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DoD News Briefing - Under Secretary of Defense Dov S. Zakheim

Presenters: Dov S. Zakheim, Under Secretary of Defense (Comptroller)
May 31, 2001 1:45 PM EDT

Thursday, May 31, 2001 - 1:45 p.m. EDT

Quigley: Dr. Dov Zakheim is the -- for those of you who have not had a chance to meet him, he is the recently confirmed chief financial officer and is the comptroller of the Department of Defense. And he is here today to discuss with you the '01 supplemental for the department.

Dr. Zakheim.

Zakheim: I suppose I ought to start with an apology to those of you who know me who've been wondering why I've been totally out of commission for the last couple of months. The system, as you know, is rather restrictive; they barely allow you to breathe until you're confirmed. And so apologies to those of you who have been friends for many years and I've been a source for for many years. It's just the way life is. Till the system changes, that's what it's going to be like for a lot of people.

Let me tell you up-front, as of right now, a quarter to, the supp [supplemental] had not yet been signed. And it since it hasn't been signed, by definition it is subject to change of any or some kind. That means that I can't talk numbers. (Laughter.) Now, it's kind of difficult for a comptroller not to talk numbers, but what I can give you, and I think this is very, very important -- because you'll get the numbers as soon as it's signed, and whenever that is, you'll have them, but I think it's very important to understand the context of this supplemental and how it fits into the larger scheme of what the administration is trying to do with defense spending generally.

The president has said that he is not very comfortable at all with the way budgets have been dealt with over the last few years where you had a system -- you might even call it a pathological system -- where there was deliberate underfunding in the anticipation of supplementals, where there was gamesmanship regarding what was termed emergencies, "emergency" became used very, very broadly so that people could evade the very caps that they had set upon themselves. And it was felt we just have to bring a halt to that; we have to go cold turkey.

Now, with the '01 budget, which essentially is a legacy of an ongoing budget, there was obviously a need to have some kind of supplemental to deal with shortfalls that just were unavoidable. Unless we were prepared to have planes not flying in the fourth quarter of this fiscal year, or have lawsuits because bills were not being paid, we had to do something. There is no use of the term "emergency" in the supplemental. The supplemental lives within the caps. And without going into a number, I can say that DoD got roughly 90 percent of what's in that supplemental; and I say roughly 90 percent because it can change.

Now, as you know, the cap is only $6.5 billion in total. That is not a huge amount of money, and it's certainly not anything like what was outlined by the services in terms of their shortfalls. But many of those shortfalls were due to estimates of what might be needed roughly around the end of '01, roughly around the beginning of '02.

And some of them, quite frankly, were based on the old way of thinking that, "Well, if we don't get the money now we might never get the money." And it's very important to understand that '01 is joined at the hip with '02.

There is an '02 budget amendment coming down the pike. It will presuppose no supplementals in '02 -- no supplementals. Now, could there be a supplemental? Of course there could be a supplemental. You now, God forbid there's a war, there could be a supplemental by definition. That's true emergencies. But in the ordinary course of business the president has made very, very clear he does not want supplementals. And therefore, '02 is going to reflect that presupposition.

It's also going to reflect a number of other things. It's going to reflect, for example the president's commitment to missile defense. The '01 supplemental, which is meant to deal with urgent shortfalls, is not the appropriate place to put money in for missile defense. But remember, to have an '02 amendment that's viable, we're talking about getting it to the Congress some time in the early summer. So it's really a matter of weeks before the '02 amendment goes up. And I think folks can wait a few more weeks to see what we have to say in terms of funding missile defense.

In the same vein, the president has made it clear that he's committed to transformation of the military. The question is, where do you start funding big dollars for that? Is the '01 supplemental really the appropriate place? Not if you take supplementals seriously as something that, if you will have at all, you only have on an urgent basis where there are shortfalls. So there will be some minimum dollars -- very, very minimum dollars as, kind of, seed corn for some transformation projects but that's about it; '02 is the place for that.

There are quite a few bills that have to be paid in '01. There are higher health care costs, as you well know; there is a legal provision for dealing with some new health care adjustments, as well as an omnibus agreement with the insurers regarding health care claims. Those have to be paid out, and those are not insignificant amounts of money. There are various legislated entitlements; pay raises for the E-5's to E-7's, those middle grade petty officers and non-coms that have to be paid out.

The housing survey identified the fact that we were paying people insufficient amounts of money to live outside some slum areas. We've got to rectify that -- got to rectify it now. The cost of food for the Army turned out to be higher than anticipated. Got to rectify that.

You're familiar with the energy crisis in California. Well, the cost of fuel generally has gone up. The cost of utilities has gone up. That has to be paid. There are some real property maintenance costs and there are some very serious flying hour costs and some training costs that just have to be met, and have to be met now.

Other areas. We have to recover the bodies of the Ehime Maru. Can't leave that till the next fiscal year. There's some money that has to go into training for the Focus Relief effort in Sierra Leone. That has to be dealt with quickly. There's some force protection money that has to be dealt with quickly. Joint exercises. Some training munitions. Some money -- we're falling short, particularly on the Air Force side, in recruiting and retention. We have to put some money in urgently for that.

So that's where the money is going. It is not going to major spending initiatives, to major departures. It is not a supplemental that is going to end run the way the system should work. And at the same time, it's a message that this is part 1(a), of which part 2(a), or part 1(b), is going to be the '02 amendment, where we will on a much larger scale with the initiatives, whether it's in missile defense, whether it's transformation or some of the other areas that obviously -- I mean, health care continues to rise. This is an entitlement that is growing far faster than anyone anticipated -- well, some people anticipated, but certainly the government didn't -- a year or so ago.

