tv Politics and Public Policy Today CSPAN March 11, 2016 3:00pm-5:01pm EST
project. i plan on looking at it myself, the first chance i get. again, thank you for your commitment to making that happen. thank you for being here today. this hearing is adjourned. >> thank you. this morning in florida, at a news conference, former republican presidential candidate ben carson endorsed donald trump. >> some people said, well, why would you get behind a man like donald trump? i'll tell you why. first of all, i've come to know donald trump over the last few years. he is actually a very intelligent man who cares deeply about america. there are two different donald trumps. there's the one you see on the stage and there's the one who is
very cerebral, sits there and considers things very carefully. you can have a very good conversation with him. and that's the donald trump that you're going to start seeing more and more of right now. and some people said, but well, you know, he said terrible things but, how can you support him? first of all, we buried the hatchet. that was political stuff. and, you know, that happens in american politics, the politics of personal destruction, all that. it's not something that i particularly believe in or anything that i get involved in. but i do recognize that it is a part of the process. we move on, because it's not about me. it's not about mr. trump. it's about america. and this is what we have to be thinking about. i have found in talking with him
that, you know, there's a lot more alignment, philosophically and spiritually, thanni i ever thought that there was. he'll speak to that. that actually surprised me more than anything, because i do recognize how a person's image having been greatly distorted, having been the victim of that, i probably understand it better than anybody. as the american people who we are focusing on begin to see the real individual there and those that are helping that individual, i think we'll be comforted as a nation. >> our road to the white house coverage continues tonight at senator bernie sanders campaigns in illinois, one of several states holding primaries this coming tuesday. he'll be at a high school rally in summit. c-span2 will have coverage starting at 9:00 p.m. eastern.
tomorrow we will have more road to the white house coverage as donald trump holds a rally in vandalia, ohio. hillary clinton campaigns in st. louis tomorrow. she'll be speaking about economic opportunity. live coverage of that on noon eastern, also on c-span. missouri has 71 democratic delegates available tuesday. the fight against injustice and inequality has been the work of
his life. bernie sanders. as a student he was arrested for protesting segregation and the racist housing policy of his university. he was there for the fight for justice. now he's trying to prevent misconduct and end mass incarceration. bernie sanders. from his youth to today, he stood with us. now it's time to stand with i
i'm bernie sanders, and i approved that message. in chicago we have endured a corrupt political system. and the chief politician standing in the way of us getting good schools is our mayor. if you have a presidential candidate that supports someone like our mayor, you have a candidate that's not willing to take on the establishment. bernie sanders is definitely not afraid to take on the system. he looks beyond that system and sees better possibilities for us. he sees that this is not the way it has to be. that is why i support bernie sanders. >> i'm bernie sanders and i approved this message. every day i wake up and play a brilliant, complex, overqualified, get it done woman who obsessively fights for justice, who cares, who gets knocked down and always gets back up. i make television filled with the kind of characters i imagine we all can be. strong but flawed.
human but extraordinary. our characters are on television. but the real world, the real world has hillary clinton. the real world has hillary clinton. the real world has hillary clinton. a bona fide rolls up her sleeves fights for what's right in it for you won't back down champion for all of us. that's why i'm with hillary. >> i'm with hillary. >> i'm with hillary. >> i'm with hillary.
>> join us. >> i'm hillary clinton and i approved this message. campaign 2016 continues on tuesday with primaries taking place in missouri, illinois, and swing states ohio, north carolina, and florida. live coverage of the election results, candidates' speeches and viewer reaction begins at 7:00 p.m. eastern. taking you on the road to the white house, on c-span, c-span radio, and c-span.org.
high ranking pentagon officials closely involved with setting budget priorities for the defense department offer an in-depth look at the process. they say striking balance between capacity and readiness is crucial in determining budgeting priorities. the center for strategic and international studies is the host for this event. >> thank you, dr. hamre. i really want to thank our distinguished guests for joining us this morning. i think this may be the first time that we've had this brain trust assembled at a public event ever before perhaps. and so i want to start, as dr. hamre said, we'll go in order of planning, programming, budgeting as you see here from my left to my right. so start with bob scher who is assistant secretary of defense for strategy, plans and capabilities. i got the title right? >> there you go. >> it will not fit into a tweet. >> not well. >> i'll tell you that.
we'll let you go first. give us kind of the strategic framework behind this budget request. >> sure. happy to. thank you. i'm honored to lead off. we like to think that we in policy and strategy often lead off and actually, frankly, with this secretary i think i will make the case that, in fact, we have. thanks to john todd, obviously, for bringing us all together. when you go through this process with secretary carter got here, it was pretty clear that he had a very -- he assessed there was a new security environment and wanted to figure out how do you change and adapt the budgeting process for dealing with that new security environment. he really gave us a very clear direction on the strategic imperative, excuse me, of putting forward a budget that makes sure our military is postured to deter, and if unable to deter, effectively deter, win the nation's wars.
he also was very clear about ensuring that we looked at what are called five evolving challenges. i hope you read the transcripts. you'll hear a lot of it repeated here. that really we need to be able to drive d.o.d.'s force planning and budgeting looking near term issues and long term issues based on those five challenges. as i think everyone knows but to repeat them here, russia, china, north korea, iran, and counter terrorism globally. and he was also pretty clear that you can't choose, you know, which one's more important. now, certainly one of the key areas to focus on he believed in his budget was to say that great power conflict is something that we hadn't done as much work on as we had done on other issues in the past and he wanted to clearly have a focus on that, but also that at any point in time united states should expect, the people of the united states should expect the
department can deal with any one of these five challenges with a $583 billion budget, which is what we put up on the hill. sorry, mike, i know that's your line but -- and that we need to be able to say that we can do more than one thing and more than one thing at a time and be able to address all of these challenges. so he was -- he's consciously didn't want to prioritize them. so i'm going to give a quick overview, again, and take a look at this, talk about the security environment and then hand it over. so first i think the budget you'll see and we'll talk about clearly reinforces the direction to make the military more full spectrum. so while we had, you know, 15, 14 years of dealing with an almost singularly focused on the very important role of forces that were in harm's way, that were in conflict doing the wars and the war fighting in iraq and afghanistan, this budget i would argue continues a trend but continues it more directly and
more consciously on understanding that we have to look at new things and new ways of doing things to deal with great power, adversaries, and the security environment we have. another big focus, which is in the budget but also is outside of the budget that i wanted to talk to you -- make sure you understand and get is the innovative ways, new concepts, how you deal with these risks is going to have to be different as the secretary said. we're not going to fight these the same way we always thought about fighting them 10, 15, 20 years ago. we have to be innovative and look at new approaches. third, a lot about -- that you'll hear about is balance. and i think we look at this balance in two different ways. one, is the balance in the mix of capability, capacity, and readiness for each of the military services and generally the direction was when in doubt bias towards modernization and
recovering readiness rather than force structure. that would universally apply because every case is a little bit different for each of the services based on what they've done and how their challenges are. that was a general focus. and then the second part is balance between resourcing today's fights and preparing for the future threats and conflicts. key to this is we will not be able to prevail in a future conflict against a great power if we don't start thinking, planning about it now, today. so when the secretary talks about war fighting posture in the budget and joint force, he's really talking about being able to deter and if necessary prevail against our most advanced competitors. and really that relies on having and being seen to have by all the ability to dominate a conflict that any aggressor would choose to initiate but i think there's been a lot of talk about this. i want to be clear that war fighting posture is not intended to be at the expense of global presence. this global presence is critical
to assure our allies, to be able to understand what we need to have in the region, to be able to -- whatever region that may be, to be able to bring forces into the region from elsewhere and so these things go hand in hand. the most credible way to make sure that you have the deterrence is to know that you can win but to know how you win, who you work with and how you'll get there. now the other piece of this is that the budget really does look at things that we're doing today. we understand we're engaged in many fights today and there is much in the budget that looks at that but there is, in fact, a gradual shift in relative terms from a force focused solely on today, to one that is also being able to deal with future risks. so as i look at the multiple regions, we know part this have is figuring out how do you do more than one thing at a time. again, the secretary has five things, that you have to be able to do, any one
of them, but you have to deal with multiple conflicts at any one time. as you're looking at this, we've really prioritized, as i said, these key posture pieces and key investments where we have had the ability to make modifications in the budget. some of these key capabilities are very focused on antiaccess and aerial denial threats, including investments in our posture in europe, modernizing fighter and air attack, undersea force research and development and the other things that jamie and mike will talk to you about. again, one thing which i know is a big focus, you've heard a lot about it, the third offset strategy. i think this reinforces the secretary's guidance in how we can offset some of the key capabilities that our adversaries and potential adversaries are building and how can we get over the sort of problems we face there in either numerical issues or salvo competition. and are we going to be able to come up with new technologies but
operations and organizational constructs to achieve advantages that significantly challenge the competitor's desire to limit our reach and not allow us to have access to those environments. so, we also -- i think i will talk -- i can talk more, but we also have a lot more about allies and posture and how we're working with allies, what our posture looks like and interoperability. some of the most notable stuff and largest stuff going on in europe but continuing posture issues in the asia pacific. so let me quickly try to get to each of the five challenges just a little bit. i think russia -- i think this budget took stock in the profound shift under way in the european security environment and what russia is doing to undermine the sovereignty of neighboring countries. figuring out what we do with russia in the near term and long term is a huge focus for us. we obviously have to work with our allies and partners. the strength of the nato alliance is something that has shown its work throughout the
years. we will continue to do that. a lot of what we are doing to support the near-term pieces is through the european reassurance initiative. while this was started last year, it was really bumped up over 300% in terms of budget figures for this coming year. 3.4 billion for eri and above -- i think we did 789 million last year. so this looks to do increasing military presence, armor brigade combat team and army rotational combat aviation bringing ace as well as service support enablers in a heel to toe fashion in the region. also looking at making investments in infrastructure, especially air fields to be able to account for the rapid deployability that we want to see. keeping some air force units there through era forces. also rotation deployments and exercises, we're trying to step
that up to increase operability with traditional friends and allies. long-term we're looking at advanced power projection environments that i know jamie and mike will talk about at greater length. these are useful in many cases for both russia and chinese advance capabilities but in some cases you have to tailor them to the ground environment versus the more maritime. also, there will be some pre-. -- pre-po within eri to move forward. china, we continue to work to ensure that as part of our rebalance to asia, which is not all about china but is also partly about dealing with potential adversary that we could see in china based on their behavior and their capability and what they are building. clearly they continue to look to try to deny access and restrict our freedom of movement in the area. so we need to take a look and have done so over the past number of years and we continue to look at where we have advantages and where we can
