SECRETARY OF DEFENSE CHUCK HAGEL: Thank you very much. Sit down. Thank you.
Colonel, thank you. Thank you for your leadership and the time you have spent with me last night and this morning, as well as the other leaders here in Charleston. I'm grateful for what you do.
I want to thank each of you for what you do and also acknowledge how important you are to the security of this country. And in particular, I want to thank your families. Families often don't get the recognition that they deserve. I think everyone in this room knows how families anchor who we are, what we do. They balance us. They inspire us. They tell us occasionally when we need it, "You're going in the wrong direction." Certainly my wife does. I'm a much better person today for that, as every husband here is, I'm sure.
But I'm serious when I acknowledge the families, because it is the families who have to hold things together when so many of you are gone and doing the nation's business, so thank you very much.
I also want to thank the community. I am well aware, have been for many, many years how important this community is to supporting you, supporting our country, and our national security. It is a keystone and very much a foundation of what we do to protect our country.
So to our civilian leaders here this morning -- and I had an opportunity to meet with some of them earlier this morning -- I want to bring you greetings and also our appreciation. We couldn't do this without local community support, and this is one community that has never failed in that area.
I also want to thank your congressional delegation for their strong support, Senators Graham, Scott, for what they do. I worked with them. I was in the Senate for a number of years with Senator Graham, traveled all over the world with him, so I am well aware of their commitment, certainly to their state, but to the security of this country and all of you.
Your congressmen -- I think you have about three congressmen that have some responsibilities for this part of South Carolina. Congressman Clyburn, who has been very, very supportive and important. A new, but not a new congressman, Sanford, and Congressman Davis. So I want to acknowledge them and their support for what we're doing.
I'm here on the third day of a three-day visit to our bases and focus in the southeastern United States, Florida, different bases in North Carolina, and, of course, here in South Carolina. I try to do this as often as I can, first, because it's important for me to understand you, understand what you're doing, have a better appreciation for how each component of our large national defense structure fits, how each works, integrates into our overall security, and the only way I can do that is I have to come out.
It's also a particular relief for me to escape Washington and see real people and come out and deal with real people and acknowledge those real people who make it all work. And I'm not unaware of any of that. As I said, I used to be in the business of representing people for 12 years, a privilege I had as a United States senator, and nothing is more important than the people you represent, and certainly that's the case with each of you as leaders in this room, who you represent in your particular components. Those people are most important to you, but they have to fit into a larger objective, and that is the security of our country, which you do magnificently well.
I also have come out -- and I was in Colorado a couple of weeks ago. I was in Omaha three weeks ago -- to have an opportunity to address all of you and explain a few things at a difficult time and open it up questions and whatever you want to talk about, questions you have. I think leadership is as much about being available and being out where the people you represent are and not hiding in Washington, what the Defense Department and our country are going through right now with sequestration, with budget issues, probably not going to get better, is more than just numbers. This is not just some people in a comptroller's office figuring out numbers.
It is numbers, yes. But this business, like any business, is about people. And you deserve to have your leaders be with you and come out and talk to you and listen to you, listen to you, primarily.
And I wanted to take a minute or two before we get to your questions to explain the process that I used right after I came into office and some judgments that I've made as a result of that process and then give you some sense of where I think we're going, because I think you deserve that.
First, I will never lie to you. I will never mislead you. I will always tell you the truth. I will never give you any false hopes about anything. I'll be very direct.
I said to the chiefs and the secretaries and the senior enlisted the first day I was in my job, the first people I went to, to meet with were the senior enlisted of each of our services. Not that I don't like generals or admirals, I do. But the largest component of our force structure are enlisted.
And I've always believed you start by listening to the people who are charged with doing the most work in the biggest numbers. And, again, that has -- that's no reflection negatively or any way on officers or generals or admirals who lead. It's a balance. You have to give equal time, you listen equally to enlisted -- junior enlisted -- which I meet with junior enlisted individuals once a month privately in my office for lunch. Nobody else in the room, just E-5s and below.
And I listen equally, obviously, to our commanders, our combatant commanders, our chiefs, our secretaries, and respect all of them immensely. You all have given your lives to this country. I'm not unaware of that. The president of the United States is not unaware of that.
But when I got to the job I'm in now, which is a tremendous privilege for me, and very proud I have this privilege, to be part of your team, I had to make some very quick assessments on some realities that were facing us. And that reality that was coming right down the track was what has been referred to as sequestration.
