(MODERATOR): (inaudible) Crenshaw, Mrs. Kate (inaudible), representing Senator Bill Nelson and Adele Griffin, representing Senator Marco Rubio. Thank you for joining us today.
Ladies and gentlemen, it is my distinct honor and pleasure to introduce the secretary of defense, the honorable Chuck Hagel. The secretary has had a lot of time at the service of the nation, both as a combat veteran in Vietnam, where he earned two purple hearts and distinguished service across every facet of national leadership, is a successful business leader, a senator, an educator, a husband and a father. Please join me and congratulate -- in welcoming the 24th secretary of defense, the honorable Chuck Hagel. (Applause.)
SECRETARY OF DEFENSE CHUCK HAGEL: Captain Caldwell, thank you, and to all of you, thank you for what you do and your families. We are grateful for you service and your commitment to our country, and particularly your families. Families I think always are the ones who get the least recognition, but in many ways, make the most significant contribution. It is the families that keep us together and ground us, advise us, bring reality to our lives and support us and inspire us, so please give our thanks to your families.
Congressman, congresswoman, good to see you both. And our representatives here for our two senators, thank you. Please give my regards to the senators. Your congressional delegation from Florida is as strong and committed to all of you and national security as any delegation in the Congress, and certainly as secretary of defense I'm grateful for that, and I think you all know that.
But at a difficult time in the world, a difficult time in our country, it is more than occasionally important to recognize and inventory some of the things that have gone right. We still live in the greatest country on Earth. Gallup's latest poll numbers show that of the millions of men and women who intend to attempt to emigrate from their country this year, almost 80 percent want to come to the United States. In no other country do we find people beating down the door to go to.
We're imperfect. We've got problems. We've got issues, so as it's always been, but I say that to bring some reflection to a couple of things I want to talk about today and then we'll open it up to your questions, and that is where we are with the secretary of defense budget, your budget, my budget, our country's budget, the impact it is having on all of you, the impact it will continue to have on our national security and each of you.
I'm on a three-day trip, visiting bases and stations here on the East Coast to, yes, better educate myself on what is going on at all of our magnificent facilities where people work so hard to protect our country, and every job is important. Don't ever forget that. Every job is important. Everybody is important. The Navy couldn't fly without a lot of help. The Air Force couldn't fly without a lot of help. The Navy couldn't sail without a lot of help. The Army and Marines couldn't do anything without a lot of help and support.
And I make that point because I want to readdress that here in a moment, but at this time of, I think, dramatic redefinition of world affairs, which we're in the middle of, because America remains the strongest nation on Earth, measured by any metric. The world does look to the United States for leadership. It is not our role to impose, or not our role to dictate or to force anybody to do anything, but we do have responsibilities to our own security first, our own interest, and particularly no one in this room doesn't understand the next responsibility and that is to the next generation.
And that's what we do every day, is help prepare our country, our children for the challenges that lay ahead. That's probably the most successful layer and dynamic of the success of this country over 250 years, and that's what you're doing. We do that pretty well, and I don't know of a group of people who has done it better than this group, and the people -- the 3 million people -- that I have a great privilege to lead, civilians, uniformed personnel, Reserves, National Guard and their families.
I also understand the difficulties that our current situation is presenting to each of you and to all of our facilities.
But let me make one more general comment about world affairs, because we are all part of that. We are not disconnected from any part of the world. We certainly don't need to go back and revisit what happened on 9/11 2001 to make that point. As Churchill once said, "The resounding gong of reality." And we are still I believe, in many ways, adjusting from that period, adjusting from, cyberwarfare now is a new threat. I suspect very few people in this room 10 years ago would have acknowledged cyber as certainly in the top tier of most significant threats to our country. It is. That's going to require a different set of dynamics, and assets, and flexibility and agility from all of you, from us.
Non-state actors, governments, could bring down economies of countries without firing a shot, without sending an army across the border or sailing a navy into a port.
That is just but one example of the new kinds of threats and challenges we're facing. So we're all adapting. We're all adjusting. We're all sorting this out. We've never been this way before. We've never seen the kind of complications, combustibility, dangers in a world of 7 billion citizens, global citizens. We're part of those 7 billion.
