Mr. Chairman, members of the committee.
I appreciate the opportunity to appear before you, perhaps for the last time, to discuss the President’s budget request for the next Fiscal Year. I first want to thank the members of this committee for your support of the men and women in uniform who have answered the call in a time of war. I know you will join me in doing everything to ensure they have all they need to accomplish their mission and come home safely.
The budget request for the Department of Defense being presented today includes a base budget request for FY 12 of $553 billion and an Overseas Contingency Operations request for $117.8 billion. My submitted statement includes the details of this request. I do want to take this opportunity though to address several issues that I know have been a subject of debate and concern since I announced the outlines of our budget proposal in January.
First, the damage our military will suffer by operating under a continuing resolution or receiving a significant funding cut for fiscal year 2011;
Second, the projected slowing and eventual flattening of growth of the defense budget over the next five years;
Third, the planned future reductions in the size of the ground forces; and
Fourth, the proposed reforms and savings to the TRICARE program for working-age retirees.
I want to start by making it clear that the Department of Defense will face a crisis if we end up with a year-long continuing resolution or a significant funding cut for FY 2011. The President’s defense budget request for FY 2011 was $549 billion. A full-year continuing resolution would fund the department at about $526 billion. That’s a cut of $23 billion half way through the fiscal year. The legislation the House passed a week ago would provide us with about $532 billion – a cut of $17 billion.
Let me be clear: Operating under a year-long continuing resolution or significantly reduced funding – with the severe shortfalls that entails – would damage procurement and research programs. Cuts in maintenance could force parts of our aircraft fleet to be grounded and delay needed facilities improvements. Cuts in operations would mean fewer flying hours, fewer steaming days, and cutbacks in training for home-stationed forces – all of which directly impacts readiness.
Mr. Chairman, I recognize that given the current fiscal and political environment, it is unlikely that the Department of Defense will receive the full amount requested for FY 11. Based on a number of factors – including policy changes that led to lower personnel costs and reduced activity forced by the continuing resolution – I believe the department can manage with a lower number. However, it is my judgment that the Department of Defense needs an appropriation of at least $540 billion for FY 2011 for the U.S. military to properly carry out its mission, maintain readiness, and prepare for the future.
Which brings me to the proposed $78 billion reduction in the defense budget topline over the next five years. To begin with, this so-called “cut” is to the rate of predicted growth. The size of the base defense budget is still projected to increase in real, inflation-adjusted dollars, before eventually flattening out over this time period.
More significantly, the efficiencies and reforms that we have undertaken over the past year have made it possible for the department to absorb lower projected growth in the defense budget without sacrificing real military capabilities. In fact, the savings identified by the services have allowed our military to add some $70 billion towards priority needs and new capabilities.
And, of the $78 billion in proposed reductions to the five year defense budget plan, only $10 billion is related directly to military combat capability. $4 billion of that comes from restructuring the Joint Strike Fighter program. The rest, about $6 billion, results from the proposed decrease in end strength of the Army and Marine Corps starting in 2015, a decision that I will address now.
Just over four years ago, one of my first acts as defense secretary was to increase the permanent end strength of our ground forces – the Army by 65,000 and the Marine Corps by 27,000. The Army went to 547,000 soldiers, the Marine Corp, 202,000 Marines. At the time, the increase was needed to relieve the severe stress on the force from the Iraq war as the surge was getting underway. To support the later plus up of troops in Afghanistan, I subsequently authorized a temporary further increase in the Army of some 22,000 – an increase always planned to end in FY 2013. The objective was to reduce stress on the force, limit and eventually end the practice of stop-loss, and to increase home troop’s home station dwell time.
As we end the U.S. troop presence in Iraq this year, according to our agreement with the Iraqi government, the overall deployment demands on our force are decreasing significantly. That is why we believe that, beginning in FY 2015, the U.S. can, with minimal risk, begin reducing Army active duty end strength by 27,000 and the Marine Corps by somewhere between 15,000 and 20,000. These projections assume that the number of troops in Afghanistan will be significantly reduced by the end of 2014, in accordance with the President’s and NATO’s strategy. This would still leave the Army with nearly 40,000 more soldiers and the Marine Corps by 12,000 more Marines than when I became Secretary of Defense. If our assumptions prove inaccurate, there’s plenty of time to adjust the size and schedule of this change. These reductions are supported by both the Army and Marine Corps leadership.
