 Well, good morning everybody. Thank you. Welcome. Glad to have you here. I'm quite looking forward to hearing what these folks are going to say You know, I was gonna say this is like a typical CSIS event You know looks like an old Dutch master's print with a bunch of grumpy old white guys sitting on one side of the table Except we've updated it here. Yeah, we've got a grumpy old white girl, too. No, I'm just eating teasing teasing No, actually So I think it's going to be a very interesting conversation. Obviously, we're all trying to figure this out The there's a certain sense of unreality to what we're looking at because we just don't know if this in any sense represents You know in the past the president's budget was really a legitimate starting point for a serious debate We don't know if it's going to be that way this year and it's a very interesting question and These five leaders are going to tell us. So who starts this thing? Is it Kim? You're in charge. Take it over. Thank you I apologize for holding everybody up Well, thanks John and good morning everybody to CSIS to our discussion of the implications of the FY 14 defense budget But a couple of administrative issues before we talk more substantively. Please turn off your cell phones or any devices So it doesn't disrupt the the Proceedings I want to also point out to you a new publication that we've just put out which is a methodology for Making the right trade-offs of defense and in the decade ahead Clark Murdock and Ryan Crotty Did this very helpful probably really very beneficial? I think the department I think there are copies outside So please take a look at it. It's useful We'll after the each individual up here not me Has something substantive to say we'll we'll go to questions. We'll take them from the floor in the normal manner Which is please hold up your hand You'll be recognized and get a microphone and then give us your name and affiliation As Dr. Henry put it he called it unrealistic I it is all of that unique I guess would be a kind way some would call it strange. They might choose to call Pick those to that term the process is strange and the substance is strange even today The department doesn't know what FY 13 looks like because they haven't submitted to the Comptroller haven't gotten approval from the Comptroller for what the sequestration cuts are so even today the 13 program is in flux Let alone the 14 program that that we're going to look at In the midst of all this uncertainty and it's enormous There is one certainty and it's the sequestration number for defense That has not been changed or proposed to be changed by anybody so that we know will be at the end of the year Unless the law has changed that will be the top line for defense, which is has enormous implications We have a great group to discuss that this morning David Bertot who is the director of the international security program here will start us off with a Broad look at the budget the numbers and some of the implications that flow from that Dr. Martin lead who is with is a senior advisor who is with the Harold Brown chair on defense studies and Leads our ground forces dialogue will follow on the author authorizing part of that process Jim Dyer now with the Podesta group senior advisor at CSIS extensive experience on the Hill as by the way does Maron extensive experience on the Hill and in the White House We'll talk to us a little bit about the appropriations process where he was the chief clerk of the House Appropriations Committee for 10 years and so knows the really ugly details of how it all works and then Clark Murdoch dark Clark Murdoch who is a also a senior advisor will kind of roll this into a strategic framework What what does this all mean in terms of the strategy for the country and what what this implies for what our national security program will look like? So without further ado, let me turn to David to kind of set the stage for us Thank You Cam For those viewers who are joined us on the web I think you can download these charts from some convenient spot on the website there and follow along I Have a clicker, so I was about to say next chart, but that's actually my job to go to the next chart So I'm gonna just really look at sort of where are we and how we got here and then the Remainder of the morning will talk about okay. What happens next if you will Where we are is we have a 13 budget and last time we got together. We were still under a continuing resolution So we have a 13 budget But that budget wasn't passed until after sequester cuts were levied and as Kim when cut pointed out the Implementation of that third those 13 cuts that 41 billion dollars is still being sorted out It the bill that we got HR 933 did appropriate funds at the sequestered level to cover DoD It fixed some of the problems caused by the CR in terms of disconnects between Investment accounts and and O&M accounts it provided some flexibility to DoD There's still a huge shortfall in overseas contingency operations the low-end seven or eight billion dollars And at the high-end 11 or 12 billion dollars and that's in 13. That's not next year shortfall Expectations are DoD has announced they plan to submit a reprogramming, but that's not up there yet So we don't know what's in it and and we do know what its target is it'll fix part of the OCO problem But the biggest issue is the President's budget, which was submitted a week ago today At a level well above what we call the post sequestration BCA caps or the final BCA caps if you will and and there is no overall problem or Solution to address the fix for sequestration the President's budget says we eliminate the need for the BCA Caps through a combination of entitlement changes and additional revenue Of course that requires legislation in order for it to happen And in addition we have House and Senate budget resolutions that passed for the first time in living memory in advance of the President's budget Having been submitted And and they are also of course not consistent with the post Sequestration caps. I don't need to remind you where we really are is we're in the middle of the fourth drawdown in the last 70 years and the important point of this is that while it is a Bit steeper than the last two It's not nearly as deep and the floor projected even the right-hand side of this Even if the caps are complied with is still a hundred billion dollars in real dollar terms above the floor in the post Cold War drawdown a hundred billion dollars above the floor in the post Vietnam drawdown a hundred billion dollars above the floor in real dollar terms of the post Korea drawdown The sequester I already talked about but one of the most important things from the point of view of Business is in fact outlays are well down Investment outlays report as reported by the Treasury Department on the 10th of each month Treasury reports government outlays from the from the previous month and the previous quarter So procurement RDT&E and Milcon and DOD was down 3% in March 8% for the quarter that's year over year and and when they add in they have a Methodology where they add in some O&M it's down even even additional percent down to about 11% lower So there's a lot less money being spent by DOD. This is reflective in the deferral process It's underway for sequestration We're hearing a lot of stories about slow pay on invoices from companies across across the defense spectrum And it isn't that invoices are being accepted in they're not paid The best way the government of course can slow pay and invoices not to accept the invoice And so kick it back and question and you have to go back and redo it again We've even having instances where DCA is rejecting invoices and the rationale being given is we don't have the funds Which by the way, I think is a violation of the anti-deficiency act But but so far nobody's been indicted for for that and and as far as they tuned As far as we know furloughs are still planned in DOD For all civilians the fairness principle being applied here and the number currently out from the secretary is 14 days beginning in late June I don't need to remind you how we got here the budget control act the important thing to remember is that was not a Spending cut bill that was a debt ceiling bill We bought with the budget control act in August of 2011 Essentially two years of increase in the debt ceiling. We paid for it with ten years of cuts All right, this is not a sustainable pattern over time You can't continue to buy one year of debt ceiling increase for ten more years of cuts or else you run out of money before you run out of debt ceiling and The reason obviously is because of the growth in spending as a percent of GDP much higher than the decline in revenue The important things about this chart the red line the top line is of course red ink That is the the money being spent total federal outlays the dotted black line is total federal receipts You see that little surplus in the late 90s, of course that's kind of a one-time deal at least looks like it and a very interesting point here in 2008 total federal receipts exactly matched total federal outlays on entitlements on mandatory spending There was zero money to fund anything in the government