do things such as engaging targets at standoff range and emphasize our under sea capabilities. make bets on future technology that will be useful. we are going to continue and have continued in this budget to move forward on posture issues in the asia pacific region. we'll continue with australia. the philippines just came to the legal determination that edga continues to be legal and we're looking to build more infrastructure and access along with our partner, our ally in the philippines. and we'll continue thinking of things like dispersing our forces around making sure we have multiple areas to operate from and dealing with the salvo competition there in terms of how do you defend but also how do you look at hardening and other pieces for survivability in the pacific. iran and north korea, these are long standing places we've looked at. we are going to continue to make these investments, and especially there's some targeted ones in each cases that are
useful for particular problems, but in general we feel pretty good about these environments and what we can accomplish and some of the advanced technology that we think about, driven potentially by russia and china, will have an impact in these environments. finally, we did not forget about fighting global terrorism. it is an ongoing condition. we must place a priority focus and there are a lot of pieces in this budget from isr, munitions, weapons systems and looking at our future posture of how you deal with this, what will be an ongoing, and i argue generational set of conflicts in and around this area of instability. so with that, i will leave it off to jamie and others to continue. >> well, thank you, bob. and i appreciate you organizing this event, todd, and certainly
dr. hamre's introduction, it is a little daunting to do an unprecedented talk here because i think every talk has been done here over the years. it's great to be with two good friends here and to have a chance to represent the second p in the planning, programming, budgeting and execution process. this is a little bit of an odd spot for me because as some of my friends in the audience will recall, i started my pentagon career working in the organization that bob now leads in policy. my first job in the obama administration was the comptroller of the air force. i've had the budgeting and execution piece, i've had the planning and policy and strategy piece. now i'm charged with the interstitial, the programming. programming is probably the piece that is least familiar to folks who are not immersed in our department of defense minutia and our processes, but it's really about connecting the
broad goals of our strategy and of our operational planning with the capabilities, the capacity, and the readiness that's required to carry them out. it's about delivering comprehensive deterrence for the nation so that we we can secure a beneficial piece for the american people and for the world. but in essence what that means is i have to argue with both of these gentlemen regularly. i have to argue with bob when he's not being detailed enough and i have to argue with mike when he's being far too detailed and focused on minutia. in all seriousness, it's a process that necks down from broad objectives through to the specific dollars and cents that instain she -- instantiate them. it is a process that the department has been using now for over 50 years through various changes. it's a process that we have been
working inside the department to reboot, revamp, improve. part of what we are trying to do is tighten that linkage from strategy all the way through to budget, which is part of why you see the three of us spending a lot more time together than perhaps has sometimes been the case. what are the -- what are the details that make up that tying of resources to strategy, that tying of resources to the outcomes that the nation needs? as bob indicated, we had to start with critical objectives. one of the things that we had that was enormously powerful in the budget cycle, the program budget cycle that was just concluded was clear and early guidance from the secretary of defense as to the strategic priorities. he gave us that guidance early enough that we could charter some very specific and focused analytic efforts to get at the critical questions that turns into the details of the budget. so our deputy secretary
responding to the defsec's guidance was able to charter six strategic portfolio reviews last year. those strategic portfolio reviews were deliberately designed to reach across the different structures of the department. so not limited to one service. not limited in most cases to one domain, not limited to one weapons system or one appropriations lineup. it was designed to reach across all of the components. i'll talk about just one of those today to give you a flavor of how those informed the budgetary decisionmaking that mike ultimately led. and i'm enormously grateful to the work of my team in cost assessment and program evaluation as they co-led these six portfolio reviews with different stakeholders across the department. these really were the department's analytical crown jewels for this last cycle and were core to us aligning resources to the most critical challenges facing the department.
so, the one i'd like to talk about in a little bit of detail today is power projection, and the reason that we had a strategic portfolio review on power projection this year, building on power projection analysis in the previous two cycles as well is because we know the department has to be able to field the right capabilities in a sufficient quantity in order to provide that comprehensive deterrence for adversaries and potential adversaries around the world. potential adversaries need to understand and be very cognizant of the capabilities the united states can bring to bear if we need to defend allies, if we need to defend american interests. and whether or not those capabilities are up to snuff and make that potential adversary think twice is really at the heart of global deterrence. there were three major thematic findings in the power projection
strategic portfolio review that really got to the heart of how we invested our capability dollars this cycle. first, it placed a great emphasis on the ability of the united states to deliver effects from range. there's a lot of talk about antiaccess area and what that means. parts of that are perhaps overhyped but parts are very real. and one way that the united states can counter that is with long-range capabilities. the second critical theme is about disaggregating complex systems, extremely expensive systems, extremely valuable systems, extremely precious systems into simpler elements in order to carry out military tasks. there you will see as we turn to the program and the budget some
more speculatively speculative investments. the third principle is to leverage areas of sanctuary. if others are seeking to keep you out so that you cannot defend allies or defend interests, it's important to be able to act from domains or from means where you enjoy a relative sanctuary. bob mentioned the work and thinking in the department on what we're calling a third offset strategy. while this power projection, strategic portfolio review was not designed to prove or demonstrate it, you can clearly trace some of the same lines and some of the same thinking really tying in to how we constructed that portfolio review and the findings that came out of it. let me tick through a few of the specifics and, again, i think mike will talk about the -- how things were instages a-- instantiated in the
budget in a little more detail. one of the things that the programming process brings to the table and that we lay forward is the longer term work of the future. mike's -- mike and his team are understandably heavily focused on the budget year and the execution year and whatever requests will occur in front of the congress, which is a lot of different things to keep your mind on. my team and my element of the process is really heavily focused on a balance across a five-year to sometimes longer horizon giving us a planning horizon far enough out that you can start to see new technologies, weapons systems come in. so i'll talk a little bit about longer horizon here. to emphasize both the sanctuary piece and the delivering effects from range piece, i highlight one specific domain example, which is what this program and budget do in the under sea. that's an area of extraordinary management for the united states, an area where we enjoy a relative sanctuary, an area where we have technological advantages built up over decades that give us extraordinary capability. so you see in across the future years' defense plan, over $40
billion of additional investment in american under sea capabilities. that's an increase of about $2.5 billion relative to where we were. that money goes, of course, to fielding more submarine, more of the virginia state of the art submarine. it goes to modernizing the under sea deterrent with the ohio replacement program. we take some very specific additional steps that i wanted to highlight. one extremely important one is the investment in what we call the virginia payload module, which is really an extended cab version of your standard virginia attack submarine and it's an extraordinarily high leverage one because while the run-of-the-mill virginia offers you 12 vertical longitude, the virginia payload modules version offers you 40. so more than treble the shooting
capacity as well as capabilities to support a whole host of other special missions and weapons systems. that's a big deal and for a comparatively small investment, each one of those will be enormously more capable. we're recognizing we can't sit on our laurels in the under sea. you see us investing in additional upgrades to submarine combat systems, acoustics, technology for our submarines, quieting for our submarine. improved torpedos for our submarines. upgrading to the mark 48 which is our core heavy weight torpedo. we're also looking towards unmanned capability and the virginia payload modules will also give those submarines more capability to host various unmanned systems. you also shifting from the under sea see the threads of that strategic portfolio playing out in several other domains. in the air domain you see it focused on things like the arsenal plane which the secretary talked about. in the surface domain you see --
and subsurface, you see an important investment in expanding the capabilities of the tomahawk missile. which is one of our most numerous missiles, an extremely effective missile. what the secretary has announced with this budget rollout, we will be upgrading and modifying the tomahawk as it goes through its remanufacture in coming years to also give it a ship attack capability. an extremely important step to leverage a system that we have thousands of in order to deliver a very serious war winning effects should they be required. you also heard the secretary talk about giving our -- taking one of our premiere surface-to-air missiles, the sm 6 standard missile which is used for ship based air defense and converting it to give it an anti-ship capability. so you have an extremely high speed, high energy missile that
we're up -- that we are modifying for anti-ship capability and then we have a low level, low flying tomahawk missile. a dual threat for anti-ship. again, taking systems we've got, making modest investments, leveraging them to really change strategic calculus to enhance deterrence. the second and final major point i'd make today is following onto the point that bob made about posture and presence. the department is constantly balancing our war fighting posture, capability to fight on a moment's notice with our presence around the world and what we have seen is as the force has become somewhat smaller and as we've dealt with a pretty substantial shift, as numbers have come down in the middle east to around the world, we have an opportunity to re-assess in relative terms how much of the force should be out and about in any one moment, how
much of the force should be training and preparing to provide a stronger deterrence to a potential large fight. and we are, as bob said, incrementally adjusting that balance. one of the critical pieces that falls into that category are the decisions the department made on the littoral combat ship in this budget and program. we made a determination that we would reduce the inventory goal for that program from 52 ships to 40. and we would move to select a single vendor there. that's a ship that we had purchased to play certain war fighting roles but most predominantly to provide presence. and we had sized that fleet to essentially replace the mine countermeasure ships that we have, the patrol coastal boats that we have, cyclone class, and
the already now retired frig ates. largely then a force that was to be spread around the world providing protection. because of how that program was designed, it was providing actually incrementally more presence than the historic fleet has because we were able to maintain a higher tempo with those ships. as it turns out, a fleet of 40 of those is going to be fully capable of providing more presence than the legacy fleet it replaces and important to note the 40 ship fleet is fully adequate to perform the war fighting missions that we need that fleet to perform. you'll see some discussion out in the press and public commentary about where is the requirement on that? the navy has had for some years now a 52-ship total requirement which embodies both the presence requirement and the war fighting requirement. the posture versus presence dialogue has led us to say we
will size that fleet to the war fighting requirements and source the presence within that war fighting requirement. that should hopefully clarify some of the discussion that's been out there on that. and, again, it's a matter of balance. we needed to make those adjustments in order to free up the resources to get the naval aviation enterprise right, to invest in some of those impressive munitions programs that we talked about just a moment ago and to in general allow the department to protect readiness and investment in future capabilities. so, i talked in broad terms about how we translate strategy into program and then it turns into budget. i'm hopefully giving you a few useful specifics. i look forward to talking through the q and a about any of the other pieces there, and in particular how the department used the secretary's construct of thinking concretely and directly about five challenges in order to focus our resources.
