Hearing of the Senate Budget Committee - Fiscal Year 2009 Defense Budget and War Costs

Statement

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SEN. WAYNE ALLARD (R-CO): Mr. Chairman, thank you for yielding. And I appreciate you making arrangements to hold this hearing today. We're going to have a tough schedule this morning with a bunch of votes scheduled, so I know that you're anxious to get going.

The subject matter for this hearing is arguably the most important function Congress will discharge this year, paying for the resources by which the Department of Defense fulfills the mission to defend the American people. The department's requested core budget to carry out this mission is $515 billion. That's about 20 percent above the Cold War average in real terms and more than 200 billion (dollars) more than DOD received in the year 2000.

Yet some have doubted DOD's ability, even under these trends, to modernize its force within budget. The coming generation of weapons systems will be very expensive. For example, the future combat systems may have a total program cost of up to 200 billion (dollars), and that is only one of our many modernization initiatives the military is planning. At the same time, DOD's current weapons inventory is aging rapidly. One of the objectives of this hearing is to satisfy ourselves that DOD has a plan to reconcile its military requirements with the budgetary resources available.

Beyond DOD's core budget, we must also consider the supplemental budget. This country has been engaged in the (cold war ?) on terrorism for more than six years. It has been paid for by a budgetary mechanism that is not part of the Defense Department's regular budget. Last year, DOD, for the first time, took steps to budget for the war in advance and submitted a detailed supplemental request along with its regular 2008 request.

This year, however, the DOD budget submission for 209 arrived with a $70 billion plug for the war on terrorism. There was no detailed justification, and the amount, 70 billion (dollars), was far below what will realistically be spent in 2009. The administration has offered varying rationales for this placeholder submission. And it's one of our goals today to obtain greater clarity on war funding.

Since our last hearing, the war in Iraq has reached a critical juncture. Over the past year, a surge has brought positive results as our troops have done everything asked of them through their brave and dedicated efforts. U.S. casualties are down, Iraqi civilian casualties have declined, and many indicators of progress, such as economic activity and delivery of public services, have started to improve.

I hope our witnesses can give us a more specific sense of the way forward in the war on terrorism as we continue to make progress on this particular war. I, too, would like to join the chairman in welcoming Deputy Secretary England, General Cartwright and Undersecretary Jonas.

I just might add that we do have our soldiers that are stressed. We have equipment that is getting old and starting to show its wear and tear, particularly in the harsh environment in which our global war on terrorism has to carry out their mission. And yet, last year, the Congress did not fully fund the dollars that were needed for our men to do the job.

So my hope is that we can show a stronger commitment to our men and women in the armed forces overseas and the tremendous job that they have and that Congress is willing to show and standing behind them last year.

Thank you, Mr. Chairman.

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SEN. ALLARD: Thank you, Mr. Chairman.

Well, I would share the sympathies with the ranking Republican, as well as the chairman, that I'm disappointed that we didn't have a more precise figure that we could plug into the budget. And I think the chairman has pretty well pursued that issue, so I won't, except I'm just going to ask this question. Can you give us some idea of when there might be a supplemental request? Because obviously we are looking at a supplemental request. Are we going to -- maybe you can't give us a specific date, but maybe are we looking at late spring, summer, this fall? Do you think we might be looking at two additional supplemental requests?

SEC. ENGLAND: So, Mr. Allard, I sort of hate to jump in for OMB here, because obviously that's their responsibility. But I would say the department, based on what I know about testimony and decisions, it would be late springtime, yes, sir.

SEN. ALLARD: Okay. And so I think Senator -- or Secretary of Defense Gates had mentioned $100 billion in a public comment he'd made about a week ago. And so that's on top of the $70 billion that we have now, so a total expenditure might be, his figures -- he was talking about an extra $100 billion, if I understand his comments, so the total would be somewhere around $170 billion. Is that correct?