in terms of discretionary We're now a little above that at the very far bottom. You see domestic discretionary and defense discretionary That's the kind of green line and the dark blue line there They've been essentially around three and a half to four and a half to five percent of GDP since Essentially the end of the Cold War and are staying about there and at the very bottom net interest on the debt Of course, we all know that's artificially low because right now interest rates are extremely low about 2.1% for 10-year T bills With an inflation rate of 2% people are essentially paying us to hold their money for them The ability to sustain that over the next couple decades is is likely to be a bit a bit slim if you will President's budget and this is really the right-hand side of this chart is a critical piece The base budget that is non-oko because we don't have projections for okoh beyond 14 Shows three three levels there the purple at the top is the Money that was cut out from the first BC a cut two years ago That was the 487 billion dollars at doD lost in in FY 11 through 21 the green is the excess of the budget submitted over the caps and Blue or periwinkle at the bottom I actually don't know my colors well enough to know if that's periwinkle or not But I like the word the periwinkle at the bottom Is what would be in the base budget if the caps were complied with that's about a 300 billion dollar difference over this fit up and And that's the real issue that we face today. So the budget was submitted It's actually a very balanced budget in a different sense one third is for investment one third is for military personnel one third is for O&M and Doesn't have any sequester cuts in it But the secretary said in his public statements when the budget was released that that's what his strategic choices Review is doing is preparing for what if we have to comply with the caps the terms of reference for that study? Don't say that but the secretary did say that out loud. There are 34 billion dollars in efficiencies This is round. I don't remember how many rounds of efficiencies. We've now had And that's mostly taking civilians out of the workforce about 50,000 over over a five-year period And of course there are some terminations and some restructurings But in an unusual stroke for for defense budgeting They've been very little attention paid to that in many ways this 14 budget is the 13 budget that was proposed not enacted Just with the 14 instead of a 13 when we go forward there So let me stop there and turn the floor to Martin. So this is what's up on the hill now now. What happens? Let me just start quickly by reviewing a little bit about 13 David Mentioned most of this already, but I think there's some assumption that the reprogramming will largely cover Most of the OCO shortfalls in terms that are due to excess Lower or higher than expected projections for expenditures for OCO What remains to be seen as as the readiness crisis caused by sequester? deepens I Think they'll be increasing pressure from some to on the department to submit a another supplemental of some sort and I don't think there's a clear partisan Breakout on how that will be received. Obviously. I think some Democrats will be highly resistant to anything that fixes sequester for DoD and doesn't for others there'll be any there'll be some resistance potentially from Tea Party years to Undoing any of the cuts that we've already enacted so again unclear how that would fare unclear if OMB would Actually support such a submission And so I think but I just think that the tenor and of that debate will heighten as we go forward and again as readiness Challenges become more and more apparent To get to 14 Um The good news and in the just unreality of all of this may be that it's it's the easiest in 14 This the top blue line is the original BCA caps Which of which is also the same numbers as in the house budget resolution the Senate budget resolution is slightly lower than that And the budget request is is in between those two on the bottom blue perry ish Winkle ish color is the is the Caps with the cuts But as this points out again if there's good news in this Lack of reality that we're engaged in all the house Senate And and president's budget requests are all At the 552 billion level for 050 accounts So They're all starting at the same point of Disreality on reality Which in theory makes it somewhat easier. I think the authorizers are expecting to mark to the 552 billion dollar level and Remains to be seen what happens if and when there's some grand bargain about how that gets addressed subsequently But I do think obviously the challenge therefore will be Where do they make cuts to? Redress some things that they're not happy with There's some indications already of where that might happen The sask I think today is releasing their report on overseas basing costs Senator Levin has already made comments about how he's not happy with the percentage the declining percentage of burden-sharing costs that are being borne by some of our partners and so I think at least To some degree for symbolic purposes at a minimum there may be some cuts to us Support for overseas basis to increase pressure on some of our partners and allies I Given the what the Senate did last year on civilian personnel reductions this this budget doesn't Fully get to the level of cuts that they approved last year. So I think and there has been already again some indication that Some members want additional sieve purse cuts. So those also may be a source for trying to buy back other things I Think they'll be the usual push for cutting things like non-defense Things are concerned conceived of as non-defense, you know breast cancer research and those kinds of things and then It's kind of good news about BRAC. There's I think about 500 billion or million dollars for BRAC They can reallocate that to other Higher priority milk on projects. I don't think that'll end up moving out of milk on in all likelihood But it does mean some other things might get bought with that in the presumption that I've just gotten pretty roundly Rejected by everybody involved. So I don't think that money is gonna stay where it is What kinds of things might they want to buy back? I think there's some clearly the Department's proposals on tri-care increases fee increases and and potentially the military personnel pay raise maybe some one place that it would go back into and Then you know remains to be seen on everybody else will have their individual Thanks that they'll they'll advocate for it. But so I think that's sort of how things look right now from the authorizer perspective Over to you Thank you very much and good morning everyone it's Good to be with you My piece of the puzzle this morning is to talk a little bit about appropriations. I Will try to spare the invective Discuss the depression and the irritation because I want to prevent all of you from rushing out into traffic at around 1015 And saying this is too much It's really not that bad and I'll tell you why If you said to me Jim what do you think The top-line defense base number will be for fiscal 14 Based on the early numbers that have been put on the street I can probably give you a pretty good ballpark and It's comfortable for me to say. Oh, let's pick a number. Let's pick 527. It's the Obama budget number It's the house budget number. It's close to the Senate budget number It's where all the numbers can be put into a category and added to and you can come there It it discards the sequester, which I will talk about in a moment, but it's a fairly reasonable round number And from an appropriations perspective and I I Don't want you to think we don't care about policy at all. That's not true for us policies numbers as you know, but If you're given if you give the appropriators a number Their track record and their history has been to try to make the number fit. There's a certain square peg round hole about the process but You can nick the holes and change things around a little bit and somehow some way the key element is to give The defense appropriators a base number and say here go write a bill and I expect them to do that I expect them to I expect that At some point in time in about a month Maybe a little after you will see the appropriations committee in the house and then shortly afterward in the Senate You'll see the Senate committee roll out a set of 302 b numbers which parse all the numbers as you know After the various 12 subcommittees The problem we face this here and I don't want to go too far up this track because this is about defense But defense does not exist in a vacuum There's something else out there called non-defense and if we're going to worry about defense we have to worry about non-defense too And if you look at David mentioned that this year for the first time in the history of the Republic the Congress decided to put a budget on the street Before the president did I'm not faulting the president presidents budget was delayed because the Congress couldn't do last year's work And that's the fact we have to own up to but Because the Congress has budget resolution numbers on the street. They are very instructive, and I'm Those of you who know