i think we've made some important steps in that regard as well. with that, i will turn it over to mike to put lipstick on this beautiful, beautiful budget that we have. >> thank you. i should note, i didn't actually introduce dr. jamie morin, director of c.a.p.e., cost, assessment, program, evaluation. and mike mccord, who is the undersecretary of defense. >> we prefer to be incognito. >> i've exposed who you are. >> thank you, todd. thanks, dr. hamre, for introducing us. it's good to be here with jamie and bob. it's unusual only that we're here in public because we meet and we work together all the time. we see each other just about every day. >> there are windows here. >> there are windows here. i'm also happy to be here, you know, at an institution that is so well known for thoughtful
analysis and discussion and that is something that, you know, is always welcome. >> thank you. >> i'm going to ask a quick question how i view my own slides. >> hit the arrows. >> will this thing work? >> yes. >> correct. >> all right. so i'm going to recap just a little bit and put on paper a little bit one or two points that have been made already. as both bob and jamie said, the primary thing that the secretary used to grade our homework, being responsive to the five challenges that he saw. again, as bob said, there's an -- there is a mixture of -- there's priority and there's not priority in both -- in the five challenges. the prioritization as he stated is russia, china, near peer competitors, the great power challenges first. that was clear, that's the priority. but in the sense they're not prioritized, it's not accessible that we can do only three or four. we have to be responsive to them
all. that's one of the things that's striking to me is the secretary -- any secretary i think of defense lives in the here and now. spends a lot of time at the white house, a lot of time responding to what's going on today and to current challenges but the secretary has us thinking well into the future, as jamie described, and if you look at what we're trying to accomplish in this budget, it really does span the domains if you think about the five challenges in terms of geography we're talking about eastern europe, we're talking about the middle east, we're talking about the south china seas, we're talking about a good bit of the world's geography. we're talking about both from the here and now in the fight against terrorism to well into the future to how we're postured against other near peer competitors. i think we haven't talked about this in detail, but we recognize that a considerable part of our effort has to go and does go in our process, especially the programming process that jamie leads into going beyond the domains where we know we have to compete and win on air and in the sea and on land but also to space and cyber
space. so pretty much every domain, every part of the world and from now to the future. the secretary's asking us to be in demand. -- demanding that we be excellent across so many ranges of geography, time, and domain. something that i think few if any militaries would attempt to do what we attempt to do let alone to excel at so much of it. those are the five challenges, really were the big lens through which we viewed many of the challenges in the budget, but we also talked about this morning that going beyond presence, which is important, and i think bob put it well, it's not one or the other posture presence, but it's both. what is posture on top of presence? it's the ability to get there. what can you bring? how quickly can you get there? how fast. how lethal? how much can you bring? as well as working with allies and partners on a daily basis. so again, we're not in an either/or mode,
of russia or china, now or the future, posture or presence. the relative emphasis is what the secretary was trying to get into this budget and what we tried to capture. another thing that i think is important again, innovation is a word you hear a lot. there's four parts to which i'm listing here on this slide just to talk about for a second. i think everybody's mind leads to technology when you think about innovation and it's certainly part of it. third offset strategy, a phrase that's starting to become more well-known, is largely technological. and there's an aspect of it, especially reaching out with the secretary, what they were doing just last week through nontraditional, the silicon valley type people that don't directly do business with the military the way you think of the defense contractors doing. innovation in the secretary's mind, new technology as important as that is, force of the future is the phrase that we use, the secretary talks about innovating and how we attract and retain talent.
i think that that's proven so far to be a little bit easily misunderstood because our talent level is so high already. there are some who ask, why do we need to do anything new? because we're already -- it's working well what we do today. secretary, i think, feels that as you look at what it takes to attract and retain someone today, what it's going to take to attract someone in the future, five years, ten years, 20 years from now, that we can't rest on our laurels, we have to think about how people don't necessarily want the same things that people wanted 20, 30 years ago when they joined when the current senior level people in this department joined. interesting aspect of this is just last year a great degree of cooperation between an independent commission and the congress and the department resulted in a military retirement forum, something that hasn't happened in 30 years. it's very much in line with the
secretary's thinking on what it takes to shape the force of the future. this is geared towards a more affordable benefit like the rest of the economy has already moved to in the last 30 years. something that allows the many people who don't stay 30 years to walk away with more than they do now. that's one of the aspects when you hear the secretary talk about force of the future, a word that you will hear used a lot is permeability. meaning how can someone come into the department, could be other departments, but we're especially hoping they'll look at the department of defense, how can you serve your military for a short time or a career, especially if we can only get part of your time, to come in, come out. portable benefits are obviously a part of that that attract people in the rest of the world and we think can work for us. we've also talked about in recent days some of the non-monetary compensation benefits, child care hours, maternity and paternity leave expansion. things that recognize that what attracts and retains a person isn't always just their paycheck. now in terms of our budget, these benefits or these changes
are not large drivers to so-called forces of the future. but they're important bets, and i think they're well placed bets. we spend a lot of times on these at senior levels debating them trying to thinking about what will keep us at the leading edge well into the future. back to the innovation side, having new technology is important, of course. if you use the same tools and think the same way, you're not getting the most value out of them. how we think, this is particularly bob's area on our planning, planning reinvigorating war gaming are important priorities that both the secretary and deputy. new technology but also new ways to use what you already have or new ways to use the tools you're hoping to acquire. and finally how our own business processes work is, again, something that the secretary
looks at the private sector and realized we can't -- even if we were successful, say, in attracting new talent to the department, if they came here and found business processes that made no sense to them, that were slow, cumbersome, you know, we might lose them again. so we need to be agile in how we operate, agile in how we think as well as having new technology and the best people. so i think all of these are connected in our minds that innovation is not just about new technology as important as that is. another point i'd like to make, we talked about the proposals that got the most attention, like the european reassurance initiative, it's natural and normal to focus on the new thing in the budget, the thing that's growing by the most percent. i would like to remind people, the european reassurance initiative is not the sum total of our efforts to counter russia. it sits on top of the presence we've had in europe for decades. it sits on top of the nuclear triad. other things that are important. new categories, new labels. it's natural to highlight areas
of emphasis. those are important. there is a reason why that's the singular most talked about part of this budget. big increase in the european research initiative but it is not the sum total. it's also true and dr. morin gave a good example in the virginia payload modules among others, with a few exceptions, this is not for or to counter russia, this is not for or to counter north korea. most of them have capability across the spectrum of capabilities. that's how we look at them. it's hard to come back at the budget later and say how much of the budget goes to counter russia? that's not how we do it. but it is important to look at the broad range of capabilities that we're bringing to bear. if i could go to -- >> i actually already got ahead of you. >> okay. the next slide. i want to talk about the budget in its size rather than its shape.
which is mostly what the discussion is, the shape and priorities inside the budget. many people have heard the secretary describes himself as being either grateful of the deal, supportive of the budget deal from last fall. i want to take a second to talk about why is that, why do we say we support the budget deal. first of all, we have been stuck for three years prior to this deal at under $500 billion in our base budget. i am going to focus on the base budget in this chart. we were able to get through this budget deal with a jump of $25 billion a year in '16 and '17. above the level we've been at for the last three years. that's real resources here and now to get this additional capability and get us closer to where we need to be. looking ahead to the future, of course, there will need to be more budget deals, more negotiations, more discussions in the future. this is a two-year budget deal that expires after this year and it leaves the question open here where we are going in defense resources. so we're starting in a
better place by having this deal than if we had been stuck where we were before. there are resources here and now. it's a better jumping off point. on this point you can see the blue bars are the base budget and we have jumped up above the red lines about 20, $25 billion in '16. not quite as high as a leap in '17 above where the sequester would have been but still an important increase. very typical of recent budget deals where there's kind of a leveling off in the first year to the second year. finally, the secretary, a point he's made a couple of times, and the reason he was calling early and often for compromise last year, is compromise is how we govern in this country. it represents progress to us to have -- to know what our top line is. we didn't get this deal, you know, as everybody knows, until early november. so we found out our fy '16 top line one year into fy '16. one month had already gone by after we got that.
