Mr. Chairman, members of the Committee, I thank you for this opportunity to meet with you this morning.
When President Bush took office some seven months ago, he made clear that one of his highest priorities would be to arrest the decline of our armed forces and begin building a 21st Century military that can help deter aggression and extend peace and prosperity well into the new century.
To begin reversing the effects of close to a decade of overuse and under-funding, the President submitted first a 2001 supplemental budget request, which was approved by Congress earlier this year, and more recently, a 2002 budget request that includes the largest increase in defense spending since the mid-1980s. This is an important step in getting the Department out of the hole that long period of under-funding has put it in, and a significant investment of the taxpayers’ money. But it is a step desperately needed by the men and women in uniform.
The 2002 budget includes critical funding for military quality of life—increases in military pay, housing, and health care. It includes funding for training and readiness, for maintenance and repair of our aging equipment, for modernization and transformational R&D.
Mr. Chairman, we need every nickel of it.
This budget request not only begins to repair the damage done by a long period of under-funding and over use, it lays the foundation for the effort to transform our Armed Forces for the 21st Century.
Earlier this year, the President asked the senior civilian and military leaders of the Department to review the U.S. defense strategy, to propose ways we could reinvigorate the morale of our men and women in uniform, improve readiness to meet current threats, and achieve transformation of the forces to meet the new and different security challenges of the 21st Century.
That effort is nearing completion:
- The Congressionally mandated Quadrennial Defense Review will be finished this month. It has been the subject of extensive and fruitful discussion by the senior DoD civilian and military leadership. The report will be presented to the President and the Congress in the coming weeks.
- The annual Defense Planning Guidance (DPG) was issued last week. It will help guide the Department as work goes forward to prepare the President’s 2003 budget.
- A new National Defense Strategy has been developed and discussed with the President, along with a new approach to planning for and sizing forces. This new approach focuses less on specific regional conflicts, and more on building a portfolio of U.S. military capabilities to meet the wide range of contingencies we are likely to face in the future. Because we cannot anticipate who might threaten us in the future, but can predict with some confidence the means an adversary is likely to employ, we will likely be shifting from a "threat-based" to a "capabilities-based" approach to long-term planning.
- The new force-sizing construct we have developed and discussed with the President will replace the two Major Theater War construct that has guided us since the end of the Cold War. The new construct would prepare forces to defend the U.S., deter in four critical regions, prevail in two overlapping conflicts, while leaving the President the option to commit forces in either of those conflicts to impose our will on the adversary—including regime change and occupation.
- The Congressionally-mandated Nuclear Posture Review is well along, and will be issued this fall. It will recommend a path to fulfill President Bush’s pledge to achieve a strong, credible deterrent with the lowest number of nuclear weapons consistent with U.S. national security needs and U.S. alliance commitments.
- We have re-focused and revitalized the missile defense program, shifting from a single-site "national" missile defense approach, to a broad-based research, development and testing approach that will explore many previously untested technologies and approaches, and lead to the development and deployment of defenses able to intercept missiles of various ranges in various stages of flight. This will include the capability to defend not only the American people, but our friends, allies and deployed forces as well, from limited threats.
- At the same time, we are working with Russia to develop a new strategic framework for the 21st Century—one that will put behind us the hostilities and institutions of the Cold War, including the nuclear balance of terror and the ABM Treaty that helped enshrine that balance of terror as the foundation of our relationship.
- And, as we work to transform the Armed Forces for the 21st Century, we are working at the same time to transform the Defense Department—to encourage a culture of greater innovation, to turn waste into weapons, to show respect for the taxpayer’s dollars, and to speed the utilization of new technologies to help keep the peace into the decades ahead.
Mr. Chairman, these efforts will help us transform our Armed Forces for the 21st Century. But let me be clear: we cannot wait until the 2003 budget cycle to get started—the needs are too great and too urgent to delay.
We need your support for the President’s 2002 budget. We need your support for critical funds to repair aging planes, tanks and ships, to fix collapsing roofs and fund training and readiness for our troops.