me know that I'm as defensive of appropriators as I am critical of budgeteers, and I'm going to show you why The difference between the number that Chairwoman Akowski in the Senate has to parse out to her subcommittees and The number that chairman Rogers has to parse out to his subcommittees is almost a hundred billion dollars Now folks I would ask you to take a deep breath and say to yourselves do you see any Circumstance in the United States government where you could have a house committee and a Senate committee Come to closure a hundred billion dollars apart and the answer is of course not To make matters worse in the house and again I'm pushing sequester off because I'm not trying to depress you, but I'll get to it setting sequester aside for a moment We had the original the the initial complication of while the house budget set a number for defense that Everyone can live with may not like it, but we can live with it Number for non-defense in an attempt to bake the sequester into their calculations is so low. It's indeed it is even lower than the sequester number 974 would be the total VA number for a sequester 966 for the fiscal 14 house budget Now that's folks That's not even a number. That's a number you'd write on a piece of paper And I think the first thing I do is fold that piece of paper up and throw it in the trash can what it is is What the house budgeteers believe is a starting point That would lead them Into a discussion with their center parts their Senate counterparts About where to go to settle the discretionary number now to bake the sequester into non-defense and to come and Address the following year defense budget and pretend there's no sequester to me Now it makes some political sense. I guess if you believe that it's defense and nothing else in the world But it doesn't make a great deal of sense in terms of getting anything anything done and just to show you how bad this is There was an allusion to it the other day in a very excellent piece of Wall Street Journal The discretionary number in the house budget is lower Than the number we have for these discretionary programs pre 911 Now as we have been so vividly reminded the world has changed and it has changed and not for the better So we spend a lot of time now trying to figure out how we meet all the nation's security commitments how we do them in a budgetary responsible way, but at the same time recognizing That there are a number of wars in this country war on terror war on poverty war on disease a bunch of wars that we have to fight so unless that Non-defense discretionary number is brought up. We're not going to make any progress this year David alluded again to the fact that the House or the Congress has brought out its own budgets It's interesting to me last year in this town. We all lamented the fact that Process was broken not a day goes by in my world. Somebody says the process is broken Well, that's true process is broken. So what have we tried to do this year in this new Congress is We've tried to do process first and substance second. We now have all of these things in place, but we still sit here Wondering aloud what the substance and the policy will be behind a process that we have arbitrarily put in place to address these issues At some point in time the policy and the numbers and the program numbers have got to catch up with the process and That is kind of tragically where we are this year I do expect because Appropriators have a tendency to be very process driven. I mean, you know I if I write a if I write a bill in subcommittee on Monday, I got to have that bill in a full committee on Thursday I got to be in a rules committee to follow on Monday. I got to be in the floor the following Tuesday I've got all these Templates I've got to meet and they will do that this year Call up there now and ask them how they're doing this a fine We're okay Got a lot of problems got to figure things out got around things off Got to create new pots got to create new holes got to jump up and down, but we'll get there That's because I always put the optimistic face on to the public But the reality of life is the one thing that There are two things really that are hurting appropriations desperately one is sequestration Sorry, I couldn't avoid ultimately getting to it the first is sequestration and of course the second thing is is We desperately deeply need and it's not just the appropriators that need it It's the country that needs it and that's a new budget deal to give this country a path to some economic and budget stability For me the sequestration is what you do When you don't want to have an appropriations committee appropriators are supposed to By by constitutional fiat, they're supposed to eliminate spending They're supposed to control spending they're supposed to eliminate waste supposed to make investments supposed to prioritize spending Supposed to run the government supposed to provide the resources government this government needs to function The sequestration simply says now we're not going to do any of those things When I cut everybody's head off just a piece at a time first we'll cut everyone's ear off Then we'll cut everybody's nose off If that's the way you want to run the government It's the worst way possible to run the government and I I think you will all agree with me that It's quite remarkable in this town that last year. I couldn't find a politician anywhere Who said oh this sequester is terrible. We've got to fix the sequester Sequester will never happen. Do you think it'll ever happen to know never never happen a world? Advised everybody who couldn't possibly happen guess what it happened It happened I thought for two reasons and they're both bad reasons, but it happened anyway Sometimes the worst of reasons is the only reason It happened because the Republicans believed at the end of the day It was the only leverage they had in a democratic administration to get them to come to the table and talk about mandatory spending cuts It happened because the Democratic Party members believe that by cutting defense They would get the Republicans to scream uncle loud enough and long enough that the Republicans would come to the table and want to talk about taxes revenues and Long-term budget sustainability guess what everybody was wrong None of those things happened. They haven't happened as we sit here today And despite the fact that let me take one last shot at the budget committee and then I'm gonna move on Despite the fact that I was I was amused earlier in this year when The House Budget Committee flaunting the 27th amendments to the Constitution on congressional pay said either you write a budget It will cut your pay Constitution is pretty clear on this subject by the way if you want to read it's 27th amendment having said that now both part both houses aggressively moved to write budgets and now We can't even get a conference committee convened because houses neither house especially the house wants to make the motion to go to conference So at some point in time the appropriators are gonna have to live with a deemed number the number will be deemed a hundred as I say Almost a hundred billion lower non-defense in the house and there's in the Senate. They will try to produce bills The fate of these bills is to be determined defense will probably be the easiest of the lot but you can't just do defense and walk home because defenses and everything so at some point in time this College gridlock if you will it's kind of floating gridlock will have to yield to a big deal My own personal belief is and you know, we tried to get a big deal in 2011 that failed So then we said well, we're overshooting the target. We gotta look for something smaller So we tried almost a year's worth of small deals and guess what they didn't work either so now we're back trying to figure out what now we can do a big deal and No community in this town needs a big deal more than the Defense Department because for my friends I will guarantee you if we cannot drive a big deal That cleans up our revenue code that controls our entitlement spending and that sets acceptable discretionary spending limits What we will have in this country is we will nick and nibble defense year after weary year and if you think the current instability and the current uncertainty is troublesome then prepare for it over the foreseeable future because Defense is too easy to get at 65% of discretionary budget and when all else fails. What do you do? We go back and nick discretionary I was intrigued by the Obama administration budget that says well We're gonna take another hundred billion dollar out of their fence. We're gonna cut it out in fiscal 17 Now we haven't gotten through 14 We don't know what the numbers are for 13 and we feared that they're suspiciously like 12 But we're cutting a hundred billion dollars out in 17. Hey make it 200 billion fine. Make it three Okay, we're now on one year linear budgeting Now I know why the authorizing committees always did one-year authorizations. They're in the same boat. We're in Long-range planning is something we do in the Pentagon and we're trying to do in the State Department But by God long-range planning in this Congress is about a