fairly light in our planning process, the process that all of us represent here was very far along by november when we got '16's final guidance what the '17 final top line would be. that left us six weeks to do a very focused effort to think about how to make the best choices to get the top line down to meet this deal and still represent the secretary's priorities. doing so gives us some near-term certainty and stability, which is important for our troops. you know, if you don't -- until you know for sure where the budget's going, people will wonder, maybe excessively, but they will wonder, are there going to be involuntary separations? things lightly. what is my future? what does it mean for me and my family? are we going to be able to stay in or not? it gives us certainty that the industry partners need. not the multi-year certainty that we would wish, but it's certainly some certainty and certainly better than the alternatives about sequesters and shutdowns all of which we've experienced in recent years.
it's important for the troops, our partners, the planners inside the department to know what resources we have to work with and for our partners around the world. so that i think is what the secretary means when he says he supports this deal. he does not mean it in the sense that we got everything we wanted. clearly we did not. we had to take additional -- take resources down in both '16 and '17 and we can talk in the q and a period what choices we made, but we recognize that that was always the possible outcome when you're seeking a compromise, that you might not get everything that you wanted. then finally, i'd like to go to my last chart. one thing that i think is -- i just want to state is an important part of this process in looking at our budget is an unstated assumption that we -- we made the choices as i described in the late part of last year. six weeks or so between early november, at christmas, with the belief that our cost line would bounce back up in the future.
if you look at the chart and you see the lines that are colored blue, purple, green, that's our profile that we -- that we had for fy '15 budget, for the fy '16 budget and now for the fy '17 budget. other than accommodating the particular reductions in the budget deal for last fall, we've been remarkably consistent. more consistent than any team i know really in saying here's the resources we need. there's a good reason for that. some of the reasons bob has described, what we normally call our ends, have remained fairly constant goals of ours across the last several years. the things we need to accomplish them with, the particular size of the force has remained fairly constant in our plan. not to say the army hasn't been reducing some and the other services have stayed constant. the end state to which we plan to reduce the army has been pretty constant. that hasn't moved around a lot. therefore, the so called means, the resources have also been pretty constant in our plan, pretty stable, i should say.
so we have for several years now been very clear about the level of resources we think we need to accomplish our tasks and our missions and we've stuck with that. so we didn't get all that we wanted in this budget deal, as i said, but we've made a big jump up, we made a big jump up where we were stuck for three years which is that flat reddish line across the bottom of the chart for '13, '14, '15. didn't get all the way up to the $35 billion increase that we had sought. but we made about two-thirds of the jump. that's positioned us well for the next year or so. we need to make another jump in '18 of about that size, to get back up to where we think we need to be, which is where those three lines kind of overlap. so we see the biggest risk in this budget not so much as the choices they can't we made to meet short term budget reductions in this deal, although we're happy to discuss and defend those, i know we'll
be asked about those, we will be in the rest of the hearings that follow throughout the year, but the greater risk to us is the $100 billion that's the difference between any of those three lines, the blue, purple, and green ones, and the profile that we -- that we had for fy '15 budget, for the fy '16 budget and now for the fy '17 budget. other than accommodating the particular reductions in the budget for last fall, we've been remarkably consistent. so with that, let me wrap up and then we can talk about any of the individual programs. and choices that we made and talk about -- there's been discussion about that as well. >> thank you all for the great comments starting us off. we will go to questions from the audience in a minute.
i think we have handheld mikes in the room we'll bring around. i want to kick it off with some questions with each of you. bob, maybe you want to start with this one. one of the things that's been talked a lot recently is improving the department's strategic agility, by that we mean the ability to just adjust rapidly as the world environment changes a great example of course the 2014 qvr before the ink could even dry we had russia rolling into eastern ukraine. we had isis expanding its territory. the world was changing. and of course the department of defense has to change to keep up with it. so from your perspective, what is the department doing to improve its strategic agility and what else needs to be done? >> so i think -- i'm going to try to -- i'll answer that from two different perspectives. one is that we obviously need strategic agility. so one -- while there is a qdr
only every four years and now it's the dsr that's been legislated, i don't think anybody should think that's the only time that we take a look and do the things we do is during a qdr. what is the strategic environment? how best to make sure to pursue our interests, protect our interests and protect our friends and allies and our commitments within that strategic environment. to some extent you make that decision anew every year. you keep looking through and every time that you see massive changes in the security environment. and i would say that to a large extent that's what we feed into the processes that then go into where are we making changes in the budget in terms of relative emphasis. so that's an important piece. and it's something we always struggle with, how do you do a better job of assessing how you're doing and where you're going. on the other hand, i don't -- changing strategic -- that's not good for the department either.
you've got to have some level of consistency so that people understand you're not flitting back and forth between multiple things. it's finding that, day i say, balance that is the key. but there are lots of things i think as mike noted that are consistent within the budget we've been doing for a long time while you make changes on the margin. one thing of being more agile that we see across the department that is working is how can you discover new things about how to operate, where to operate and how to use things where you're pushing innovation. a lot of that is about war gaming. there is money specifically tied to incentivizing war gaming within the department in the '16 budget and on. i think combining all those and having a sense of understanding that in fact some things are consistent, right? we have alliance commitments. we have things we are always going to be able to have to do
to project power into areas. understanding what's consistent while understanding that you can't be so happy with the work you've done that you don't ever look to challenge that. >> and jamie, a question for you. i know this actually goes back you were air force comptroller before director of cape. i know you've been part of this administration's effort to create greater efficiencies on how our defense dollars are spent. some of those have been successful. some haven't. in part because congress doesn't always agree with what the department wants to do in terms of efficiency initiatives. my question to you is, looking forward, what legislative or policy obstacles are holding the department back from achieving greater efficiency while it uses resources? >> so it's not a popular answer, but base realignment and closure is an important piece of this. it's been aspirational goal for
several years now, we're now more than ten years since our last round, the studies the department has done generally find 20% to 25% sometimes more surplus infrastructure in most of our mission areas, obviously it varies depending on what part of the force and what capability you're talking about. but it's substantial. the big thing that plays there is not so much the cost of maintaining facilities or owning more real estate than needed. it's the people that come with that. when i worked for the air force, our walking around rough order estimate was it took 800 to 900 airmen to open a base before you had any operational folks there. 800 to 900 airmen just to have that base. and so you can understand, as you shrink down the operational forces, as we get higher and higher technology, this is
particularly an air force issue, the capital gets more and more expensive because it's more and more advanced. we are operating with a constant physical infrastructure with a lot of overhead to maintain it. so base closure is an important piece. it's critical to note that the department is not happy with what happened in the 2005 background in terms of cost takeout. we rebalanced the force in some useful ways but we think a future background would have a much different financial ramification. even though the 2005 background is now paying off for the department financially it was a much smaller scale of closure and large scale realignment than the previous rounds which yielded much larger financial savings earlier. we would model more on the earlier in order to garner more savings. but this is a difficult political topic. we understand that.
but the department is going to i think remain consistent in the message that we just need to move forward on this to enable a whole bunch of cost takeout, to drive more combat capability out of each taxpayer dollar. now, there's more that we can do that are unquestionably beyond that. i think the department needs to look at broadly speaking agility in identifying and divesting programs that are not delivering. as we look to an era where we have sort of a near great power competition going on, it is important that we're willing to take enough risk in the things we develop and acquire to maintain that deterrent posture for the long run. doing that necessitates a portfolio approach in which you do not expect that every investment you make is going to successfully come to fruition. we need to have a risk profile
where we do some exotic work that may only have a coin flip or a 20% chance of turning into a military capability. but if you don't do several of those, you're going to be locked in purely incremental improvement. incremental improvement is important, but we need a portfolio with higher risk effort. the department's got to be really good at divesting those when it's clear they are not paying off. that's an area that we are working internally and with congress to sort of build the understanding. it's difficult to have a portfolio approach with various high risk technologies if you know you're going to be sorely push punished for any failure. as the secretary looks to model in silicon valley, you can't assume that every investment you make is going to pay off. if that's what your assumption, if that's your planning basis, you're not being ambitious enough. mike may have something he wants to add on this. i don't know.