And to further complicate it, demographers tell us that we will add another two billion, another two billion people, to the Earth over the next 25 years. That's not going to make the world less complicated or a world that is less intense in fighting for resources, space on the globe, opportunity and hope.
We can deal with this. We can manage this. We have the capacity, the people, the system to do that. And if no other reason -- we have a system that self-corrects.
And I know what my friends and former colleagues sitting here in the front row of Congress are going through. I'm not in that business anymore, but I have some sense of what they're dealing with day to day. It is a matter of prioritizing our resources. It is a matter of prioritizing our interests.
What's most important? Is education important? Is national security important? It is all important for our country and for our future.
My responsibility as secretary of defense is but one thing, and that is, assuring the president of the United States, the commander in chief, Congress, who represent the people, the people, that we can -- all of us associated with the Department of Defense -- secure this country. Committed to making America safe. We will continue to make America safe. We will guarantee that, and that is my only assignment. That's your assignment.
Now, beyond that there are many, many pieces to that -- all of our workforce, our commitment, taking care of our people, taking care of their families, the technological edge, wise stewardship of resources, how we're going to apply those resources.
And now I wanted to move into that resource base of discussion here for a couple of minutes and then we'll talk about whatever you want to talk about.
I said a couple of minutes ago I am out of Washington for three days visiting four different facilities. I was in Colorado a couple of weeks ago, two days visiting bases there. In Omaha three weeks ago, STRATCOM. And I try to do this as often as I can, yes, to help educate myself, understand more about what we're doing, our capacity, our problems, listen to you, but also to really listen to our people. And that's as much for me an important part of this job as just basically informing myself, because if I don't know what's on your minds, your concerns, your problems, I can't do the kind of job this country expects me to do, and that I'm committed to do. I need your help in order to do that.
Let me begin with a brief couple of thoughts about the budget. You all know we are going through a product of an act of law now. It's the Budget Control Act of 2011, which first over a 10-year period reduces the Defense Department budget by $487 billion. It was agreed to by the president, agreed to by the Congress. We started that process two years ago, so we're on that downward slope in doing that. We can do that. We are doing that. We are unwinding from two wars. We've unwound from one long war that cost us a lot of money and a lot of blood. We'll be paying the price for that war for a long time, especially with our veterans and their families. We owe to our veterans and our families that we take care of them.
We're unwinding a second war, the longest war America has ever been in. That, too, has come at a very high cost and price to you, because it is you, in uniform, who had to do all the fighting, and all the dying and make all the sacrifices.
I talked to a young first sergeant yesterday at Fort Bragg, at the family assistance center, and I said, "How are you doing?" He said, "I'm okay." I said, "What is it? What's your problem?" And he said, "I'm ashamed to tell you, Mr. Secretary." He said, "I froze up. I couldn't respond, anxiety in Afghanistan. I was a first sergeant and I just lost my ability to command and my ability and my presence." I said, "How many deployments did you have?" He said, "This is my fifth consecutive combat deployment, Iraq, Afghanistan."
Well, why are we surprised? You can't push human beings to a point where they don't break. They will break. And we are seeing some breaks. Predictable, no point in making excuses or casting blame. We are where we are. We need to fix it. We need to fix our force structure. We need to be smart in where we apply our forces and apply our power. We need to be wise in that employment. Because 1 percent of the American people have had to endure all of the sacrifices and make all of the commitments.
So that's also in the mix. And we owe those men and women and their families who made a commitment to this country to do what they did for us what we committed to do for them at the end. That's a priority. It's a priority for the president. I know it's a priority for the Congress. It's certainly a priority for me. And I think everybody in leadership, in this institution.
On top of the $487 billion that we are taking, there's another part of that Budget Control Act, which is referred to as sequestration. So this year, FY 2013, we're taking an additional $37 billion cut that wasn't planned for, and so we're not even prepared for it.
And as we roll into fiscal year 2014, which begins October 1st, we now have continued the very real probability that sequestration will continue. That means for the Department of Defense a $52 billion additional cut for fiscal year 2014, unless the Congress and the president come up with an adjustment to that current law.
Soon after I became secretary of defense I asked our leaders to conduct a strategic choice management review, and I asked the deputy secretary of defense, Ash Carter, as well as the chairman of the joint chiefs of staff, Marty Dempsey, to head that review. First thing I said was what the objective was, and the objective of the review was look at every part of our capacity, our system, every dollar that goes out, every commitment we have, I want to review. Is it necessary?