day at a time So and unless we can get ourselves into a big deal That lays out a path that people can buy into we're gonna have this problem in the foreseeable future And we're gonna have to live with it and it's going to be bad for the country It's going to be bad for everybody and it's going to generate a lot of concern on the part of everybody that For instance, and let me be very specific with you the biggest concern We had in the first quarter of first quarter of calendar 13 Was the fact that we were operating off of fiscal year 12 numbers in the Defense Department and they were totally out of whack We didn't have enough money to Basically run the O&M accounts. Well the Congress moved aggressively to do something about that and took some of the pressure off They didn't take it all off This is why you see the Air Force talking about reduced flying hours and you see everybody talking about lower contracts and lower obligations It's not all off. It's still there and it will stay there and and we will never really get the type of match that we need Matching money to programs because we're always living in the past We're always we're always looking at numbers that that while we get new numbers. They're basically in old pots And we have to get off of this backward path and it'll forward path So let me stop there. I've talked too long, but just to say that this is a very Difficult time. I think for anybody who lives and dies by numbers. I Told David I didn't want to do charts because I was afraid that if I wrote a chart last week by the time It got in here somebody put a press release out in the Pentagon make my chart useless And I still I still feel that way. So I would just say to you all Think big this year if this is about Trying to produce a defense budget that is worthy of this country's global leadership Because we have to do a lot of things and it's not just to focus on the numbers in defense. Thank you Supposed to make it easier if people could actually hear me. I'm here to talk about the S work I see I can't even get it out without choking the s word for strategy as opposed to sequester I Was asked to look at the strategic implications of the FY 14 budget And I scratched my head and first thing defense news helped me out with an editorial on Monday When as everybody else does characterize the FY 14 budget is unrealistic, but they also said it was a strategic blunder now they're using strategy in a tactical sense here in terms of Managing of the Department of Defense, but there's no question that when you have People across the spectrum of opinion like McKenzie, Egluna the AEI and Gordon Adams at Stimson Center All agreeing that this is a completely unrealistic budget in terms of the amount of revenue It's going to have what it's going to be able to Save what it's going to be able to afford to buy in terms of equipment afford by in terms of force structure and so on so unrealism You know, this is where Dr. Hamry started it's where all of our panelists started about the lack of reality to the budget So I decided to go back and take a look at sort of Hegel as a strategist if you remember he got onto a lot of trouble initially for making the statement about Bloated budget the DOD has a bloated budget people didn't pay Attention to what else he said is a quote our military Has not really looked at themselves strategically critically in a long long time So he's saying we have to think more strategically about the military We also said, you know on the first day he's defending his budget Sequestration is the law. It is not debatable for me This is what is on the books now. I have to deal with that reality and I have to manage and lead in that reality Well, it may be on the books, but it wasn't in his budget, you know And that's the thing, you know, it's just sitting there the sequester the 52 billion that's supposed to come off the top at the end of 58 so He did call for a strategic choices and management review Known colloquially as a scammer although Bob Hale says I don't call it that but As Was mentioned by David its goals were a little it was set up on 15 March It's goals were a little vague It's to identify the choices that underlie our defense strategy postured investment including all past assumptions and systems But then that's not the last thing he did he also gave a speech On three no three April at the National Defense University where he started to lay out The way he was looking at strategy. It's actually I think it was probably presented in a bit of a dispiriting way Defense news again helped me out flat delivery In terms of the secretary But he raised the right issues, you know that we have to Accept this new reality that it leads to fundamental change a further Prioritization of the use of our resources He fully internalized something that we at CSIS but increasingly throughout the policy community have been emphasizing For much of last year and that is it is not just a top-line problem It's not just fewer defense dollars is also the crowding out effect of internal cost growth increasing costs of personnel increasing costs of Medical increasing costs of O&M increasing costs of acquisition is leaving less and less room Most recent calculation of Todd Harrison at CSBA is is that by 21 when the sequester cuts are over the caps That are in law or over the United States Department of Defense would be spending 86 percent of its budget on Personnel and medical costs and O&M Doesn't leave much for procurement does it our estimates were a little higher than that Because we were more pessimistic on the ability of the department to change in terms of the work that we've been doing at CSIS so You start looking at the expectations for this strategic choices of management review and and Hegel himself makes it very clear that let me find the right page for the quote Makes it very clear that everything's on the table With this and his list of what's on the table is very comprehensive Everything will be on the table during this review roles and missions There was ever no word that the Department of Defense was allergic to its roles and missions We've seen many failures attempt to address roles and missions directly Planning isn't going to be on the table business practices for structure personnel and compensation Acquisition and modernization investments and how we operate and maintain readiness. We have no choice The shortage of resources is going to drive it to us The statement is right yet the rumors that come out of the department in terms of what's happening in the scammer I talked to one very experienced Close Pentagon watcher Who's sitting at the table who said I? Hear there's an awful lot of working group committees. Well, that's a typical DoD QDR kind of thing is to create a proliferation of working groups There's some people out acting as if we're a cut drill my feeling is I Can only say two things certainly with certainty about the SCMR very little strategy and very few choices will be made During that time, but there's still this budgetary squeeze. I agree with Jim the United States is the United States government is a situation where the vice of Mandatory entitlement spending If left to its current trends by 2036 we have no discretionary spending of any kind The crowding out effect of mandatory there has to be in Order to put stability not just in terms of what the government actually does but stability What the United States itself does abroad because our strategy is unchanged. We're still the indispensable nation We're still the country that if we withdraw the vacuum will create instability and threats to our interest that hasn't changed And in fact, we're now going from a counter insurgency oriented Department of Defense to a full spectrum defense Full spectrum operations is the new buzzword from all of the services at this time Not exactly sure how that computes indispensable nation capable of full spectrum operations And oh by the way your resources are dropping from the top down about 20% and hollowing out from the inside by about another 20% during that time not sure how you be an indispensable nation capable of full spectrum operations under those conditions But we're in a situation and I think you know to the president's credit the FY 14 budget request from the US government perspective was as Michael Linden at the Center for American Progress characterized it a quote preemptive compromise budget The senator's concept 1.8 trillion dollars that had some revenue and it was balanced It had some revenue new revenues about 600 that had additional cuts Some of them made up some of them pushed beyond the fit up to be sure in terms of defense But it did put some entitlement reforms change CPI some changes here some changes there On the table was that a strategic blunder or not My feeling is is that a deal of that kind is the only hope for the way forward It's hard to be real optimistic about hope in this particular environment But at some point the crunch on discretionary spending Both defense and non-defense will get so great that there has to be an overall bargain Now it could be a bargain that's achieved fitfully Because people tend to forget we've achieved either 2.5 trillion or 2.8 trillion depending