>> certainly, brak is one of the more challenging ones. we've had challenging discussions as well on areas like health care over the years. i would say on your first point about agility as well that seeing not only two of my predecessors as comptroller here now, we do have operational agility that requires the financial community to respond. our organization has always worked with the services and with combat and commanders to respond. we're here to talk about the planning and programming budgeting. the process formally named execution on the planning programming, execution. we don't normally talk about execution that much. but we do have to respond to the here and now contingency. we do have and i do appreciate a reasonable amount of flexibility in our operating account and the way we're allowed to use them and where the military
operations are done through the commander in chief. they're not negotiated with the legislative branch, exactly how you're doing to do the branches on a day to day basis. we have inherent flexibility but we have to move money around to address challenges in ways that are avenues that come off that are more enduring power. probably the most dramatic example of that was the ebola response in fairly recent years. it was done in the last month of a fiscal year. having the ability to do that working with our committees on congress is important as well as a different kind of agility, what i call an operational agility rather than strategic agility. >> i also put out a call for questions on twitter before the event and i got some good ones. i want to ask one. mike, in many years we see the military pay raise that's proposed by the administration as basically an across the board
pay raise, the whole pay table goes up, all the ranks at once. one of the challenges with that, of course, is that over time if you have across the board pay raises it widens the gap in pay between the higher and lower ranks because the higher ranks grow actually at a faster amount because they're starting from a higher base. so from time to time the department has used targeted pay raises at certain parts of the pay scale based on recruiting and retention needs. is that something that the department has looked at this year? and do you think it's time to look at that again? >> i think this year we have -- the focus has probably been the mental focus has been on some of the non-monetary things i described, the force of the future initiative. we did not have an in depth discussion of targeted pay raise in lieu of the across the board pay raise. there's a variety of reasons for that.
i think probably also that the fundamental change in the retirement system is something that we need to work through. i was just out in indianapolis with the accounting people end of last week to talk about all the changes we'll have to do to actually operational all that and get ready for the questions that come in. so i think that we've been looking at it i don't know if nontraditional is the best way to describe it but in terms of the child care, the maternity and paternity aspect, we've just had a change in the retirement as well. every year there's a discussion of health care of some ways to make it better while still improving ideally both the value and efficiency of the health care delivery system. i think pay raise itself is an important part, the thing that people think about first. and the virtue of it is also it's the most easily changed if we see that we're getting something wrong on the recruiting and retention side. but we haven't seen that.
i don't think the case has been made i'm ware of to go target instead of across the board at this time. but it is something that we could do fairly easily if we or a future administration decided that change is needed to be made at the margin. i will say finally there are some pockets certainly where in fact you have the opposite problem of pay compression between various grades that not a widening but a compression as well. >> so with that, i want to open it up to questions from the audience. we'll start over here. we can wait for a microphone coming to you right now. >> good morning. i'm an independent consultant. i don't think anybody envies the job you have trying to put together a budget when there's so many floating variables and changes of priorities and so forth. but i do most of my business around the world so i note geopolitics where it affects business agreements and dealing was ministries and presidents and so forth.
it's interesting that where we have a lot of problems is we do have a lack of presence. as you try to look at at least the navy budget it's interesting that all the service chiefs have a common denominator is the lack of need of an additional carrier battle group. even to the effect that chief of staff of the air force notes that it affects the movement of numbered air forces when there's a delay of carrier or lack thereof. as you look forward and i realize that you in the out-years can't really -- don't know if you'll be able to raise your base budget lines and so forth as you mentioned earlier, but is there a sense that maybe we need to add another carrier and of course there's a domino effect associated with that but the numbers seem to be really flat. i haven't noticed any comment on the navy but i have from the other service chiefs. is there any sense of that? >> the department is on a path right now to again have 11 carriers out operationally. as you know, we were in a
short-term gap where the delay in building a new carrier have left us with really only ten functional ones. so that is coming up naturally already. i'm not sure if you're arguing to go still further beyond that, which is a pretty big undertaking, given the nature of the carrier industrial base. it would be a major decade-plus endeavor to get to that point. so i don't think it's under serious consideration. the navy is working hard and has been for a few years now to identify the right ways to optimize the deployment and employment of the fleet in order to produce maximum carrier presence. and we made some conscious choices a couple of years back in the face of some geopolitical situations to surge the carrier force out and provide enhanced presence for a period of about a year, little less than a year,
understanding that the consequence would be we were deferring some maintenance, which meant that we would have more carriers in dock and waiting for dock than we would otherwise have for a short period of time which we are now just about to start coming out of. so you are i think probably seeing a little bit of the regret associated with that past decision to surge. but it was very much a conscious decision made by the then-secretary of defense based on the situation. i don't know if you want to add anything. >> beautiful. >> all right, right here. >> thank you. john arbor with national defense magazine. i have a cyber related question for each of you. the fy 17 budget i think calls for 35 billion worth of investments in cyber over the course of the -- can you give us a breakdown at least a general breakdown of what that money would be going toward?
and what are the key programs or capabilities that you're trying to push forward in that budget? and what are the top policy issues that you're wrestling with when it comes to using cyber weapons in armed conflict or in scenarios that perhaps don't level to armed conflict but still require a dod response? thank you. >> i think we're still struggling maybe for metrics in the cyber area that are commensurate with some of the ways we talk about other programs that have been around longer. our categorization of these, you know, is defense of our own networks is the secretary's top priority i think. then we look at offense. we look at the -- cyber is embedded in a larger i.t. effort that our cio does a great deal leading. i think the last couple of years we've done a better job of
elevating the cio's role so we talk about cyber in the context of other issues. one of the things that's been on my plate a lot is the response to the opm hack as it was called that affected mostly dod people. so we have both our own needs and our own efforts but also they need to respond to the challenges that come at us from the outside. so the cyber budget i think jamie could talk maybe about some of the particular choices we made. there are some that are unclassified we can talk about many that are not. >> i would emphasize looking at cyber we are continuing to grow the overall capacity and capability that's resonant in u.s. cyber com and that's resonant in the very service components for it. they are understandably focused first on the priority of securing the network, as mike said.
we know that the way the u.s. operates in peacetime and clearly the way we would operate in the case of a major war is deeply dependent on the flow of information, and we know that that's a contested environment. we certainly have seen it contested in the commercial sector where we've had major companies face debilitating hacks and we know that it's contested among governments and intelligence agencies and militaries. it is based on that, we have this very clear priority of defending the network first. and we are growing teams that are dedicated to active defense and to testing ourselves. we're building a series of scorecards and metrics that will hold individual suborganizations to account. since cyber security is in large respect a discipline process, in a distributed organization like
the department of defense, so we're finding ways to ensure that commanders at all levels are cognizant of how choices that they're making can affect that cyber security. we're also looking at the global environment and asking hard questions about what does it mean to maintain deterrence in a world where cyber can be weaponized? and those are the trickiest questions. they have the most heavy policy overtones. i think i may use that to toss it to my distinguished colleague. >> as much as we have done cyber i think it's fair to say there's more as we think of integrating this domain into the way we think about conflict. obviously first is absolute protection of our own networks and then from the planning perspective that we go through, we have to ask different questions and figure out how we can use this as an effective tool both from a deterrence and a protection perspective.
and part of this is going to be, do we have to look at cyber -- do we have to have cyber reactions to cyber actions or do we look at figuring out, how do we integrate cyber into how we think about things at large? it's still very sensitive and still very tightly controlled as it should be, given the repercussions that could come back not just on the defense force but also on the society at large. so working through each of these issues is important from a theoretical perspective but frankly that has to be coupled with what practically you can and can't do to understand how you want to look at it in theory. >> we've got a lot of questions. how about tony in the back. >> tony with bloomberg news. how does your vision of we have to be able to do it all square with the looming bow wave the next administration starts to face in 2021 when they have to start planning for 2021 next year basically.
how do you square the two? how much money roughly will the next administration have to find starting in 2021 just to pay for the nuclear modernization upgrade, the f-35 ramp-up, b-21, ssbnx. how do you square your two goals we have to do it all yet navigate a major bow wave coming? >> great question, tony. unsurprisingly. so just one clarification for the group, this year's future year's defense plan is the first one in which the real bulk of that nuclear bow wave is now within the planning horizon. fy 21 represents the target procurement date for the first of the navy's ohio replacement submarines so we are looking at a substantial ramp-up. i don't know if we still have slides here. i think we might not.
if you looked closely at mike's final slide, what we call in the defense business the spaghetti chart, you will see that the last year the future defense plan that was shown up there for this cycle, the 2017 budget and the 2017 through 2021, shows a tick up in the defense top line in fy 21. and that was the product of a very serious and deliberate discussion between the leadership in the department of defense and the senior staff at the white house all the way up to the president about this upcoming nuclear modernization bow wave. and specifically substantial bills with regard to both the ohio replacement with the funding for the first ships procurement and then also some significant costs for both the icbm replacement and the bomber, although those grew less year
over year than did the submarine. so we had a very serious dialogue about that and in response the president gave the department fiscal planning targets that were greater than those that were projected the previous cycle. it doesn't represent the whole of the bow wave that you're talking about. that bow wave will grow significantly particularly by the time we get to the mid-2020s and the late 2020s when the ohio replacement submarine is in serial production, one a year. right now we're building one. we have two years of gap. and we're incrementally funding -- planning to incrementally fund the submarine over three years. you can envision once we're to one a year that's going to be a very substantial increase. it's on the order of $12 billion to $18 billion a year above sort of where we were over this last decade, which was a period of very low investment in the nuclear enterprise.