We know we're going to have to make some cuts. We know that right now. But where are our priorities? Are schools our priority? Is readiness our priority? Combat power our priority? What's our priority? Because we know we're going to be doing with less, and probably much less. We weren't prepared. It's nobody's fault. It's what it was.
I presented the president's budget of 2014 as all budgets are presented. Our members have dealt with this for many years. So I presented a 2014 budget. That budget is different than the sequestration possibility, probability of $52 billion.
So what I said in the review, I want you to review the probability of how we would prepare and plan starting in FY 2014 for this department in having to endure another $52 billion cut. Now it wasn't a blueprint to exactly how we do it, but we better get on some high ground and start figuring this out, because that's what's coming unless something changes with the Congress and with the president.
Second, I want you to continue to look at carrying out the 2014 budget plan that we presented, and then I want you to review something in between, if there could be some kind of compromise in between. I asked the review leaders to look at those three things as the objective. I didn't need all the detail. We didn't have enough time for detail. You don't put a -- as you all know, many of your are budget planners, you don't take a $600 billion enterprise and figure that out in three months -- it doesn't happen that way. But we better get some general plans on deck here if we have to do this. They came back on time.
And the other part of that review was this: I want everybody involved. I want our senior military involved, and they were, our chiefs, our combatant commanders. I wanted our base commanders. I wanted our senior enlisted, and I wanted our junior enlisted. Nobody was shut out of this process. I wanted everybody's input into this.
I also said -- there third point I made was, we're all going into this together. We're coming out together. We're not going to go into, "Well, this is my budget, and this is your budget, and therefore I've got more money in my budget, so therefore," for example, "I don't have to furlough, but you guys do."
Let's just take one example. The Army budget is in the worst shape. Well, it's not figure -- it's not hard to figure out why. It's the Army, in numbers, in budgets, in mission that has been at the lead in both of these wars. Marines have been there, yes, absolutely, Air Force, Navy, special ops. But the Army has taken the bulk of the budget on both those wars. So the Army's budget is going to be not in as good as shape.
Now the other thing about that was I was not going to allow us to get into, well, let's blame somebody else for our problems. Well, you mismanaged your budget, I didn't so therefore I have money and I can do what I want with it. No, we're in this together.
And I said to the chiefs, the first day we sat down -- and the secretaries -- "I respect and recognize your responsibility to each of your own services. You have that responsibility and you have to be true to that, but you have a higher responsibility, a higher responsibility, and that is to the entire enterprise, but more important your higher responsibility is to the country."
I used to say more than just once when I was in the Senate, As you all do, as the congressmen do, I took an oath of office to the Constitution. I didn't take an oath of office to a political party, or president or service. I took it to the Constitution, and that is our highest authority, and so that in the end, at least for me, has always been the defining moment on how I voted or how I've done anything in government.
And I wanted to make sure that everybody had some sense of that within the Department of Defense, because we all have different roles to play. I get that, and that's as it should be. But in the end, we've got to be together, because if we're not together at a time like this we will get picked apart, and it will hurt our country. It'll hurt our defenses.
So I know this has been difficult for everybody, and it may well get more difficult.
One last point on furloughs and we'll open up and talk about whatever you want to talk about. When we first started looking at this, when I became the secretary of defense five months ago, the comptrollers of all the services, our comptroller in my office, all our money managers, I asked them to come together. I said, "What do you think? What are the options we've got if this continues through this year, 2013?"
One option they came back with is we're probably going to have to furlough most all of our civilian employees 22 days in FY 2013. You know we have 800,000 civilian employees. Many of you were part of that. I said, "I can't do that. We've got to go back and find better ways."
And everybody worked very, very hard to find betters numbers on this. But in the end, I had to make all my final decisions on readiness, supporting our warfighters and preserving as much combat power as I could. I could not take our readiness down any further, any deeper than where we are. I just couldn't do it responsibly.