upon who's doing the counting of Debt reduction already. That's just sort of relieve the pressure a little bit to urgently move We still have a long way to go so from my perspective, you know where the department is and this my last word on this is that the commandant general Amos testified a couple of days ago and He said something I never thought I'd see a uniform person say much less a marine say and That is they're used to Saluting smartly and say we can do more with less we can do more with less Well the commandant didn't he said we're gonna do less with less Now the truth of the matter is we're actually going to do less with much less, but that is the beginning of Acceptance of a reality is that we are now in a position where you are going to do less with less and People are going to have to learn how to say no So that it makes clear what the opportunity costs are for a lack of realism either at the grand strategy level about an indispensable nation with full spectrum operations and a department that is being starved and nibbled to death each Month as Jim talked about each year as Jim talked about or at the Department of Defense level because when you Keep putting off the reality of having to make tough choices It allows you to avoid tough choices. It allows you to not reform wasteful business practices It allows you to duck roles emissions and division of labor between the services This lack of realism has to end because right now sequester is the law The only certainty here is the law will be applied unless it's changed Thank you. Well, great start to a tough dialogue One of the interesting thing audiences at CSIS always have enormously valuable perspective So we're looking forward to your questions General Schwartz. Nice to see you sir and thank you for your service Before we do that I just have to I have a question a comment first of all I speaking for the three authorizing committee former staffers on the panel I do want to say that I'm used to hearing the world according to the Appropriations Committee I had never heard the universe according to appropriations Always good to hear Jim. Thank you. Yeah, because sometimes we misunderstand the process I Do I do want to ask The folks that have been in the building the Pentagon and have helped build a budget I frankly am a little perplexed as to how this scmr is going to deal with Both the president's budget And the and the actuality he's that the secretary said that they would anticipate the sequestration, which is on the books Is that? feasible Can I just answer the first of those questions and not address the feasibility? I'll leave that to I'll start by by Opining that one of the real advantages of this review the SC review I think some are calling it. I actually prefer skimmer because that's kind of what I expected to do There's just a skim a little bit off the top, but it has it one enormous advantage When a secretary of defense comes in as Secretary Hagel has done in the middle of a dynamic Which he neither created nor participated in He needs a way to get up to speed really quickly and I suspect that that's part of what this strategic review is going to do It and in fact at one level in the only level at which it may really be strategic Is in getting him to think and and be aware of what's going on because we sort of know what the choices are There's not a lot of new choices are going to pop up here. Oh that 50 billion. Why didn't we think of that? I mean, it's that's not going to happen, right? I Think the other thing that it has, you know, since since the budget control act was passed and you'll remember for the first basically 16 months under the BCA or 17 months DoD was operating under a rule of don't even think about planning for this because it's not going to happen Right and I think what you see now is a recognition and obviously the services and every component at every level was doing some Thinking and some scenario development. It's just that none of it was integrated across a common set of assumptions and and principles and priorities So what you may have this is the second positive thing I can say about it Kim Is that you may now be at least moving towards a common set of understandings as to what it is? We're supposed to be thinking about as we're looking at these potential reductions. That's about the best spin I can put on it as to its feasibility I'll leave that to others to comment Martin can I volunteer you for that one? Well, I think I share David's views on Some on the upsides and it's hard to it's the first bit of optimism perhaps we've heard today I Have to say I'm I'm pessimistic about the feasibility the department doesn't tend to To really make strategic choices. I mean, I certainly observed over years and years that a Lot a lot a lot of senior leader time is spent on Decisions of a hundred million dollars or less So and it's just extremely difficult for a bureaucracy that big to to really deal with Big choices and and while I think And we and we've talked a little bit about this before that the secretary Certainly has an opportunity to bring some new thinking he still does have the team that put where we are together on the table there and so You know, I also think it's just difficult to get But something that is was a negotiated solution of with all the players still there to really to sort of Beat new approaches out of that is is a challenge Don't kill that optimism a little bit You want to go first? I'll be brief from my perspective And I'm a great believer in reviews. We should do them all the time the issue for me is is Resources and how you expect the cleverest policy planners on earth I'll stipulate they're in the Pentagon how the cleverest policy planners on earth can be confronted with a reduction of 42 billion dollars in mid-fiscal year and then Prospect of another 51 billion dollars should nothing happen this year on the budget front at some point in time I've always been impressed by Spokesman the Pentagon saying we're gonna do this we're gonna do this and of course we're gonna do it because this Clark says it's the law but I Don't think you can have a successful review process Without having a predict a predictable flow of resources even if the resources are lower if at whatever level but don't Pull the plug or change the game Halfway through the fiscal year if you want to change the fiscal year, which I think brilliant idea you should do that But let's and if we're gonna cut Pentagon spending let's agree to cut it But let's agree to gut it and a more planning effective thoughtful way after a whole bunch of consultations as opposed to say Well, we hit you 40 this year. We're gonna hit you 50 next year I was stricken last week by the words of chairman Buck McKee and Who said he was concerned that he didn't think people were taking this second follow-up on sequester seriously enough And I think he's right. I think people tend to think oh this happened Well, first, they didn't think it was gonna happen then when it happens. Oh, we'll get through this thing It's hard to focus on the next one if we're still living with the last one So I would I would hope that I review Whenever taken on is done with adequate resources even if they're less Don't it's it's so round to take away big chunks in the middle of a fiscal year give somebody an opportunity to do some planning I Agree with David that in part this Strategic choices and management review is like What rumsfeld did when he first came in And he had a top-to-bottom Top-to-bottom strategy review is what he called it and for a while For several months. There was a lot of speculation that that was going to replace the QDR process But it was rumsfeld bringing his own approach to it This is Hagel bringing his approach to it He wants in a sense of time out to do a process that he controls rather than one That he senses everybody else in the building is fully familiar with and might want to do so This is partly about rumsfeld getting more strategic. I mean Hagel getting more strategic Bob Hale as he usually does was a little bit indiscreet in his testimony And indicated that they were looking at alternative fiscal futures Which meant that they were bounding it with full sequester because a couple of people including Hale indicated We're looking at full sequester But they're also looking at an upward level, which is probably the FY 14 request which is no sequester and Somebody said we're gonna look at the Senate number as well Which was sort of in between the two of them So they're looking at so alternative fiscal futures and I think that the key thing is going to be like Jim talked about a deemed number They're gonna say at what point does the 2012 Defense strategic guidance the current strategy guidance at what point as you go down the fiscal ladder is The strategy broken and we have to think about a new strategy and I think If I were to make a guess they're gonna say if we go FY 14 and have to take another 52 billion Off it. They're gonna say strategies broken and we have to do a new strategy that fits the sequester during that time Well, I'm gonna use a time-honored Washington technique and answered my own question in that I don't think they'll do it. I think it Actually, I