investment for the department in the nuclear enterprise is cyclical. the nuclear weapons established in the united states was fielded post-world war ii, was modernized and updated under eisenhower, was modernized and updated under reagan, and while the programs crest and trough based on those cyclical modernizations, we are coming up now on a period of growth. each of those modernizations in history has been aligned with a period of increasing top line for the department of defense. so what the fy 21 projection in the future year's defense plan lays out is really the start of a ramping back up. but obviously that will be a decision the new administration will have to make and maybe even the administration after the next administration, depending on how future elections come before we really get to fy 21, fy 22, fy 23. >> i would just add that
there's -- in your question, tony, was stated how do you square and the you in english unlike french is the same word for one person or many. there's certainly a dod aspect but it's really a larger national aspect how much are we willing to pay for defense when you get to that era. that cannot be limited to just us, which why we started the conversation with the white house but it involves the congress and also the american people as well. are we willing to make that investment? we saw the same discussion absent the particular focus on the nuclear -- in last fall's budget discussion. how much are you willing to pay? our request was up here. we did not get it all. people were not willing to pay in terms of tax increases or cutting programs to the full extent we thought. that same discussion will be had with maybe more importance and more at stake when you get to this point. >> and let me add just one more quick point on that, tony, which is we conducted a nuclear
strategic portfolio review as well and what we did with that among other things is we looked very carefully at what were the department's options to pay for nuclear modernization sort of within the strategic forces within the nuclear forces budget and it very quickly became apparent that unless the department was willing to divest the submarine leg of the triad, which we're not, there is no way to pay for that modernization within the budget because the bow wave you're talking about, because it is an ebb and flow kind of thing is a doubling of what we need to spend on nuclear. so you would have to look beyond the portfolio, even if you chose to do radical things within the portfolio, it would not come close to paying for that whole bill. >> let's go to otto. >> this is for mr. mccord. the administration has said consistently that the defense budget you presented matches the
two-year budget deal from last year. the republicans in congress are constantly saying you're $17 billion to $18 billion short of what you were allowed under the budget deal. the numbers just don't seem to match up. could you explain to us where you're matching the two year deal or where you're not? >> thank you. yes. well, in our view, in my view, we did match the deal. the deal has a face budget number and an oco number in it. the oco, the base budget number includes entities like the nuclear nnsa as well so obviously it doesn't track directly to the department of defense target but it's obvious we're about 95% of that. on the oco side, which i think more of the discussion has been, there's an oco number in the deal and there's language in the deal. it's the same number and the same language in both '16 and '17. we treated it the same way congress treat td last year.
congress wrote to that number last year in the appropriations bill. number in the budget deal. i'm well aware that at one point there was draft of that language that had wording about it being not less than. that wording is now what was passed by the congress or signed by the president. i don't think it's all that unclear. i have heard some of those discussions or some of those concerns raised. i will point out which the secretary appeared at his first hering that was not raised to him by any member of congress republican or democrat that i recall. so i don't think it's actually that much of a dispute or that it should be unclear. i mean, there was a budget deal, budget numbers in budget acts tend to be ceilings and that's how we viewed and that's certainly how the administration viewed this number. >> let's go over here.
>> hello, tony bertuga, "inside defense." i wanted to turn the discussion to the practice of the services sending unfunded priorities lists to congress. so these have readily been leaked out to capitol hill, the secretary has not had a chance to provide input yet to what's been leaked. does he still, one, reserve the prerogative to modify what the services send to congress? and, two, do the three of you see value in continuing this because it essentially sidesteps civilian oversight of the budget process. thank you. >> this process began some time in my career, i want to say at least 20 years we've had it. it has its good and bad points it's disappointing that the lists get out so soon before the secretary's had time to review them. they do have some value in the process in illuminating margin
of where additional pressure might be or is perceived to be within the services. the problem in this particular instance is, as we just had in the previous question, there's an agreed to top line.gvññ so taking -- just to pick a service at random. if there's something you picked off a navy list, it would have to come at the expense of someone else. we've already had well thought-out discussions in the department about what the priorities are which is reflected in what we've already sent. i think absent some unusual or unexpected change in the budget situation, you know, it's less helpful this time than usual. >> every individual decision is interesting and useful into itself. but if you can't balance it against the entire portfolio and understand where you're accepting risk in a zero sum game, then it isn't -- that is not as useful. so i think as mike said, and that's what we spend a number of months doing is trying to look at allocating risk across the
portfolio in the best way that the secretary thinks. so then changing one off decisions really does change that whole risk calculation and balance fort folio. >> we understand, of course, that chiefs are asked this question and ultimately they're going to as they have for over two decades now respond to the question. >> just as a status update, right now the secretary is awaiting the chairman of the joint chiefs' recommendation associated with the lists that the individual service chiefs have sent to the chairman. >> let's go to pat back here. >> i was just told by preface that the congressional role is a part of civilian oversight and congress asks for the lists, just for the record. the uncertainty of the budget the last five years that you
guys have had to wrestle with and it isn't going to damp out any time soon, you have to think about budgetary agility. mike, when you were here back in the end of november, you said that sacrificing forestructure to accommodate budget cuts takes too long to reverse if you get lucky on the money so you didn't want to do that. what about the high end of current readiness? i mean, current readiness doesn't have much shelf life and the high end of full spectrum readiness, full up ntc run, multi-ship on multi-ship -- that's expensive stuff. in '94 and '95, two people with association with this fine institution suggested that you take a serious look as we came serious look at tiered readiness and the blowback was ferocious. nobody wants to be on the b-team, blah blah blah. have you seen as the services
have accommodated the uncertainty of the last few years and look forward to -- have you seen any effort by the services to -- the phrase that sam used i remember was train the force to get ready to get ready? so that you had the a-team was up on the firing step ready to go but everybody isn't ready to get on the plane right now. is there any attempt to modulate the current readiness? again particularly at the high end of the spectrum to give you some flex, some budgetary flex given this year to year uncertainty. >> well, let me take a quick stab at that and i'll ask my colleagues to respond as well. the first thing that strikes me is, yes, it is correct that i think making a forestructure change in response to a short-term budget signal is a problematic undertaking and you didn't see us really walk away from our forestructure plans to accommodate the bba deal from last fall. on the readiness side, i think the primary difference between the time you described and now is the heavy degree of contingency operation that's are
ongoing in multiple theaters. and i think that that has necessarily consumed the attention of the readiness community of the service providers, service that is as well as the combatant commanders, so that we have probably a different problem, more compelling problem in the readiness base, just how to maintain as much full stress and readiness as you can given the amount of time, effort manpower and logistics we've had to defeat to iraq and afghanistan and operations like that in recent years. so i think as we all looked at this program and this budget and i asked jamie to comment here, most of us felt i think most of the leadership of the department felt that if anything, we wished the readiness recovery rate toward a more idealized full spectrum rate was too slow, not too fast and didn't choose to take any more risk in that than we already were. >> yeah. i'd add two points that i think are very important to thinking about this issue.
first and just in the background sense, the large parts of the force are by their nature tiered in readiness. the navy, of course, is out and then back. we need to give people at least a little time with their families so they go through an ebb and flow of readiness. the army in today's world where it is a rotational army out in the world either in a combat zone or in rotational support of our day-to-day activity in korea and europe, elsewhere, is now increasingly in the same sort of mode. get up on the step, go forward, then come home and take a little bit of a breather. so you have what we used to call the army force generation cycle. you have the navy optimized fleet response plan. both of those are about managing the force through those ebbs and flows of activity and the readiness associated with them. the air force has been the most reluctant to accept any sort of cycle like that, although,
again, operational tempo and the fact that they've been forward more than they might prefer has also driven them to a little bit of that ebb and flow. so that is a reality in the world, and it's different than sort of the garrison force that senator nun was looking at 25 years ago. the second important point is that, if you are an individual service member, you progress through a career and you have a succession of experiences through that career. if you're an army infantry company commander, you'll be in that command a couple of years. if your unit happens to be in a tiered readiness state, a true tiered readiness state in the way people advocate for it, a-team and b-team, you will not have experiences at that point in your career that you will
never be able to make up in your career because you have progressed on. we are made up of human beings that have to work as a team and we have to be conscious of the fact that shaking up these kinds of things has consequences. we saw that in the sequestration year. i was acting undersecretary of the air force at the time we had to stand down red flag operations because we were out of money. we had to stand down the red flag high end exercises because we were out of money. and the men and women in those unit that's were scheduled to have that experience didn't and may not. they will miss that -- if you're in the army unit, you miss the rotation, you will not. we have to be extraordinarily cautious about swinging that lever, and i think that is why this administration has put an extremely high priority on protecting readiness funding even if it meant we had to do
deeper cuts on some of these modernization programs. and i think what you see secretary carter now doing is trying to shift that balance a little bit back more toward capability, recognizing that our foundation of deterrence rests on capability and readiness. >> not to belabor the point, but a focus on ready for what is what we always have to ask ourselves. the fact is that, given that the shift, the direction we were shifting in terms of being ready to deal with great power adversaries potentially, means that we really do need to make sure we have that full spectrum focus. when we were ready and putting ready forces into afghanistan and iraq, they were ready for those missions. but arguably not ready for full spectrum against a near pure adversary. we're still in the process of adjusting for getting ready for what the secretary has told us to do. so i think that's a big focus of why -- another piece of why you're not seeing money being taken out of full spectrum readiness training.