Finally, as you know, sharply rising health care costs are consuming an ever larger share of this Department’s budget – growing from $19 billion in 2001 to $52.5 billion in this request.
Among other reforms, this FY 12 budget includes modest increases to TRICARE enrollment fees – later indexed to Medicare premium increases – for working age retirees, most of whom are employed while receiving full pensions. All six members of the Joint Chiefs of Staff have strongly endorsed these and other cost-cutting TRICARE reforms in a letter to Congress.
But let us be clear. The current TRICARE arrangement – one in which fees have not increased for 15 years – is simply unsustainable. And, if allowed to continue, the defense department runs the risk of the fate of other corporate and government bureaucracies that were ultimately crippled by personnel costs, in particular, their retiree benefit packages.
All told, the cumulative effect of the department’s savings and reforms, combined with a host of new investments, will make it possible to protect the U.S. military’s combat power despite the declining rate of growth, and eventual flattening, of the defense budget over the next five years. But, I should note, and you referred to this Mr. Chairman, this will only be possible if the efficiencies reforms and savings are followed through to completion.
In closing, I want to address the calls from some quarters for deeper cuts in defense spending to address the country’s fiscal challenges. I would remind them that over the last two defense budgets submitted by President Obama, we have curtailed or cancelled troubled or excess programs that would have cost more than $300 billion if seen through to completion. Additionally, total defense spending – including war costs – will decline further as the U.S. military withdraws from Iraq.
We still live in a very dangerous and often unstable world. All you have to do is pick up the morning newspaper. Our military must remain strong and agile enough to face a diverse range of threats – from non-state actors attempting to acquire and use weapons of mass destruction and sophisticated missiles, to the more traditional threats of other states both building up their conventional forces and developing new capabilities that target our traditional strengths. We shrink from our global security responsibilities at our peril. Retrenchment brought about by short-sighted cuts could well lead to costlier and more tragic consequences later – indeed as they always have in the past
Mr. Chairman, before closing I want to raise one item of grave concern and urgency. Exactly a month ago the department submitted a request to the congressional defense committees to reprogram $1.2 billion in FY 11 funds to allow us to purchase urgently needed equipment to protect our troops in Afghanistan. General Petraeus requested this equipment as an urgent matter to better protect our forward operating bases as we continue to push into contested areas. The equipment involved is mostly to improve our protection against IEDs by providing enhanced intelligence, surveillance, and reconnaissance capabilities. Particularly through the very successful use of fixed based sensors.
As of last week all congressional committees except this one have approved this request. Mr. Chairman our troops need this force protection equipment and they need it now. Every day that goes by is one more day that they will do without. Every day that goes by without this equipment, the lives of our troops are at greater risk.
I urgently want to get these items under contract so that I can get these important capabilities into Afghanistan in time for operations prior to the fighting season that begins in a matter of weeks.
I understand that the committee has a concern over one of the funding sources, the Army Humvee program. The U.S. military has over 180,000 Humvees in its inventory today, 154,000 in the Army alone. This vehicle family continues to be a work horse for our military, but the Army determined over a year ago that we have more than enough particularly since we have not used them outside protected areas for several years. With your extraordinary support, we have moved on to better protected vehicles like the MRAP, which is saving lives every day.
Mr. Chairman, I wish this were a simple matter of finding another source of funding. But with the size of the cuts that the Congress is proposing in our FY 11 budget and the uncertainty over the continuing resolution, we simply do not have the luxury of leaving this unneeded $900 million on the table. We should not put American lives at risk to protect specific programs or contractors. I strongly urge the committee to act on this matter today so that we can get this urgently needed equipment flowing through our troops.
Mr. Chairman, I look forward to working through this next phase of the President’s defense reform effort with you in the weeks and months ahead – to do what’s right for our Armed Forces and what’s right for our country.