Sequestration is part of a deal that was made in the Budget Control Act of 2011. You start there. The agreement made by the Congress, by the president, that we would cut the Defense Department budget $487 billion over a 10-year period, and we've started that process over the last two years. Our force structure would come down in our services.
Obviously, we have unwound from one very long war, which was very costly in blood and treasure. We are unwinding from the longest war we've ever been in. And as you do that, not unlike any other time in the history of our country -- World War II, Korea, Vietnam, Cold War -- there are ramifications and consequences to budgets, to capacity, capability, priorities. Still a dangerous world. Maybe -- maybe more dangerous today than it's ever been, different kind of challenges. So agility, flexibility, different dynamics are always in play -- are always in play.
So that is ongoing, has been ongoing. But what I don't believe many people expected to happen was the additional piece of that agreement, which was the sequestration budget control -- the caps, the spending caps -- would be implemented if there was no further agreement between the president and the Congress. That meant, as you know, this year we are taking an additional $37 billion cut in this fiscal year, which lasts for another two-and-a-half months.
Now, what happens in 2014? I presented the president's budget. It's the way it works. We know what we have in that 2014 budget. We prepared for that, just like we always prepare and plan for budgets. But the reality is we are headed into 2014 with the law being that we're going to take an additional $52 billion cut.
Now, that's going to happen unless the Congress and the president come to some adjustment, understanding, compromise to change that. That's going to happen. When I got to the office of secretary of defense, I had to do something that would start to prepare all of us, this institution, three million people in this institution, plus families. So I asked the deputy secretary of defense, Ash Carter, the chairman of the Joint Chiefs of Staff, General Marty Dempsey, to oversee a process which I referred to as Strategic Choices and Management Review.
And it had three main objectives, but within those objectives, there were a number of things that I asked for. But the three objectives were to give me options, contingency plans, for the Department of Defense if we were going to have to, in fact, live with another $52 billion cut, because we're not planned that way. We planned everything for 2014, the budget that was presented in 2014.
What does that mean? What's going to happen here? How do we continue to support all of our efforts, and that is the security of this country. That's our only mission, is the security of this country and our national interests. That is my primary focus and concern -- has to be. It's yours -- has to be. That's our role. That's our job. That's our objective. That's our responsibility.
We know -- know what 2014 looks like based on those numbers, because we've got plans for that. Then I said I need some options and contingencies with something in between the budget sequestration. And by the way, the budget sequestration, right now the law is, not only do you -- would we take $52 billion in new cuts in FY 2014, but this goes out another eight, nine years at $50 billion cut a year. I mean, that's what's on the books right now.
I had no choice but to help prepare this institution. I would fail you, I'd fail our country if I didn't do something to start preparing us, if this -- if this happens. So I ask them to do this in three months.
Now, a couple of things that went into that. First, I said I want everybody involved in the review. I don't want just numbers people in the comptroller's office. I want everybody, but that means our uniform military leadership, our civilian military leadership, all of the components of our armed forces, senior enlisted, lower enlisted, combatant commanders. Everybody had to have a voice in this, and they did. And they did. No one was going to be happy; I get that. But my job wasn't to make people happy. My job was to prepare you, this institution, the country for what may well come. That's my job. So that was the first thing.
Second, I said everything's on the table. We do know this. Regardless of what comes out of 2014 or doesn't come out of 2014, this institution's going to be living with less. That's already started two years ago. And if there is an adjustment or a compromise or a change, even to sequestration, it's still going to mean less. It may not be $52 billion. It could be -- I don't know what the number is. We know that. That's going to happen. So we better prepare how we're going to do this.
So every -- every up and down and cycle and end of every conflict that we've been in since World War II, we've been through these things. But the big difference for us now is the steep, abrupt, large cut, which gives us no time to make the responsible adjustments that we need to make. I mean, we're making the responsible adjustments as a result of the first part of that Budget Control Act, bringing our force structure down as we withdraw from Afghanistan, different mission, so on. And we're doing that. We can do that. And we're still going to protect this country. That can be done.
But when you're faced, our leaders are faced, our chiefs are faced -- commanders at every level, our civilian leaders are faced, you know all the dynamics of this. We had to close commissaries once a week and the furloughs and so on. We don't have any choice. Something's got to happen here.
So let me address the furlough issue. So we knew right from the beginning that some of these hard choices were going to have to be made for 2013. When you take a $37 billion cut, that wasn't anticipated, wasn't planned for, now, you can have flexibility in -- in the reprogramming of accounts, which we need, which we ask for all the time with Congress, but that doesn't -- that doesn't make up for the $37 billion.