>> unfortunately, we are out of time. i promised i would get these gentlemen out of here by 10:30. i know there are many other questions but you can save them for the next panel. please join me in thanking these three distinguished panelists. [ applause ] >> thank you. thank you. and bear with us for a second while we get some more chairs up here on the stage.
i've tweeted it out this morning. we're doing a survey opening it up to the public for defense reform and looking at goldwater/nichols reforms, the kind of people that come to these events and watch them online may have some strong insights and opinions there. so please go take our survey. we're actually going to release the results of it at an event a week from today here that will be hosted by dr. emory. it includes some of the faces you see here. all right. i will go ahead. i think we're all ready, all miked up. we can get started here. i will briefly introduce each of our panelists here. to my right is shawn brehmly, executive vice president and director of studies at the center of new american security. and formerly served on the national security council and has been an undersecretary for policy in that office as well. and then next on the line is roger zackhiem a visiting fellow
at the american enterprise institution and of counsel at the law firm of coughington and berling and has been the -- he has the hill experience to bring to the discussion. then in the middle, andrew hunter who is a senior fellow here in the international security program at csis and the director of the defense industrial initiatives group. and he is also has worked in the pentagon and on the hill in the pentagon at the joint rapid acquisition cell and also had been chief of staff to ash carter and frank kindle while they were at atnl. and mark kanzian as a senior adviser also in the international security program at ysis, at the office of budget and at cape as well when i guess it was pane back there and is a retired marine. then at the other end of the
panel here is tina jonas who we are glad to have as a nonresident senior adviser at csis. she had mike mccord's job, dod comptroller in the bush administration. since then, she's been president of the united health care and is still very active in defense issues. so i want to thank all the panelists for joining us here. we barely fit on the stage, but that's great. we've got a lot of ideas and insights to share here this morning. so i'll start off, we can just go down the row here. i'll start with sean. i asked each of our panelists to give about five minutes of opening remarks and then after that, we'll go to question and answer. >> sure. thanks, todd. prior to the session todd asked me to to give a few comments on how to budget in terms of a
actualizing so-called -- wanted me to focus on that. i think that's a complex question in part because i think the issue has been relatively vague. i don't think the department has done sort of the best job in clarifying exactly what the so-called strategy is about. although i think with bob and jamie's comments, you're seeing this become a little bit more clear over time. i think it's important for the remainder of this administration and certainly to the next administration to state very clearly what the essence of the challenge is. to me, the offset strategy is attempting to answer a basic question, how does a joint force operate in a world of ubiquitous precision moo snigss? it's a basic challenge for the joint force i think as you look at both the current operating environment and how we think the operating environment is going to evolve. bob talked about this being the third offset strategy. it's important to remember the first was about nuclear weapons in the early cold war and we were trying to find a way to respond to quantitative advantages in conventional weapons.
the second strategy in the '70s concerned isr networks and they were trying to answer and then reestablish a qualitative advantage as the soviet union caught up with us in the nuclear weapons balance. both of those first two strategy it's important to remember focus on developing unique qualitative responses to the soviet union's quantitative advantages. so as we get to the third offset strategy, i think it's about trying to re-establish america's military dominance as pretty much all of our current and plausible adversaries will be able to employ precision munitions against us if they choose to do so. i think that's a very profound shift in the operating environment and something that i think the current debate glosses over somewhat. but that's important. so i think the third offset strategy is somewhat more challenging because the answer can't simply be investing in ways to reestablish only a qualitative advantage. part of the answer needs to be
finding ways to compete on the quantitative battlefield as well. so what do i mean by that? part of the implication of having actors like china, russia, iran and north korea investing in precision munition is we quickly get into what defense manners i think there was reference to the earlier panel called a salvo competition whereby each actor's missions are highly precise and we need to defend against them as well as ensure we have enough munitions and delivery vehicles of our own to pose a very credible challenge both in terms of deterrence and actual projection if we have to. so the third offset strategy in my mind requires investments both in new capabilities as well as in new ways to generate mass numbers and quantity in an operating environment that's going to be quickly filled with precision munition. so i think there are two main operational paradigms in which this competition is playing out. the first is what i call the problem of the first thousand nautical miles which we'll get
to long-range power projection and jamie talked about that in detail. how do we project and sustain military power beyond and inside an adversary's denial zone, sort of the classic problem. i think an important part of this is also what i call the last hundred yards, close infantry combat. there the question is, how do we ensure army and marine corps infantry units and armored units destroy an enemy that employs precision munitions. you have seen bob talk about this a little bit in his recent speeches. i tend to look at the department's investment portfolio and contents of operation through these two lenses. from that perspective, to answer todd's question, i think the early indicators of the off dwlt set strategy are fairly positive. 6 billion of that remaining inside classified programs, but i think on the question of the first thousand nautical miles
the core projection challenge we're seeing investments like the new carrier base aerial refuelling system, the unmanned plan sort of son of u-class, which i think is a fundamentally important proposition for the department as we think about the huge can capital investments we're making in the ford class carrier. jamie talked about investments in unmanned under water vehicles that can infiltrate adversary zones. and hold their assets at perpetual risk. that's important. you're seeing a lot of investment in enhancing our portfolio in the magazine capacity of our munition -- like virginia payload module which will bring the tomahawk capacity to 12 to 40 and the conversion to an anti-ship cap built. these are huge, important investments that get to the quantitative problem not just the qualitative problem as we look across the operating environment. but i think on the question of
pushing precision munitions down to -- it's less clear in this. they are expermeimenexperimenti. some emerging capabilities from industry like raytheon i think called the pike guided munition which is sort of pushing highly advanced precision munitions down to the infantry platoon and squad level. i think it's very important. i think the offset strategy is real but i think before the end of the administration i encourage defense leaders to be more clear and precise about exactly what operating challenges the offset strategy is designed to address. i think you are starting to see that. i encourage you to continue doing that. the strategy is important to remember it isn't about game changing technologies and it never was. rather i think the strategy is getting the pentagon to react to a huge shift in the operating environment, the ubiquity of precision munitions and doing so before it's too late. i think on this basis the pentagon from my perspective is succeeding in making that offset strategy real.
i think the next administration will inherit a defense portfolio in this respect that is more satisfying than it would otherwise be, had ash carter not gotten focused on this. >> great. thank you. roger, you're up next. give us another perspective. >> thanks. i'm going to bring this up quite a bit. todd had asked me to give the hill perspective. i hear this a lot, the terminology of spoiler alert. this is the spoiler alert this morning. that is in particularly recent years but when the administration sends over a budget request it's the congress' job to throw cold water on it. that's what you're seeing right now. i want to give perspective on what we can expect to happen with the budget that came over recently then tie in a little bit to what we can expect when we have a new administration in place and then maybe just a couple of comments on the strategy.
the reality is the fights and the environment on the hill really hasn't changed at all even with the bipartisan budget act. the first one or the last one that if you look at the house of representatives right now they're struggling to pass a budget. there's about a $30 billion debate between the fiscal hawks and the defense hawks, actually not even defense hawks i would say between speaker ryan and the fiscal hawks. the defense hawks would like to see the budget either expressed in oco or the base budget to reflect the fight from last year's budget from fy 17 which is roughly about $23 billion higher than what came into the budget request. so we have not even with the budget deals seen the house of representatives particularly this debate between the freedom caucus and the rest of the republicans go beyond this kind of annual fight over who can fight to get a little bit more than $10 billion, $20 billion in cuts.
what that means, is, despite the majority in the house, they'll struggle to put in a budget that meets the last administration's budget request. just when we were having the panel this morning, the senate announced not surprisingly they're not even going to have a hearing or a budget before because they're waiting on the house which i've just mentioned has essentially slowed down. so we have this great discussion of the architecture of the fy 17 budget request. you heard from the last panel the nice deep and important thinking that went into it. but this essentially is going to be a cr. we're probably not going to have appropriations bills go -- and if that's the case, not to the way in. and then when the presidential election coming into place, it disincentivizes anyone to move on the budget request. what does that mean? how should we look at this budget request? i think most people would agree an administration's last budget is generally trying to shape and set the table for the next administration.
some try to do it generally responsibly, not try to push too forward and try to keep reality in check at the same time not trying to jettison or abandon their priorities or strategies they kind of worked towards for their administration. it goes without saying that the next administration -- well, i'll reserve trump for a second. but i think anybody else you could expect to adopt what president obama put into his budget request for fy 17 with tweaks, probably going up. i think the most notable thing that's happened on the -- in the context of these primary fights has been -- i'll try to say this kindly -- the evolution of senator cruz's thinking on defense budget. here i don't mean to make an attack on the rubio campaign, but i think it's really relevant to this discussion. senator cruz came out not too long ago saying that in the
first year of his administration he would seek to spend 4.1% gdp, right? i think mike mccord was here earlier. if he heard senator cruz was seeking to do that, the entire different way i would approach senator cruz two, three years ago. i think what that reflects is there's a consensus setting trump aside from republicans that the top line needs significant relief. that much has kind of sunk in across republican candidates. i think hillary clinton generally most people expect to be at the same or perhaps doing a little bit more on the top line than the current administration. now, whether that is informed with the details that came out earlier, i think it does reflect that something needs to be done here that we have a major problem all the good work at csis is kind of registering with the policy people in campaigns. the interesting piece is the fact that, even with the migration of senator cruz's views, it has not infiltrated
the mind-set of the freedom caucus or any of the budget stakeholders in the congress. i think that's a very important question as to why not. why is a so-called leader of the movement, rubio, cruz were brought in on the wave of the fiscal discipline of the congress and it hasn't affected the thinking of those back benchers who are able to basically hold up the migration of a budget. you know, despite the fact their fearless leader is now recognizing the wisdom of perhaps doing more on that end. so more to see there. but i think the table setting which really is this budget is one that will ultimately become basically be embraced and you'll probably see no action on if until we get too the first quarter of the next fiscal year, which i think you'll see an embrace or perhaps an increase. that's where my view is on the top line, hopefully provoking questions on that. in terms of what goes on in the budget, here i'll just take a couple of minutes on strategy
and kind of a little bit about what this debate is going on kind of within the defense committees. basically, the congress has and the armed services committees reflect this embrace reform. embracing reform less so because they see it as a means of spending less on defense, more so because they see this as a primary means in which to grow the defense budget, to get the things we heard in the last panel. a recognition that you can do mindful of andrew hunter's work on acquisition reform but the more you do on acquisition reform doesn't really matter if other aspects of the budget are cannibalizing it year after year after year. that's why you see movement in terms of tri-care reform and military pay or these other areas. more needs to be done on onm. i think there's an emphasis on that now because that is the vehicle and other areas outside of -- reform is actually the way we'll see relief to get to the problems that mike and others discussed earlier.