think it should be done just for the startness of is not only for 14 But for the out years where the sequester hits and but but I think It'll be too hard for one thing and actually I don't see any way to do it by May 30th Given the time frame that it's in bottom the significance of the issues Okay, we are now looking for Questions from that. Let me just go through the the ground rules again. Hold up your hand I'll recognize you the folks will bring you a microphone and then state your name and affiliation and then We'll give the the really tough questions to Maran and the others will Okay, who would like to Ray rated was CSIS all of you Would it would appear that all of you and to use Clark's I thought appropriate comment There will be very little choices made in the strategic choices and management review I Mean it seems to me that Secretary Hagel has put himself way out on a limb. I mean He's exposing himself if nothing or very little comes out of that review with respect to Major building strategic building blocks, etc. I mean, he's personally and professionally at risk and I find that Very disturbing that he would have put himself in such a position if in point of fact Very little choices are the outcome of the process Can I put a different spin on that though? What let me go back to the speech at the end of you speech that you cited Clark the April 3rd speech where he said everything is on the table And let me draw from Jim Dyer's comments that you know We should probably expect that what we've seen over the last year or two is what we're gonna see next year and the year after that the likelihood of Achieving nirvana here reaching I like big deal better than Grand Bargain because big deal but But it is in fact, you know not likely that the votes are gonna be there in the next three or four months to do this So we may have to become accustomed to this chaos what Secretary Hagel is beginning to do here And I'm gonna I'm gonna cite the the report that that Kim mentioned that the Clark Murdoch and and Ryan Crotty just put out we had an event on this and it's it's the one that basically show you can't see this chart But it basically says by 2021 the internal cost growth and O&M and the internal cost growth and military paying benefits including the O&M Funded parts of health care will essentially drive out investments, right? And you look at the dynamic that's going on to pay for the sequester investments are going to be the one that I mean sequester is being paid for by Same cuts everywhere, but that will then be offset by the supplemental and the reprogramming which will shift money from investment accounts into to cover the shortfalls for O&M military pay obviously exempt from sequester Left to its own devices the department will continue squeezing investment in order pay for O&M and military personnel What Secretary Hagel has done and it may not be the most elegant way of doing it But I think what he's done is saying I want to put those things back on the table I don't want investment to pay for everything for the next ten years We need to figure out a way so that everybody's paying a piece of it here that is you know And it may not be elegant it may not be artful in the way it's been described. It may not even be his intent I may be extrapolating far more than is intended here But at least the potential is being opened for wrestling with that kind of question So he may be out on a limb, but I think it's the right limb on which he should be out I'm trying to pick my participle, which I dangle there carefully, but I mean I think he's the right limb. I Agree, it's the right limb, but I look at two previous examples Secretary Rumsfeld again came in top-to-bottom strategy review. He was routed During that time then he fell back into a QDR goes out in August to meet with a president the president's clearly unhappy with him People were making book that he was the first cabinet officer to be driven out Because a Republican administration comes in and the department is in an uproar and Congress is in an uproar and he didn't get the money he thought he was going to get out of OMB to raise the defense budget and People were making book that he was on his way out and then 9-11 occurred And it saved his job did a lot of things but it saved Rumsfeld's job during that time Because Rumsfeld did have big ideas and failed to deliver on them And I'm afraid and he said many of the right things the speech He gave the day before 9-11 inside the department was an excellent speech in terms of what needed to be addressed in terms of Rolls of missions and the kinds of issues that were out there Gates is the other model of somebody said oh, I'm just here to fix a rock rock rock. That's my job Maybe a little afghanistan in the end and then turned out to be a very strong secretary of defense in terms of his willingness to make Tough decisions in an April of 2009 cut out three hundred billion dollars plus worth of poorly functioning programs during that time, but Bob Gates never Said he was going to change the world and do all this do all that he just went about his job and did things and so If there's anything I think that the history of past secretary of defenses and I remember I Worked directly for one who is probably one of the worst of the secretary defenses It's only one of the shortest lift During that time shows you what happens when an authorizer takes over the pedicab anyway It's a Reminder that You don't go out on any limb. You're just the right limb Your actions always speak louder than your words And I wish he hadn't gone as far out as he did I do think that there are a few off-ramps on the limb Some people have said that the review is really intended to Identify the assumptions that will inform the QDR and so you know again I think and the other big off-ramp in my mind is if it's in fact a Excursion to examine different budget options and you don't know what the budget option You know you don't have a number at the end of the day Well, then there are it's all just theoretical anyway So there's nothing that you have to deliver on until Congress gives you a number. So I think I'm I'm not sure as much of a limb as it might at first appear George Knuckleson with Stroud Corp. You're alluded to the QDR and you've seen in the last couple of months The new congressionally directed QDR oversight Commission's been put together looking at the members of that Commission Do you think that we're just still looking at old think or they're gonna be able to actually provide any substantive inputs into the process Clark you're the But let me just start by saying that they're not supposed to provide inputs, you know, they're supposed to review the end product I do think there's some couple. There's a few Folks on there that are not what I would consider old think kind of folks So but again when they had a pretty strong and Challenging review of the last QDR To little or no effect it would be my assessment So I'm not sure how much that matters and then there was a lot of discussion after the last QDR and after the last independent review panel that There would be changes to the QDR process and not much of that has actually happened. So I'm not sure how much it matters I'll ask that question again We all look at this from the Washington standpoint But David your charge suggested that there's another constituency out there that's important It's the program managers and the people that are actually running programs who are watching all this and trying to be Responsible to do what they think is right and your outlays suggest that Potentially and I'd be interested in your thought on this whether last year they moved on their own and began to husband resources and anticipation Sequestration and and what's your thought if that seems to be the case? How do you think they act this year where with a similar circumstance of sequestration sitting out there? Contrary somewhat different than the president's budget. I think that's a well. That's a complicated Posture to look at Tracking the data is useful DoD has its own internal obligation data that gets reported to the comptroller They are not consistent with the Treasury Department reported data that come out publicly, which is very intriguing to me I've made a career out of taking advantage of data discrepancies In order to drive a decision the way you want it to go because as you know We spend a lot of time inside the government arguing over whose numbers are right rather than what it is We ought to do but in this case I think the Treasury Department data are pretty good and they do show That in the fourth quarter of last calendar year not was standing the guidance from DoD that said spend normally That in fact there was a dramatic reduction in outlays both DoD investment outlays and across the entire federal government I Think if you talk to individual programs and program managers and to the companies that are under the prime contractors for those programs You will see a tremendous tendency of that The downstream effect of this though is is a complicating fact we haven't talked about here this morning if in fact For your investment cuts for your O&M and RDT and E cuts for sequestration You solve those