We are already, as you all know, not flying a lot of planes. We're not doing any new training in the Army. We're not sailing a lot of our ships. This is hurting our readiness terribly. It's hurting our readiness now, but it will really hurt our readiness into the future if we don't get this turned around and some of these adjustments are going to have to be made. You can't buy back readiness. You can not buy back readiness. So I'm being as brutally honest with you as I can be. It's an obligation that all leaders have, is be straightforward.
But, I also want you to know I am doing everything within my power to reduce this hardship, so I announced as you all know, a couple of months ago, that I have made the decision 11 days furloughs for most of our civilian leadership. We've exempted about 150,000, some here, based on the priorities of safety, security, all the other priorities.
The other part of this is, I have given total flexibility to all of our commanders, all our senior civilian leadership, as to how they want to have the flexibility, should have the flexibility, how they want to handle -- how we implement this. No matter how you do it, it's not easy; it's difficult. I understand that hardship this is putting on families. If I could do it any other way I would've done it another way. Maybe we can do it before the end of the fiscal year better. Maybe we can get lower than 11 days.
But I'm not going to mislead you. I'm not going to come out here and tell you something that may not happen, but I'm doing everything that I can, and I know it's not good enough. But we are doing everything we can. I cannot cut any more in our readiness.
So I said I -- in reference to the budget negotiations, I'm out of that business. I'll leave it to the policymakers. I've got one responsibility, and I've got to be responsible for the security of this country, along with you, and I will continue to do that, and do it as responsibly as I can.
I want to thank you all again for what you're doing for our country. I'm aware of it. I know it. The president knows it. The president's very aware of it. And no one is more upset about it than -- than not only me, but the senior leadership of uniform leadership and our civilian leadership. And I know your leaders here feel the same way.
So I'll be glad to respond to whatever questions. Yes, sir? That way everybody can hear your question. Thank you very much.
Q: I heard you talk about your $52 billion target next year.
SEC. HAGEL: Well it's not mine. It's a $52 billion sequestration number that's reality. It's in law now. It's going to happen. Actually starts in January 1st, but it's in fiscal year 2014, which begins October 1, unless there's a change.
Q: I'm sure you realize how disruptive the furlough is to our productivity. So I'm hoping that we're not going to do it again next year. So what I wanted to ask was in your planning for FY '14 have you planned for a reduction in force? And if so, is it going to be a targeted reduction?
SEC. HAGEL: Well, we had to prepare a plan for every contingency. If we have to take a $52 billion cut in 2014, there will be further cuts in personnel, make no mistake about that. I don't have any choice. We took a $37 billion cut this year and you see the consequences of that. And, if you take a $52 billion cut there'll be continued significant and serious reductions.
On your point about losing skillsets and it goes back to a point I made about readiness. You can't buy back that readiness. One of the big concerns I have, yes, the tremendous hardship this is putting on families and people. But I'm also concerned about losing skillsets. Some of our best people with this uncertainty that's hanging over us all, and I can't give you a straight answer. All I can give you is we're planning for the worst.
We're planning for a $52 billion cut. Maybe it won't happen. Maybe it won't happen. But we don't have any exact plans right now to say okay this is the way we will do it. We're preparing; have to. We've looked at the general numbers on this. We've looked generally at what we will have to do to accommodate an additional $52 billion cut.
And, I don't have to tell any of you, there's little good news in that. But the skillset, not unlike an industrial base; you start losing industrial base capacity, especially this facility knows all about that because contractors go away. You will find contractors focusing on new markets in Asia, the Pacific. The ripple effect of this is very, very serious. And I think we're just at the front end of people understanding this.
And I hear a lot of nonsense in the press and other places, talk shows about what's the big problem here? You guys said it was going to be a big problem. We're just at the front end. We're just at the front end of what's coming here. And I will never needlessly scream at the top of my lungs about disaster and we will have to undo our defense capabilities. I'll never do that.
First of all, that isn't true because we will defend this country. But we think through this a little bit, too. What are we saying to all the bigger audiences out there in the world who are allies who have questions about can America fulfill its commitments to our security and to our partnership and to our relationship?
And on that point, one of the strong approaches we have been taking before I got to the Pentagon, but it's the right approach -- I talked about it in the Senate, and I'm sure these congressmen have as well -- enabling our partners to do more around the world. Training, assisting, leading, so we don't have to put Army on the ground. So we don't have to be essentially the occupiers. Enable our partners to do more, be better. And that's the way of the future -- we're still going to have a big army. We're still going to have big facilities. We have to. But we're going to have to be far more agile and flexible and wiser in how we employ our power. And that isn't only a necessity, but it's just a reality. Thank you.