So what essentially we're doing is we're eating into readiness, and you can't buy back readiness. It's going to cost you more at the end. You know all these things. But what we're trying to do is -- is essentially move investment account money into operations money so we can, first, prioritize what's most important, and that is the men and women serving overseas, especially in combat. As you all know, all of our active-duty uniformed military have been exempted from this. Priorities on education, safety, other priorities.
So we've had to prioritize what we -- we thought we could do, what we couldn't do, what we couldn't compromise. There are veterans programs, family programs. Those are critically important. So we went through a long process, and the chiefs were involved, everybody was involved in this.
The furlough question came up early on, and early on, it was suggested that we may have to furlough civilian employees 22 days. And so we talked about it, and I said that's the last thing I want to do is furlough people, for the reasons that you all know and are undergoing. I mean, it's unfair. It's wrong to do this to families, to people who've given their lives to this country. It's the wrong way to do it.
So I said, let's keep going back and back, and we did. Finally, I got to a point where I had to make a decision, and I made a decision that we would furlough 11 days. The reason I did that, I could not go across the readiness line any longer. We're going to be able to save about $2 billion from those 11 days of furloughs.
And I could not find it anywhere else, believe me. I could not find it anywhere else. I couldn't cut into furloughs any more. We've got planes not flying now, have been, and no new Army training for months. Ships are not sailing. I mean, you know, because you're right in the middle of some of this. Maintenance schedules, all the rest. So we have stopped overhead issues. We have stopped almost everything that we don't critically need to defend this country, and it may get worse. It may get worse.
But I wanted to explain to you the decision I made and why I made it. I wish I would not have had to make it. It's the last decision I wanted to make. Now, maybe in the end, before 2013 is -- is up, maybe we can find a couple of days in that 11 to make it better. I can't promise you that. I wouldn't promise you that, unless I knew I could fulfill that commitment, but we're still trying to find ways to make it better.
I know it doesn't change anything. I know it doesn't make you feel better. But you needed to know from me, because I made the decision, why I made it and what the realities are and then anticipation of what's ahead. Let me address that very quickly, and we'll open it up to talk about whatever you want.
First, the worst thing any institution, any individual can be living with is uncertainty; in your private lives, your personal lives, your public lives, your professional lives, is uncertainty. But that's where we are. We are living with uncertainty -- uncertainty about what is going to happen.
I can't influence that, you can't, other than by informing our policymakers and educating our policymakers as to what the consequences of this are presently. We're just at the front end of the consequences here, what's coming, if we are going to have to play into 2014 and take a $52 billion additional cut. There will be very significant consequences, and you're already seeing them, but it's right at the front end.
I hope that the Congress, the president, Washington, can come together before we start 2014. But I can't lead this institution based on hope, based on I think, or based on maybe. You don't turn a $600 billion institution around in three months. This is as complicated an institution as there is in the world. I mean, if there is one bigger and more complicated, I would very much like to know. There isn't one.
And then you look at the bottom line of any leader, starting with our Constitution. It's the safety of the state. It is the security of a nation. That is the primary responsibility of any leader.
And so we live -- we're living with that uncertainty. I know that. I recognize that. I'm concerned about that. I have some sense of consequences of losing skill sets in our civilian workforce and other consequences. I'm not unaware of that. I hear it. I'm out here, as I said, on my third day. I'll be doing more of it.
I've been out in the last two months. I know that. I listen to the stories. It's imperfect. The process is imperfect. The process I put in place to get a better understanding is imperfect. I know there's unfairness. I know that. We're trying to correct every one of these. That's why I've built in waivers, and we've exempted, I think, generally out of our 800,000 civilian workforce, we have about 150,000 or more exempted from furloughs.
We've tried to protect our educators. Our teachers are furloughed five days, not 11, but we've tried to organize that around summer schedules. If we can do better, we will. We protected accreditation of schools. We protected a number of things that we felt were absolutely essential; imperfect, I get it, but this is an imperfect business. And within the timeframe that we have to try to get ahead of this as much as we can, if this continues, then there's going to be more unfairness.
Sequestration is a mindless, irresponsible process. You know it -- I know it. And I'm hoping that our leaders in Washington will eventually get that and come to some policy resolution. I used to be in that business. I'm not in that business anymore.
So my responsibility is the security of this country, to you, people of this country, saying it straight, being very plain, and helping educate our policymakers to understand what's going to happen here if this continues, this mindless, senseless way to do something, if this continues to play out.