last point and i'll turn it over to andrew. and that goes to the oco. there wasn't enough discussion on the last panel on this point, but it is kind of shocking to me that the amount of time it took get so complicated with the competitors to start eating up more and more of our attention to the point where ash carter comes out a little more than a month ago to say russia is our number one threat. this is seven years after a russia reset policy. it's shocking. a lot of that is, one, just general policy in the world we can't control but also the fact that when you see the top line declining year after year, how quickly others step in and exploit that opportunity. and i think what you're seeing as a growing consensus is we need to be able to operate in three theaters. these days of a force planning construct, that means all things to all people.
some type of swiss cheese. yeah, we're going to go ahead and fend off one theater, deal another theater. without a real explanation of kind of which theaters we need to be present and capable of engaging i think now that's perhaps the silver lining of all the challenges we face. we have to be able to deal with and contest russia, we have to operate and challenge or respond to the challenges posed by the chinese and the middle east this notion that we're going to pivot away from it is a thing of the past. it's simply not reality. and having qdrs and budgets that simply say we don't need a ground force that's capable of dealing with these scenarios, even though none of us want to have to deal with them, is really in the rearview mirror, and i think you're seeing consensus, whether it's a president clinton all the way to even a president cruz or someone else, that's going to have to adjust that strategy, and it's really kind of tied into kind of a more realistic view of the world. so, let me pause there and pass it on or back to you, john. >> andrew, you're up next.
>> thanks. well, roger set me up nicely. i'm going to focus mostly on acquisition modernization, because that's where i spend most of my time daily, not to suggest that's the only or most important part of the budget, because that's where i spend most of my time daily, not to suggest that's the only or most important part of the budget, but it's the part that i focus on and would like to address with the minutes that i have. it's impossible to talk about this year's modernization request without a little bit of history, some of which has been discussed in the first panel and then this panel. and the gist of that is that modernization suffered tremendously in the era of sequestration and the post sequestration budget caps. they did a big hit on modernization. it came down to a greater extent than the budget as a whole, and the department is in a hole as a result of that. when we analyze this in a report that we put out in january, we assess that there is about a five-year trough, if you will, in the pipeline that you would
normally expect to see more major weapons systems programs in the department of defense. now, that may be a necessary response to a defense drawdown. certainly, every drawdown that we've had has shown decreases in modernization spending. this one was particularly short, particularly fast, and also came at a different time, because when we had a drawdown after the reagan build-up, we had had the reagan build-up. and so, you were able to live off the land to a certain extent in the modernization budget because you had modernized the army, the air force had been modernized in the '80s, and certainly the navy was very large at the end of the reagan administration. that is not so true today. in fact, for certain services, but i'm thinking particularly of the army, it is untrue. the equipment for the army that was designed for the entire army and for the full-spectrum missions really was not substantially modernized during the last build-up because the focus was on iraq, afghanistan, things like amraps and the systems that were needed to fight the war we were in, which
is a perfectly rational, logical thing to do, but it also means that we arrive at a point today where the army's modernization budget is substantially down, and they have a very old force that they have to fight with, and that's a problem. so, come along, then, to last year, the fy '16 budget. finally, there were glimmerings of pink light on the horizon, the apparent dawn, the rescue from modernization. modernization funding in the fy '16 budget was substantially higher. so, that $25 billion increase that mike mccord made reference to that the bba provided for fy '16, a good portion of that went into the modernization accounts, and that was a very necessary and a very good thing. but as his chart didn't quite go into detail, but as you could see that that increase really didn't carry over into fy '17. the fy '17 budget levels out again, compared to fy '16.
and in particular -- but the way that the department's budget is structured, leveling out is not the way that it naturally functions, right? pay increases happen, so the pay accounts have to go up. readiness has been an issue. it's a priority, so funding for readiness goes up. so if there's a leveling of the top line, guess what, modernization once again is in trouble. and so, with that background, the fy '17 budget is down for modernization, mostly in the procurement accounts. and if you really dig into the details, what you find out is almost all of that reduction is in aircraft. and there are two points i want to make about that. the first is that one of the services, the navy, has, in fact, been buying a very large number of aircraft in recent years. and actually, to be fair, the army also has been doing a lot of recapitalization of its aviation fleet. and so, what you're seeing is that those cycles, big increase
in aviation is coming to its logical conclusion because they have largely modernized a lot of their aircraft fleet. for the army it was a conscious choice to slow down the way their aviation is proceeding. we're not done, but as a result of budget trade-offs, they're going to slow down the pace of their aviation modernization. and the air force is actually starting to spool up, but they took, as everyone i think probably knows, a little bit of reduction on f-35 as a trade-off. now, one other thing i should note about that, the f-35 is an interesting case study, because the reduction really is coming down from a level that had been increased by congress. so, congress had added a lot of money for the f-35 last year, and compared to what the administration had requested for f-35, the air force request is actually an increase compared to what was requested for last year, but congress was so generous in its focus on modernization in last year's budget, that this year's budget comes in as a decrease compared to what was enacted.
so, that suggests, potentially, that the department of defense understands where some of the congressional priorities are and may have budgeted strategically in certain accounts and thought that maybe the right place to take reductions is places where the congress might in its wisdom apply increases. [ laughter ] i think there's a word for that, called gold-watching, and i can't state -- you know, we didn't get a chance to put them up here on the, you know, the truth-telling machine to specifically ask them that question, but that is a possibility. i did want to make one other comment about the unfunded priorities list. i know that if i were in the positions that our last panel was in, i would have had to give the same answer they did. but drawing on my hill background, the one thing you can say with certainty is that when congress is done with the budget, there will be things that will have changed, fact-of-life changes for when the budget was developed, things
like inflation patterns, foreign currency fluctuations, pay always executes a little differently than we expect. so there's always a few billion dollars of free play in the budget where things that you thought you needed when you put the budget together, you realize when congress gets to the end game that you didn't need all that money, so there is opportunity for congress to move things without necessarily -- it is within the top line -- true statement about what mike mccord said -- but it doesn't mean that what congress is doing is taking away some critical priority necessarily that was in the budget. and so, those unfunded priorities list are a great signal about when facts change, where is that next dollar most valuable to go. so i'm sort of a fan of the underfunded priorities list. i'm not going to get into whether they should or should not have been shared in the way they were this year, but i think they still have utility as a construct. so just to kind of summarize a few thoughts for going forward. i mentioned this gap, this
trough in the major weapons systems pipeline. the fy '17 budget does not fix that. until and unless the overall budget top-line problem is addressed, that problem will not be solved. the seed corn, if you will, the early s&t that drives your future modernization again is relatively preserved compared to other areas of the budget but will still need help when and if there is a larger budget deal. if there is not a larger budget deal, i am concerned that the increases of fy '16 will be something of a false dawn for the acquisition system. so it's going to be up to the president and the congress working together to make that not the case, to make sure it's a real dawn. and to talk really briefly about what challenges the next administration will face in the acquisition arena, i think the biggest challenge -- there are many, and of course, i've mentioned this issue of the false dawn or not, that's a central one. the second one that i want to focus on briefly is this
question of adaptability and when threats and the security environment are in a state of great flux. and we're seeing challenges that we hadn't anticipated. we're seeing challenges in places that we hadn't anticipated. and i'm confident there will be challenges next year and the year after that we didn't anticipate that may or may not involve the five challenges about which ash carter -- and i can't quibble with any of them -- but about which he organized his review of the budget. but there will undoubtedly in my mind be additional challenges that will arise that were unanticipated. and so you need an acquisition system that is agile and adaptable, and those are not phrases that one normally hears in association with the department of defense acquisition system. now, i will say that it can do it, it has done it at times, the rapid acquisition experience demonstrated that. more recently, the decision to up-gun strikers with a more capable gun in response to some of the things happening in europe. and as has been mentioned a
couple of times, the decision to modify the way the sm-6 is employed is an example of a case where, in fact, the acquisition system has proven that it can adapt pretty rapidly in acquisition terms to changes in the world, but that will remain a central challenge for the next administration. and just one last comment, that in some ways, there is some irony in the fact that one of the biggest conflicts in this whole budget development has been between osd and the navy, because in many ways, i would say the navy has pioneered, as demonstrated by the sm-6, some of this question about adaptability and about leveraging the platforms you have with small investments to get a better return and new capabilities. and so, it may be one of those cases where in some ways, like minds argue more because they get down to the really fine details. but i think those are the two big challenges for the next administration. >> all right. so, mark, you're up next.
>> well, thank you. i'll talk a little about forces. and of course, there are many issues on the forces. i'll talk about one overarching theme and then look at some individual issues for the particular services. the overarching theme i think you're going to hear over the next year or so on forces is whether there is a gap between the strategy and the size of the forces that are planned. the current forced sizing was done in 2013. that was before we saw a very aggressive china in the south china sea, before you have russian aggression in ukraine and then threats to the baltics, now in syria, of course, and the battlefield successes of isis, plus in the background, of course, you have iran and north korea. so one of the arguments is that the world has changed. the administration's force plans have not changed and a gap has opened up.