cuts not by terminating a program because you can't terminate 9% of a program or 13% of a program But by deferring and delaying then you've basically shoved those requirements into the next fiscal year into fiscal year 14 There's no room in that 14 budget for those that additional 20 billion dollars, which you've just shoved out to there And in fact we just said that budget's 50 billion dollars above the cap So it's really 70 billion dollars above the cap because you've just shoved 20 billion dollars worth of requirements into it From 13 and if you take Clark's cost growth numbers It's actually about 73 or 74 percent above the cap or 73 or 74 billion dollars because you've got the Unanticipated and unbudgeted for cost growth in mill per's and and O&M there So I think actually Kim the situation is more dire That then it looks and How does a individual program manager deal with it in that circumstances you can't really change requirements, right? You can't undo his contract in fact a perfect example of that is is the struggle the Air Force is having with the KC 46 tanker fixed price development contract Multi-year long-term fixed price development contract in and into with eyes wide open by all parties The CR threatened to force the Air Force to break that contract because it did not have the funding necessary in order to do it The the appropriations bill fixes that so I think the Air Force said that their 14 budget and their 13 C Corstration do not require them to break the contract But the minute you open up a fixed price development contract for an adjustment for dollars You're opening it up for everything else as well And that so that's just one example almost every contract is in that same circumstance I think it's a very tough world for program manager to be in and buying time until your successor arrives Maybe your best strategy Kim could I just add a footnote to that? In the first quarter of what on paper was FY 13 actually was FY 12 continued DoD was spending well above its BC a cap and No one told DoD to stop everyone basically said the assumption was oh this is going to get fixed So there were two sequesters out there There was the threat of the big sequester and there was a smaller sequester out there that was going to be necessitated To get the DoD down to its BC a cap My own experiences they were putting contracts on the street in December, but They were getting sluggish because it was a sphere of the secondary cap that was going to force their spending levels lower and this was necessitated by the confusion that was created in the 2011 act about national security funding as opposed to defense funding just created this mismatch and it was It was something that DoD had on its its radar and while it was not under any guidance to slow spending They knew that if they didn't they're going to have to do some things into the second quarter of what would have been FY 13 So that was out there Curtis buzzard military fellow here at CSIS have a question on jointness Coming out of this budget as you look as a guy that you know redeployed recently from Afghanistan. We are You know probably operating at the optimal level of jointness right now and soft conventional integration and is These budget trade-off decisions are made really without priorities. It seems to a large degree There's a potential that it really has a very negative effect on jointness and we go back to our corners and look to look for more Service-specific capability responses to joint Capabilities, I'd be curious what your thoughts are on how the secretary can still encourage that within this budget cycle for instance if you look at airsea battle and Really how that forces the Navy and Air Force to work together. Should there be something looking at innovative ground force Combinations and greater interdependence rather than what I think is I'm seeing the opposite of that potentially occurring There's nothing Before the last ten years people used to talk about the budgetary Wars being the Pentagon's real wars Well, we've been fighting a lot of real wars since then so people no longer make that joke But there's no question that when there's a competition for scarce resources It's hard for people to sing kumbaya and come together When people are trying to keep enough resources for the rice bowls within each respective institution, so I think that the effect of resource scarcity Is to exacerbate competition, but I also think it depends on how sharp the resource scarcity is To whether you get to the point where you really do think anew I would take the UK system as some indication of what can happen When really tight resource requirements resource constraints tighten in for example We now have acquisition processes in all the services and an OSD They mean to be one or the other you don't need them in both places instead What we have is an awful lot of gridlock and acquisition because there's so many players involved Well in the British system you have a defense procurement agency that issues that's run by civilians and issues Equipment to the military they went there because they couldn't afford not to go there They have a joint requirements process the services don't generate requirements. They have a joint Requirements generation process in the UK It's only the combatant commands. We have operational requirements services shouldn't have any requirements generation That's not true during that time. So One thing that can happen from resource scarcity if it's severe enough You can get fundamental changes in how you do things, but I would argue that the near-term effect is always to exacerbate conflict to get in the way of joining us in the way that you talk about and since Predominant this nation is a nation is war weary and Recession weary This will be a time When this is going to be an unending pressure because the mandatory entitlements, you know They constantly put the pressure on discretionary spending will increase so it's It's going to be a long drawn-eye process, but I think it's going to one that will eventually result in fundamental change Other questions That's Jim Woodbridge with SAIC This is I guess more for Jim Dyer being a kind of partial appropriations process myself But so do you do you think we're talking about process? Do you think that Mikulski and Rogers will push forward this year to get back to regular order and just mark? You know ignore the sequester number and mark to what the president You know use that number One of the the burden is heaviest on Rogers Because he's going to deal with a deeming resolution that will not let him go forward with very many bills You write legislation the question is can you pass it and the 302b process has always been an internal process up there Where the chairman has looked at his subcommittees and said what how much money do you need to get a bill through the house and Last year you will recall That they got five bills signed in a law and seven Were simple day changes to the best of my knowledge that's the first time that's ever happened In the history of the Republic. It's a terrible trend Because you really Once you start and we talked about it earlier once you start living with baselines that are year or two back You just never really catch up. I Think the trick for Rogers will be Can he massage his allocations to move as many bills as he can? Till he gets some kind of guidance on a big deal, which I believe will revise the discretionary number of the discretionaries again remember I Think Clark alluded to the savings we've gotten so far. Okay in discretionary spending You've got 1.2 trillion dollars worth of savings and you got them in the most painless way possible You took the CBO adjusted baseline from marks of that year 2011 and you ran it out 10 years and then you dropped it by a trillion to you didn't feel a thing, okay? They're real cuts, but you didn't feel it But that's how you got that one two and ironically we've been violating that thing ever since we got it It was the only thing we've agreed on in three years and everybody around says well I changed that they changed the number as late as is January of this year in the McConnell-Biden agreement But I think the trick becomes at certain point in time how Rogers moves his numbers to a point Where he he will want he will want to report bills all he want to get something out of his committee And remember he can go to any number he wants then where the budget points of order fall in line Or when he gets to the floor and I think his goal will be and I have discussed it with him But I think his goal will be let me produce 12 bills in committee I'll produce him at whatever level I think I need to get through the house Then if points of order must file against him they would file when he has to put them on the floor in the meantime He's hoping for a big deal But if he sticks close to the strip script, he should be in a defense number That is fairly close to what will be the standard accepted number Which would be around 527 or so I would add one more thing the house tends to look at 302 bees different from the Senate the house tends to plus up defense Senate takes down a little bit Senate tends to spread the butter like butter over toast