The budget before you lays the foundation for the transformation of U.S. Armed Forces, while at the same time providing immediate and much needed funding for critical priorities contained in the new defense strategy—including funds to address risks to people, modernization and transformation that have been neglected.
So as you consider the 2002 budget, allow me to briefly share some of those priorities with you, and how they relate to the 2002 budget request before you.
As we prepare for the security challenges of the 21st Century, U.S. homeland defense takes on increasing importance. For most of U.S. history, we have been blessed with the security advantage of excellent geography, friendly neighbors and a vast ocean buffer. But the Cold war, with its threat of missile and bomber strikes against our territory, ended our geographic advantage. The end of the Cold War has not restored it.
To the contrary, the proliferation of weapons with increasing range and power into the hands of multiple potential adversaries means that the coming years will see an expansion of the risks to U.S. population centers—as well as those our allies. We will face new threats—from satchel bombs, cruise missiles, and ballistic missiles of varying ranges.
This is a major change in our circumstance. We can no longer count on future conflicts remaining largely contained within their region of origin far from our shores. States unfriendly to the U.S. are working aggressively to develop nuclear, chemical and biological weapons of mass destruction and a variety of means to deliver them. They are doing so because they want to have the ability to blackmail us by having the capability to strike our people where they live and work—as well as U.S. friends, allies and deployed forces around the world.
If we remain vulnerable to missile attack, a rogue state that demonstrates the capacity to strike the U.S. or its allies could have the power to hold our people hostage to nuclear or other blackmail. Forging an international coalition to stop an act of aggression by such a state would be difficult if not impossible. Without missile defense, the alternatives would be to do nothing and thereby let aggression stand, to repel the aggression (and thereby put our populations at risk), or to attempt to preempt, a difficult decision for any country.
What is at stake here is not just protecting the American people and our allies from attack—although that is critical; what is at stake is the U.S. ability to project force to defend peace and freedom in this new century.
Winston Churchill once said: "I hope that I shall never see the day when the forces of right are deprived of the right of force." That is precisely what rogue states intend—to deny the forces of right the ability to stop aggression and defend freedom in the 21st Century.
If we are to remain engaged in the world, the capability to defend the United States from a range of new asymmetric threats must be a high priority.
This is why the President has requested $8.3 billion for all types of ballistic missile defense. We need Congress to fully fund the President’s budget request—a budget that also contains critical funds to deal with terrorism, force protection, cruise missile and protection of our space assets. The safety of our people, our friends, allies, and deployed forces—and our ability contribute to the peace and stability that underpin world prosperity—depend on your approval of these funds.
The President’s request for missile defense is less than 3% of the 2002 amended budget. More than 97% of the defense budget goes to other critical priorities. It is a modest, but prudent, investment—especially when compared to the significant investments that rogue states like Iran, Iraq, Libya and North Korea are making.
Let there be no doubt: The threats are real. President Bush is committed to ensuring we develop the capability to contribute to peace, stability, and freedom. Without such capabilities, the U.S. could be driven inward at the great risk to the world economy; for without peace and stability, the world economy is threatened.
As you know, we are working to reach an understanding with Russia by the time our development programs bump up against the numerous constraints of the ABM Treaty.
Mr. Chairman, I recently returned from Moscow, where I met with my Russian counterpart and others discussing these matters. I believe that we may be able to reach an understanding with Russia—but let there be no doubt, doing so will be difficult and success is by no means assured.
Our discussions with Russia will continue in the months ahead. Secretary Powell will meet with his counterpart next month in Washington. I will meet with my counterpart later this month in Italy. And President Bush will be meeting with President Putin in China in October and in Crawford, Texas, in November.
Congress can help determine the success or failure of these discussions. If Congress shows the same resolve as the President to proceed seriously with research, development, testing and deployment of missile defense, it will significantly improve the prospects to achieve a cooperative outcome with Russia.