Now, let me add one last thing. I want to thank you again. I know this is difficult. This is a very, very difficult time for all of you and for your families. And I see the pain. I understand it. And I just really wanted to come out and explain why I took the action I did and then give you a chance to ask me questions or whatever you want to talk about.
So with that, thank you very, very much for what you do. And I'll be glad to respond to questions.
Q: (inaudible) question (inaudible) what might happen. You kind of answered that question by mentioning uncertainty. Has the possibility of furloughs potentially made that (inaudible)
SEC. HAGEL: Yes. If -- if we have to take an additional $52 billion cut, I mean, there's no other way to find the $52 billion. I mean, we know what we're going through now at $37 billion reduction. So -- I hope we can, as I said, see some adjustments, but I have got to be honest with our people. I've got to prepare our people. We've got to do the best job we can to plan for this.
But I've given a straight, honest answer. Believe me, I'm going to do everything I can and will continue -- and your leaders will -- to make this as painless as I can for all of you. But those are the facts of life.
SEC. HAGEL: Morning.
SEC. HAGEL: Oh.
Q: (inaudible) so they appreciate that.
SEC. HAGEL: Well, just to do a quick point, thank you very, very much for that. Former Congressman John McCollister got me started in politics. And I've said many times in many forums over the years that he was the role model for me, the ideal of how to do the job; honest, work hard, tell it straight, and listen to people. And he did it, and he was -- he was really my mentor.
Q: Yeah, they are a great family.
SEC. HAGEL: Thank you.
Q: Thank you. My question has to deal with TRICARE and TRICARE Reserve Select and the Federal Employees Health Benefits Program. Currently, as civil service employees, we're not allowed to join into the TRICARE Reserve Select program like every other drilling reservist and guardsman in the United States can. That causes some undue stress with our families when it comes time for being mobilized and then coming off mobilization and taking orders to support the war on terror and whatnot.
When can we expect maybe to see legislation or -- or the laws changed to allow us to select TRICARE Reserve Select as one of our viable federal employee options, like Blue Cross or the Postal Benefits Group and just add TRICARE Reserve Select as one of those options for us to use?
SEC. HAGEL: Thank you. And thank you for your service and your family's service.
This is a big, big area, as you know, health care, TRICARE and is appropriately important for everybody. There's no question that the entire field of eligibility, fees, and everything that goes in that is going to get some considerable review. It already has; it will continue.
How do we do it better, more accountable, all those questions? Your question specifically is one that's raised and one that will be part of the mix, I think, as we -- not just the Pentagon, because the Congress sets the laws, as you know, on this. I mean, we can propose, but we -- we implement whatever the Congress passes. So we work very closely with the Congress on these things.
But generally TRICARE, which would include your question, is going to continue to be part of the larger mix of evaluating all the questions about TRICARE. It is a hugely expensive program, as you know. It's a huge percentage of our -- of our budget. I mean, when you mix compensation, retirement benefits, health care, and -- and all that goes in that, that's about half of the entire Pentagon budget. To be able to fulfill the commitments that we've made to you and as you retire out, we're going to have to make some adjustments or the money won't be there, not unlike some of the entitlement programs in the civilian world.
Now, we can do this, I believe, smartly, without hurting anybody here. There are going to have to be some adjustments, whether it's co-pays and retirees and -- a lot of ways to do this in pharmaceuticals, different ways. There will be some changes. There's no question there will be some changes. But if we do it now, smartly, with some time, we can -- we can make it work without hurting people.
And the -- it's like anything else. It's like a health problem. The longer you let that health problem go, it doesn't get better. Then you're forced into an emergency room or an acute surgery hopefully to save your life. Well, you shouldn't let it get that far. And that's what we have -- that we're dealing with now on TRICARE. Your question will be part of that, is part of it, should be part of it. Thank you.
Q: Thank you. Thank you also for coming to visit. Mark Epstein, 628th Civil Engineering Squadron, installation management. I'm a Navy brat, 30 -- almost 32 years of civil service. My father was 20 years in the Navy.
I guess my biggest question is, you focus on security and the security of the nation, and I've really enjoyed contributing towards that process in the years I've served. One of the things that's challenged me is often I see the Department of Defense funding looking like it's expended on things other than our clear security, economic interests, international trade interests, and I'd like to know what you'd suggest we can do to help assure that we can help you focus on our true security, on our borders and protecting our people and -- and help avoid what appears to be expenditures for -- for economic interest or other interests that it appears the Department of Defense gets pushed to do through legislation or other -- other issues.