Q: Sir, you said you allowed the (inaudible) commanders to be able to have much flexibility in doing the furloughs. But my experience with the furlough process indicated it was extremely restricted. And I know of a couple of examples of some very reasonable (inaudible) requests that were just summarily denied. And it seems to me that since this has come from such a high level that perhaps commanders are acting much more aggressively through to limit any relief on furloughs then they might otherwise if they didn't have so much pressure. Is there something we can do to allow for the commanders to sometimes use a little more reason?
And like for instance, if you have an FMS employee who's not going to be charging domestic funds this year, and all of a sudden, we put them on furlough because he happened to work like 10 percent of his time on domestic funds. But the person's not even going to work domestic programs for the rest of the year and is scheduled to be on FMS. You would think that we could make that decision real easily. It just seems like a no-brainer because it has no impact on domestic spending. Yet because of the rules, we've just summarily denied removing the furlough from cases such at that.
SEC. HAGEL: Well, thank you. First of all, I don't know the specifics of what you're talking about, but I've got some people who are traveling with me. We'll get your name, get the specifics, and I'll look into it. Because I don't know what you're talking about specifically.
But let me address beyond that, and we'll get back to you. Okay? When I talk about flexibility, that doesn't mean we're going to accept every commander's idea. Can't. I've seen a lot of the local commanders' suggestions. I've seen a lot of civilian leadership's local suggestions. I haven't seen them all. Seen a lot of them because I asked to see a lot of them. A lot of them have come in. A lot of them have been denied.
Well, of course. Because almost all of them had some variation of an exemption or an exception. And I get that. Of course, I get that. But that doesn't mean they weren't part of the process.
Now, I'm not saying the process was a hundred percent. I suspect -- I've been around awhile. I've done a lot of things in my life. I've never found a one hundred percent process. Maybe someone directing one, and I applaud you for that. I would some kind of recognition. It will have to be less than $10. But whatever, we'll give it to you.
It doesn't happen that way. Our processes are imperfect. And if someone has been denied their right to make a proposal or idea, then, yes, I want to know about it. But if it's just a matter of their ideas weren't accepted, it doesn't mean they were shut out. Their ideas weren't accepted.
I recognize that these things are different for everybody. I recognize this is difficult and I know there is going to be a perception of unfairness no matter what, I get that. And in certain cases, there probably will be, there probably will be.
I'm not apologizing for it, but I'm saying I just recognize what you're saying. If you'll give me the specifics of what you're talking about, I will assure you that whatever those specifics are, get factored in, and I'll know about it, and I'll see it. Is that fair?
Q: Yes, sir.
SEC. HAGEL: Okay. Thank you.
Q: Mr. Secretary, my name is George Smith. I represent the Federal Managers Association (inaudible) executives throughout the federal government.
I've got a few comments that our office has sent to your office as well as some excerpts from the Defense National News, whereas senior military defense leaders have repeatedly stated that more and smarter cuts can be made if they have ability to make hard choices themselves rather than accepting the arbitrary across-the-board cuts.
So if you really want to remove the waste from the Pentagon, allow the defense leaders to do exactly as they're suggesting, to make the hard choices for cuts themselves, being that they know what the true requirements are down on the floor.
As of right now, inflexible cuts, we already are seeing that -- are causing damages that you stated earlier throughout the capability and other agencies that support war fighters. It only worsens in time, that this is truly the front and will only get worse, as you've stated again.
So recently the House passed 933, which is a bill which allows the DoD flexibility in order for them to manage how the furloughs work. We really should look at strategically how we can support the war fighter if not impact them, and look at areas at Pentagon that we can't have cuts that don't impact the war fighter.
I realize that it's a tough task at hand, but it's one that has to -- we have to get the defense leaders and your senior leadership those opportunities to make those cuts based on their knowledge.
And in closing, if the White House and lawmakers fail to lead, then it's up to the senior leadership and military to make the recommendations that deliver maximum capability for available resources as well as targeting personnel reform.