If Congress does not approve the President’s request for missile defense—if funding is cut or restrictions attached—Russia could get the mistaken impression that by dragging its feet it will be able to prevent development of U.S. missile defenses. This would harm our chances of achieving a cooperative solution.
We may or may not succeed in these discussions with Russia. But let us not fail because we send them signals of disunity or lack of resolve.
Mr. Chairman, The 2002 amended budget starts us on a path toward transformation by undertaking urgently needed, immediate repairs to our existing force, and by investing now in some of the transformational technologies and R&D that we will need for the 21st Century force. We cannot build that 21st Century force unless we first begin repairing the damage that was done by overdrawing the peace dividend of the 1990s.
We spent much of the 1990s living off the investments of the 1980s. We allowed our military capabilities to be slowly degraded as we overused a shrinking and under-funded force. To their enormous credit, America’s dedicated servicemen and women dutifully did more with less--putting off needed investment in training, infrastructure, maintenance, and procurement to keep up with a proliferation of missions. A number in Congress--and on this Committee--worked hard to give them more resources. But notwithstanding those efforts, an imprudent policy of overworking and under-funding our troops continued.
The result has been a critical backlog in maintenance, deferred procurement, a deteriorating infrastructure and lost opportunities for transformation.
For example, basic research funding has declined by 11% since 1992, and RDT&E funding levels have declined 7.4% in the same period. The deferred maintenance for DoD facilities—the cumulative amount that has not been funded from year to year—currently stands at some $11 billion. DoD is failing to meet the current standard to maintain a steady state of 310 ships, and, without added ship construction, is headed towards a clearly unacceptable steady-state of 230 ships. Every year the U.S. government puts off addressing these problems, the costs of "catching up" grow worse.
We need to change this. In addition to the various risks associated with our ability to execute war plans, the Department must also take into account the risks to personnel, to modernization and to transformation when determining how we allocate resources. And we need the cooperation of Congress in this effort.
The President’s 2002 budget proposes immediate investments to address the neglect of these critical areas and to begin stabilizing the force.
In February, the President proposed a $310.5 billion baseline budget that included $4.4 billion in new money for military pay, housing, and R&D. The request before you raises that proposed investment further to a total of $328.9—an increase of an additional $18.4 billion. Taken together, President Bush has proposed $22.8 billion in new money for the Department of Defense in 2002.
Among other things, the President’s budget:
- Requests increased spending on military personnel from the FY 2001 level of $75.4 billion to $82.3 billion – an increase of $6.9 billion – including funds for a needed targeted pay raise, and an improved housing allowance.
- Requests $4.1 billion to improve the quality of family housing – an increase from $3.6 billion in the FY 2001 budget.
- Requests the Congressionally required increased spending on defense health from the FY 2001 level of $12.1 billion to $17.9 billion– an enormous 48 % increase of $5.8 billion.
- Begins to reverse the neglect of maintenance and repair, requesting increased spending on operations and maintenance from the FY 2001 level of $107.9 billion to $125.7 billion today – an increase of $17.8 billion.
- Fully funds Navy and Air Force OPTEMPO costs.
- Plants signposts for 21st Century transformation, proposing an increase in spending on RDT&E from the FY 2001 level of $41 billion to $47.4 billion – an increase of $6.3 billion.
This budget also includes a commitment "realistic budgeting" in order to stop the pattern of annual "emergency" supplementals. For example, health care costs in the country are increasing at an annual rate of 13%. But the FY 2001 budget provided just $12.1 billion for military healthcare—falling short of what was needed to cover that rate of increase by $1.4 billion.
By contrast, this 2002 budget proposes $17.9 billion for defense health—a $5.8 billion increase—that should allow us to cover a probable 12% growth in the costs of medical care and a likely15% growth in the cost of pharmacy purchases. This means that, for the first time in years, the FY 2002 budget should fund a realistic estimate for military health care costs.
Mr. Chairman, these are important investments. But let me be clear: this budget won’t get us out of the hole we are in. Today, we are proposing a $328.9 billion defense budget for FY 2002. But to keep the department going next year – FY 2003 -- on a straight-line—no improvements, just covering the costs of inflation and realistic budgeting—we will need a budget of $347.2 billion. That is an $18.3 billion increase before including the additional investment that will be needed to modernize and transform the force for the future.