Evenly among some of the other mid-level subcommittees the toughest is labor age because it's traditionally not a bill that Republicans get very excited about but it's very important to Senate Democrats So you have two different philosophies in play But the issue will be how many bills can you get out a committee and then see what happens easier Right a continuing resolution if you've got levels that you have put in play Come September 15 because they're out of committee and just write the committee level But could I add one thing to that? Jim Woodbridge, even if we return to regular order even if they pass and of course the 050 is not necessarily the three or two Be allocations for the for the appropriations committees Until and unless the caps are changed Even if you pass a bill you'll be fine in October. You'll be fine in November You'll be fine in December you can spend away at the level appropriated But on January 1st you have another sequester and it brings you back down to the caps all over again And so regular order only works until in fact you drive off the cliff and then gravity takes over Jim, let me just throw in one other one other point. I think Jim Dyer had it right But but there is in addition to the sequestration There's a there's another problem out there if you if you're a committee chairman report a bill It's inconsistent with the budget resolution and allocation not only is there a budget point of order potential But there's also across across the board amendment which you don't like to look at Because the house or the Senate has already voted at a level and they may well offered across the board amendment That's a huge detriment to the DVA too far from from where the budget resolution was we should have a CSIS event that explains exactly how point of order is raised and dispensed with on the floor It would be a very well-attended event. I'm quite sure Buster has British defense attache I just wanted to add a footnote to mr. Murdoch's comment and perhaps a Observation from my colleague who's now left on the subject of join tree as an outsider with little understanding of the American Process that you've described in such elegant detail I am struck by and perhaps predictably by how mesmerized you are by the short term and You know, it is a Byzantine thing that you've sought to to to articulate the Diagrams that you helpfully provided show though that there is an it there is an inexorable and unavoidable long-term issue that you have and It's more it seems to me the resolution of it and I'm simply extrapolating my own impoverished nations experience We usually Experience things after America, you know something happens here, whether it's obesity or something else and five years later We're fat in Europe This is an unusual experience to be ahead of you in this painful experience and it's the cultural shift Which was pointed to and the idea Marin's point about well delaying you can buy time You can't buy time you throw things over the fence that the euphemism for this de-scope delay defer Is to you know you you gerrymandered the problem and then you get further cost growth And we ended up with this completely unsustainable You will all be aware of it as defense analysts Equipment bow wave, which was just submerging us and we were living in a sort of In a in a strange parallel universe where we are kidding ourselves. We could afford the equipment program that we had So we have now balanced the budget in inverted commas And it was probably in real realistic terms of balance the day that it was balanced And now we have a whiteboard so called the euphemism Which is that the chiefs sit down and at the end of the day your point ma'am that An awful lot of senior leadership time is spent deliberating in your culture over Decisions for less than a hundred million Somehow or other and this is really easy to say and so hard to achieve that that the sense of Sitting down and trying to determine what is needed for America's defense and working out what your margin is When all those non-discretionary payments are made and then collectively on a whiteboard saying what will remain Seems to be working for us now Now that sounds sort of wildly simplistic set against the Mechanisms that you've described and doesn't allow for the complicated Challenges that you have with Congress currently and the politics which are clearly hugely Complicating and the fact that programs are distributed like Osprey over 50 different states and and and but the cultural shift and my sense the duplication of quite a lot of The programs seems to me the elephant in the room and Something which we through an unbelievable amount of bloodletting over 15 years have finally grasped and somehow or other It's the cultural shift that seems to me the fundamental thing Since I provoked your question, I'd like to respond to the question I Agree with you completely But this is where there's a fundamental difference in our processes I take you back to a comment that Jim made earlier in the day that there is no long-range planning in the Congress Congress thinks a day ahead At that time I was an earlier Stage when I was more optimistic about the cause of defense reform went over to London and spent time Trying to understand how the British government British Ministry of Defense was organized and do it this was several years ago any three-star general is explained to this playing to this is but but This doesn't have anything to do with you. I mean this doesn't apply to you. You have a Congress I don't know how you get anything done with a Congress and Our system is so fundamentally different, you know that Right now when you take a look at and there was a great CBO study that was done Earlier this year that was comparing Different projections out of the Department of Defense and the CBO protection They calculated that when you looked at the fit-up projections that were in the 2012 to 2015 2017 budget, you know that we were 10% underfunded in terms of Meeting, you know living within our own defense projections during that time the CBO projections Said that they were going to do two things that were different one They were going to reflect the reality of what the government what the Department of Defense actually did rather than what it said it would do and to Congressional decisions made in recent years where last year in FY 12 the department Wanted made a number of suggestions for how to reduce personnel growth from about 4.5 percent Down to 0.3 percent Congress rejected all of them during that time You know and and they've come up that where the Department of Defense is 10 percent underfunded by its own it's more like 13 to 15 percent underfunded by actual reality and what Congress does during that time and So I agree you can form the band of brothers change in the strategic culture people think more jointly act more jointly, but That's only the beginning of the process in our country Only the beginning of the process and it gets torn asunder. It's because the appropriators can noodle I want I want to defend a little bit here, and I agree with everything you said by the way But I do want to make a at least a spirited defense of the process that produced all my colleagues here the Armed services committees in both bodies of Congress are run by very very serious men on Both sides and if you went up there and talked with him You would find that Multi-year planning and multi-year projections are a significant portion of their lives, and they don't want to fight the last war They want to fight the next war. It's a serious serious problem And we have a huge industrial base in this country that is subject for another discussion that has large invested interest in in how our system plays out the problem we have is that Even for people on The hill who want to think multi-year Because resources are so limited we are limited to thinking one year and the planning capability on the hill to respond To the planning capability executive branch is is compromised This is why the biggest priority for our country is we really need an overarching Economic deal that's going to call it a deal called an understanding only under a big framework Can you do the type of multi-year planning that you talk about if you don't have it? We're get words. It's just by the seat of our pants every year. Well, let me just Actually fascinating comment. I think we're all sort of watching your experience with With great interest and I think Jim's right that but the difference is you had you wouldn't call it grand But you had a grand bargain We haven't gotten ours yet And I think the part of the problem is nobody's willing to believe that the numbers are going to turn out There's this fantasy that exists in the Pentagon that everything gets it fixed in the fit-up or the years beyond the fit-up And that has not changed and until there is a number and I happen to think it's the Sequestration number that the department's going to have to live with over the next ten years, but until people get an agreement on a number It's just you know, there's all they always are delaying the hard decisions in hopes that they don't have to face So come back and we'll have further discussion, so thanks for being with