So on behalf of the Federal Managers Association, we ask that you make a right decision in supporting men and women as we know -- as the war fighter, who put their lives at risk every day in this country.
SEC. HAGEL: Thank you. I agree. Let me address a couple of the specific points you made.
I have announced, General Dempsey has announced that we have directed a 20 percent across the top cut in our offices, the Office of the Secretary of Defense, and General Dempsey's Joint offices, straight up 20 percent across the board.
That isn't going to fix the problem. But two things, one is, yes, everybody has got to do their part. I mean, I've got senior people here, one individual, for example, the director of public affairs for the Pentagon, George Little, who is here, he had his furlough day Friday.
Our senior -- my senior scheduler, who is in the office with me next to me, I think she was out on furlough yesterday. Now -- and by the way, not to congratulate myself, but I long ago said I would take a 20 percent cut in my salary. So has Ash Carter, the deputy secretary.
Now I know that's not a big deal. But there is an optic here that I think all our people should expect us at the top to have some sacrifice too. As to your other points, your other comments, we are going into that low-hanging fruit overhead, management.
We have plans we're looking at. We've got a lot of results from the review on consolidations. We'll be announcing some of those by the way. We'll be announcing a number of things here in the next few months to do exactly what you said.
So everybody is going to have to do something here. Everybody is going to have to pay a price. Everybody is going to have to make a contribution. But I appreciate what you said in support, thank you.
Q: Good morning, sir. I'm (inaudible), I represent most of the federal workers here, wrench turners. (inaudible) review what you're talking about on the drawdown of all the military -- of all four militaries, each facility has been here for over 60-some years when the military men and women get out of the service come and work here.
So if we have 800,000 federal workers and we're going to start cutting those down. We've got to hire -- average work person's age is like 55 years old. So if we've got to get these folks to retire and forced out, I just wondered if that review planned, if there is anything in there for buy-outs, to get rid of (inaudible) or the people out of active duty that are going to be forced out can also backfill some of these jobs.
SEC. HAGEL: Yes. Well, what you just noted were some of the specifics of if we have to go specifically into that direction on buy-outs and reduction in force and so on. And first, let me make just a general comment. You know this, and I suspect everybody in this room knows it.
This is not a good way to do it. You don't save any money at the front end when you RIF [reduction in force] people. In fact, it costs you more money. It's just a dumb way to do it. Sequestration is an irresponsible deferral of policy-making.
But we are where we are. And I understand what you said about RIFs and the buyouts. The uniform military, just to give you another piece of this, as you know, will be coming down, because that's all part of the law.
And by the way, I support that. I think that's -- the Congress did, the president did. I mean, we're going to be out of two wars, big wars, big, big wars. And I don't -- this was not my decision. I don't think we're going to jump right in to another big land war.
The president and Congress may decide that otherwise. I don't think that's going to happen. But we've got to be prepared for everything. So as you bring our uniform military down, we're moving down to, right now, 560,000 Army down to 490, could go below that. But right now 490 is the deal.
We're reducing -- marines are coming down to what, 187, something like that. And so on and so on. But that's a responsible glide path that you can use and we can accommodate and we can manage.
It makes sense. What has happened to us because of sequestration is abrupt. It's steep. It's deep. It's immediate. And it's going to hurt our investment accounts, our technological edges here that we have. We're going to have to do away with some of that. We don't have the money.
The compensation piece is a huge piece of our budget, about half of the budget of the Defense Department is retirement benefits, Tricare, health care, pay, so on and so on and so on.
And that will be touched too. That's not going to go untouched. To your point earlier about, where do you get the money? You don't get the money and the overhead at the secretary of defense's office, you get -- you need billions and billions of dollars, or you go where Willie Morris went when he was asked the question, why do you rob banks? It's where the money is. We'll be forced to do that.
All right. Everybody is waving a red flag, white flag saying, we've had enough of him. Thank you for giving me an opportunity to say hello and to thank you, and an opportunity to try to explain where we are, if that will change anything.
But I hope at least you've gotten if not a better understanding, some sense of kind of what we're doing and why. We welcome your thoughts. We'll get back to you sir on your specific questions about anybody not listened to or denied.
Because I don't want that to happen. I instructed that not to happen. So if there's a problem there we'll fix it.
Thank you, very much. Thanks.