The point, Mr. Chairman, is that it took the U.S. government years to drive the Department of Defense into this hole, and, I regret to say, it is going to take us years to get out. It is a lot easier to do things right in the first place than it is to straighten things out after they’ve been done badly. But, that is the hand we’ve been dealt, and we need to get about the task of fixing it.
We need your support for the President’s proposed increases in pay, housing, health care and quality of life for our men and women in uniform. We need your support to fund the increased cost of flying hours, tank miles and steaming hours for our forces. We need your support to begin to work off the backlog of facilities maintenance and repair, for weapons system maintenance and repair, for modernization, and for transformational research and development. These important investments will help lay the groundwork for 2003 transformation budget.
But we cannot transform our Armed Forces for the 21st Century unless we also transform the way the Department of Defense does business.
This Department used to be a technological leader—an engine of innovation. Today, with few exceptions, DoD can barely keep up with the pace of technological change, much less lead.
Consider: Since 1975 the Department has doubled the time it takes to produce a weapons system—at a time when the pace for new generations of technology has shortened from years to just 18 months. This virtually guarantees that many of DoD’s newest weapons will be one or more technology generations old the day they are fielded.
The combination of internal inefficiencies and external constraints on the Department together ensure that DoD operates in a manner that is so slow, so ponderous, and so inefficient that whatever it ultimately does produce is late and wasteful of taxpayer dollars.
At the same time, DoD’s processes and regulations have grown so onerous, that a number of commercial businesses—developing needed technologies—prefer not to do business with the Department.
If DoD is no longer the engine of innovation in the 21st Century, and if many of the private sector companies that are the engines of innovation prefer not to do business with us, how can we effectively transform to meet the challenges of the 21st Century?
This situation cannot stand. That is why, in the coming weeks we will lay out a plan to address the waste and duplication of effort at the Department. We will undertake initiatives to encourage cost savings, to foster a culture of intelligent risk taking, and to begin applying modern business practices to the way the Department does its business. We will outline specific cost savings that we are undertaking unilaterally, as well as structural reforms that will help lay the groundwork for further savings in the years ahead.
Our efforts will be guided by a new Senior Executive Council that includes the Undersecretary of Defense for Acquisition, Technology and Logistics Pete Aldridge, and the three Service Secretaries: Secretary of the Army Thomas White, Secretary of the Navy Gordon England, and Air Force Secretary James Roche. They are leading a new effort to bring the Department and its business practices into the 21st Century.
But while there are many things we are doing unilaterally to transform the Department, we cannot succeed without help from Congress.
For example, we need your support for our Efficient Facilities Initiative of 2001 ("EFI"), requesting Congressional authorization for a single round of military base closures and realignments in 2003.
Since the end of the Cold War, the number of men and women in uniform has come down over 40%. But there has not been a parallel reduction in facilities. People who have studied the problem conclude that we have roughly 20-25% more infrastructure than we need to support the force. That excess infrastructure is costing unnecessary tens of billions of dollars every year in unneeded rent, utilities, and maintenance. We estimate that after the first few years, EFI could save as much as $3.5 billion annually—money that could be better spent on priorities such as readiness, modernization, and quality of life improvements for our troops.
We need your support for the proposed revitalization of the B-1 bomber fleet. By reducing the fleet from 93 to 60 aircraft, concentrating the remaining aircraft in the two largest B-1 bases (rather than the five bases where they are scattered today), we can free up funds for the Air Force to rapidly modernize the remaining aircraft with new precision weapons, self-protection systems, and reliability upgrades so that they can remain viable for use in future conflicts. There has been a great deal of vocal opposition to this proposal, but it is the right thing to do and we need to get on with it.