SEC. ENGLAND: Again, I'm not sure it's likely and I'm not sure it's an estimate, because we have not accomplished the work to do that. But I would say, based on past expenditures, that's probably, you know, a rational number to look forward to. But again, we do not have any detailed estimates to support that, Mr. Allard.

SEN. ALLARD: So if this committee was to look at plugging in a figure here, I don't think the committee is going to accept $70 billion, but maybe you want to plug in a figure. I may even have an amendment. I don't know what the chairman thinks, if he doesn't, to try and realistically plug into our budget about what that would cost. One hundred and seventy (billion dollars) wouldn't be out of line.

SEC. ENGLAND: I certainly would not disagree with the secretary of Defense, so I would say that's -- if you're going to plug in a number, that's probably the appropriate number to plug in, sir.

SEN. ALLARD: Okay, thank you. I want to talk a little bit about the sustainability of our forces right now. As I mentioned in my opening comments, we have some real challenges, particularly when you look at the Selected Acquisition Report. It seems to be one of the best tools for future budget consequences of present and past decisions. And there's been a doubling of acquisition costs in only the last four years, as opposed to previous history. We haven't seen that dramatic an increase.

So I guess the question is, how are we going to sustain some of our developmental systems? It looks like we're facing some real challenges there, such as the Future Combat System, the Joint Strike Fighter and the (DD-1000 ?) when they hit full production a few years from now.

SEC. ENGLAND: Mr. Allard, I don't believe that's really -- I mean, while that projection is put together, it is sort of a straight line to where we are today. And that's not what happens. I mean, I don't expect we'll have those kind of funds in the future to double those kind of programs. So we will make modifications as we go. I mean, we're certainly not going to double the cost of those programs. I mean, even -- the Congress has been extraordinarily generous these past several years. I don't see that we can double those budgets.

So we will take other measures to control the budget. I mean, we either change some of the requirements or change the rates. You know, we will take other actions to control that cost growth. So that is a projection of future costs. But we then manage our way, you know, into a more realistic dollar amount as we go forward. So that's -- my view is that's not what we would expect in the future. We would rather manage our way to a more realistic number.

SEN. ALLARD: The secretary of the Air Force, I think the secretary of the Navy -- the secretary of the Air Force is saying there's a $20 billion shortfall. The secretary of the Navy has -- you know, he's got a goal of 313 ships. You know, how do we -- are those overly optimistic, or are they reasonable requests, do you think?

SEC. ENGLAND: Mr. Allard, I expect in this '10 budget we will look more carefully at those numbers to see exactly what the basis for those numbers are. The Navy ships right now, operational ships, are, I believe, like, 280-some ships. The Littoral Combat Ship, which the Navy was planning to build 55 -- I think they still are, but they basically had a setback, a delay of some couple of years on that program. So they do have a way forward to the 313. The way forward, however, in the out years does require more money than we presently have programmed. So that is an issue in terms of achieving the 313.

The Air Force issue -- they do have older airplanes. And unfortunately, I mean, a lot of money was spent on a relatively small number of F-22s at a very high cost. And they do not begin to recover until the Joint Strike Fighter comes along, which is a more affordable, what we call fifth-generation airplane.

So these are valid concerns. I will say they're concerns we face every year in terms of trying to get all the demands fit within the budget. But we will look at that more as we do the '10 budget and better understand their requirements.

SEN. ALLARD: Just one final question, if I may, Mr. Chairman.

Are the services now feeling any adverse effects from the failure to provide the $102.5 billion of the supplemental request this last year?

SEC. ENGLAND: Tina, perhaps you can help me here.

I do know they're having some effects because we're not placing all the orders we would normally face. But I expect that will become a much more significant problem here in a couple of months. But what we would like to have is continuity of production, continuity in our facilities in terms of depots, et cetera. And when we have uncertainty of funding, you're not allowed to commit funds in advance. You know, it's -- (inaudible). We're not allowed to do that. So this does cause a lot of disruption.

We looked at a few programs here just recently. I know in just a couple of months we're going to be at the point where we will be uneconomical in terms of some of our ongoing maintenance programs.

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