SEC. HAGEL: Yeah.
Q: Thank you, sir.
SEC. HAGEL: Thank you. And thank you for your family's service and your service. Let me address your question in this way. Without knowing the specific programs you're talking about, and I've got some -- my staff here, be glad to get your name and what specific programs you're talking about, and I'll address those specific programs, because I don't know what exactly you're talking about, but on a broader -- a broader context and framework of your question, which is a very good one. It's an important one -- let me start this way. And I'm not going to go back and replay history. It's over.
Has the Defense Department been guilty of wasting a lot of money on a lot of things? Yes. I think almost everybody, except maybe some of you don't agree -- maybe you think every dollar we've spent has been wisely invested, and that's your right if you believe that. I don't think the American people think that. I don't think the Congress thinks that. Your secretary of defense doesn't think that. So what does that mean?
It means we're going to have to be a lot smarter, a lot wiser, as I've already said three or four times in my remarks, prioritize what our job is. Now, that said, our economic interests are directly tied to our security interests. If a nation is not economically strong, you will have no options. It's like any of us. If you have no money, and if you have no prospects, you probably don't have a hell of a lot of options. It's not -- it's not difficult to understand that.
So our economic interests around the world are clearly defined by both our -- our security interests, the future of our country, and our defense and our freedom is also clearly defined by and connected to our economic interests. You can't separate the two.
Now, I think I recognize your points that you're making. That isn't exactly our lane. That's not exactly our responsibility. I get that. But to protect our interests around the world, give you -- I'll give you a good example, different canals around the world, what's going on in Egypt right now in the Middle East. Do we have economic interests in any of those areas, the Panama Canal, open sea lanes in Asia and the Pacific? I suppose you could technically say, well, that doesn't affect our security interests. I mean, that's -- Asia is way over there. Egypt's way over there. But it does, because we live in a world with seven billion people, all completely interconnected in every way. It's a global economy. We're going to put two billion more people on the face of the Earth. That's going to -- I don't believe -- give us a less complicated world. So our economic strength is vital to our security.
Now, that isn't to dismiss or diminish your question and your concern about other things, which I get, but I -- I do think it's important we all understand that, yes, this is our lane, this is our portfolio of responsibilities, but it is not disconnected from helping in every way we can protect our economic interests around the world. Thank you.
Okay, this lady right here.
Q: Yes, sir. Thank you for your time today. We appreciate you coming to Joint Base Charleston. I'm Sandra Walker. I'm from the 628th Medical Group in education and training. Today you've mentioned numbers, families, and a possibility of further furloughs in the future for F.Y. '14. With that in consideration, if we do have future furloughs, will we be protected in our -- the security of our jobs, in our retirement, in our security clearances?
I've taken a second job to compensate, because I have several children at home, and if we are going to have future furloughs, will those things be taken into consideration for the future of our jobs?
SEC. HAGEL: Well, thank you. And thank you for your service and your family's sacrifices.
I'm not going to get specific here, because I can't. I don't know. And I don't want you walking out of here, oh, my god, the secretary of defense says we're all going to be "RIF'd' and furloughed and so on. But I've got to be honest with you, too. So you've got to listen carefully to what I'm saying here.
Again, I'll start in answering your question with what I've already said. If we take a $52 billion further cut, of course there's going to be significant impact on our people. Now, how do we manage that? What do we do? If we have to do that, we'll probably be beyond furloughs. We're going to have to eliminate some jobs.
Now, I'm not going to get into how we do that or the specifics of that, but there is no other conclusion you can draw, because -- because we do have a readiness combat power responsibility that you cannot eat into anymore. We're eating into readiness now. We're robbing from investment accounts now for -- to keep our technological edge.
I mean, we're taking all these accounts. I just noted yesterday that we're going to be taking 20 percent across-the-board cuts in all headquarters; the Joint Chiefs staff, secretary of defense, services. There will have to be some very, very clear thing about consolidations of commands. I mean, this is -- this is what's coming if we don't get this thing resolved.
Now, I'm not going to get into any more of the details on that, but everybody has to understand that. And I think you do. And there's no good news. So I -- I completely understand what this puts you in the position, taking a second job, young children. And as I said, it just breaks my heart to see that. But we're doing everything we can to adjust to this and -- and see if we can fix it within our ability to fix it.
Thank you very much. Thank you.