This reform will add some $1.5 billion of advanced combat capability to today’s aging B-1 fleet over the next five years—without requiring additional dollars from the taxpayers. It would revive the B-1 force, so that it can provide America with the kind of all-weather, long-range strike capabilities that will be critical in the 21st century.
Mr. Chairman, this is the kind of efficiency we owe the American taxpayers. Congressional support for this plan is needed to send an important signal to all of the Services, and give them an incentive to find further cost savings by telling them that such efforts will be rewarded with freed up funds to improve capabilities, rather than simply being bombarded with complaints for their efforts.
The failure of this proposal, by contrast, would send a harmful signal across the defense establishment that if the Services do step forward to find innovative ways to save money and to increase efficiency, not only it will be a waste of their time and effort, but it will lead to hostility to them and to the Department. That is not the message we want to send if we want to be respectful of the taxpayers’ dollars and if we truly want to strengthen our national security.
We also need your support for the proposed elimination of the Peacekeeper missile. The previous Administration’s 2002 budget included $100 million to fund operations, maintenance, and personnel support for the Peacekeeper, plus $5 million more for procurement support in 2002 – but then it included not a dollar for follow-on funding for 2003 or beyond, either to sustain the missile squadron, or to retire them.
Rather than continue spending taxpayer’s money on an unneeded system, we have proposed deactivating the Peacekeeper system over a five-year period. Doing so should avoid costs of $320 million during the deactivation, and then an additional $150 million annually thereafter.
Another area where we may also come to you with proposals for reform is in officer and enlisted career lengths. We’re losing good people sooner than we need to. Today, we have policies that have the effect of uprooting enlisted personnel and families every few years to move them to new assignments—and then, after training them and benefiting from their fine services, half of them leave the service when they still have so much to offer. Similarly, we bring in commissioned officers, train them, bounce them around from assignment to assignment every two or three years, that they end up skipping across the top of the waves so fast they don’t have time to learn from their mistakes. And then we have them retire in their late 40s and early 50s—while still in their prime. No private enterprise could survive functioning this way.
By undertaking both unilateral reforms, and reforms in cooperation with Congress, we can and will bring the Defense Department into the 21st Century. As President Bush told the Veterans of Foreign Wars two weeks ago, "We’re not only going to spend more money on national defense—we’re also going to spend it more wisely."
Mr. Chairman, we need to do so because the harsh reality is that the unmet needs of the U.S. Armed Forces far exceed the funds available to address them. So unless together we can turn waste into weapons, we will have to come to you next year and the year after that, asking you to appropriate still more of the taxpayers money to meet urgent needs—many of which could have been paid for by trimming cost savings from within.
Neither the transformation of U.S. Armed Forces nor the transformation of the Department will be easy. Change is hard. A philosopher once wrote: "there is nothing more difficult to plan…or more dangerous to manage than the creation of a new system. For the initiation has the enmity of all who would profit by the preservation of the old institution and merely the lukewarm defense of those who would gain by the new."
We have no choice. We are entering a world where new threats can emerge suddenly. We must have a military sized and structured to meet those challenges. And we must have a Department that is innovative, flexible and forward thinking if we are to meet those new and different threats.
To accomplish this, we need your help. As I said at the outset, we are in a hole. And the first rule of holes is; "when in a hole, stop digging." But each year we put off these critical investments, every year we "kick the can down the road", we are digging ourselves deeper and deeper into that hole. Each year we put off these investments, it will be vastly more difficult – and certainly much more expensive for the taxpayers—to fix the problems. It’s like having a credit card—if you pay only the minimum every month, the interest will accumulate and the cost of digging out of debt gets bigger and bigger every year. That is what we have been doing to our Armed Forces.
Changing that requires a new strategy, a new force sizing construct, and new investments. We’ve been living off the investments of the 1980s for too long, to the detriment of our men and women in uniform. We have given insufficient attention to the risks to personnel, to modernization and to transformation.
The time has come to change that—to reinvigorate the morale and readiness of our force, and to prepare for the new and different challenges of this new and still dangerous century. The necessary first step to doing that is for Congress to approve the President’s 2002 defense budget.