We have to deal with the infrastructure. We have to deal with housing. There is some money already for the housing initiative, but we need more. We have to honestly fund our programs. We don't want any more of the gamesmanship where there is some kind of sense that, well, we can underfund programs and then make it up in supplementals. Well, the only way you can rectify that is being up-front about the costs and then funding them. That's an '02 issue and an '03 issue and an out-year issue.

So why don't I stop here and I'll take your questions, because I know I disappointed you from the start.

Yeah?

Q: Could I ask you -- I guess I'm asking you to repeat yourself.

Zakheim: That's all right.

Q: But what you are suggesting is that the $7 to $8 billion dollars, or whatever it was that top military brass wanted, might have been padded. You are confident that what you are asking for will fund everything from flying hours to pay to everything else by the end of the year?

Zakheim: I'm not in the least bit implying that it was padded. I think that the military requests are very, very real. The real issue is how much of those requests really can be met and executed in '01? I mean, look, it's June, right? So let's say it goes up to the Hill today, tomorrow, this week. The Hill's in recess. It has to then act -- we have two committees that have to act on this supplemental; possibly a conference, whatever. So when is the money really going to be available? Sometime in July? So we're talking July -- half of July perhaps, just for argument's sake -- August and September: two and a half months. You've got two and a half months to execute billions of dollars.

So it wasn't a matter of padding, it was a matter of what can realistically be executed when it is needed to be executed? And that's what drove our approach.

Q: But this will pay for all planned -- as of now, for all planned training, flying --

Zakheim: We believe that this, plus -- you know, very often in the past there have been some omnibus reprogrammings. We want to keep those to a minimum. But yes, we believe that this will. There is also going to be -- and again, I won't give you the dollar figures, but, you know, the blue ribbon panel under General Dailey talked about restructuring the V-22 program, and there will be a rescission of some magnitude, which, again, is going to be applied to some of these needs. But that rescission presupposed the blue ribbon panel's recommendations.

Yeah.

Q: You mentioned that the '02 amendment would be considerably larger than the '01 supplemental. Can you give us some ballpark estimate of --

Zakheim: Well, I mean, give you -- considerably larger than a number I didn't give you? (Laughter.)

Q: The number you have in mind, is that four times, five times bigger?

Zakheim: I really don't know. I mean, we -- what we have -- as you know, the budget resolution did not put a ceiling on '02. It was kind of interesting. There were various proposals on both sides of the aisle, in the Senate in particular, to put an additional number on the function 050, the defense and defense-related function of the budget for '02. And the ultimate outcome was, "Well, we'll see what the secretary's strategy review yields." And I think that's probably the best way to look at this.

I believe it will be larger. It has to be. Logically it has to be because we're talking about initiatives that the supplemental just didn't address, and properly didn't address, in my view. But how much larger? Well, you know, we have to total it up. We have to see what's there, we have to scrub the numbers. And I would be misleading you if I gave you a number right now. It wouldn't be fair to --

Q: Is there some range that you have in mind, I mean $20 billion to $30 billion or --

Zakheim: Well, I know you're trying to get me to say 20 to 30 or whatever the number is, and I'm going to come back at you and say we'll add it up and then you'll know what it is when we know what it is, which we don't yet, quite honestly.

Yes?

Q: During the campaign, a frequent mantra to military audiences was, "Help is on the way." And there's been a lot of grumbling that, indeed, help has not been on the way; that they've been waiting four or five months for this. And your comment about there's not enough time to execute more money, I think their response would be, "Well, if you'd given it to us earlier, there would have been."

So what do you have to say to those critics that say, "Help is on the way maybe, but really what we wanted was the tax cut, and so whatever's left over, DoD can have."

Zakheim: Okay, I'll leave aside the fact that by saying it was a "mantra" you're kind of giving away where you're coming from.

Look, the fact has nothing to do with -- in terms of execution, with when you would have started, because by definition, if the money were needed and could be executed by the end of the fiscal year, then that's what could be executed by the end of the fiscal year and it wouldn't really matter whether they got that money in March or in June; that is the money that covers the shortfall. The shortfall is a finite amount of money, and then the question is, how much can you spend on it to cover it?

In terms of why we took so long, it's pretty straightforward. I mean, I've been on board -- what? -- two and a half weeks give or take? That wasn't my fault, but that's the way our system works. And not only was I not on board, but I was restricted -- not only were you people people I couldn't talk to, I couldn't talk to foreigners, I couldn't talk to Congress, I couldn't talk to half my friends, okay? (Laughter.) You know, everybody fit into some category. I've been in this business a quarter century, so who are my friends? And all of a sudden I couldn't talk to this one, this one, this one and this one.

So I certainly couldn't make policy decisions. I certainly couldn't give instructions to the comptroller staff. Until I was confirmed, I didn't know that I would be confirmed.

Now, I've at least gotten in. I'm one of the lucky ones. There are quite a few that are still waiting out there. And for a very, very long time, Secretary Rumsfeld had one person with him, and that was Deputy Secretary Wolfowitz, and that was it. Now, we have terrific career staffs, but they are not meant to give policy direction, they're meant to implement policy direction. And so you had two people to cover everything, from a crisis over the airplane that went down on Hainan Island, to budgets, to foreign visits, to missile defense, to whatever it is. Two people. And so what do you expect?

All right. Yeah?

Q: You mentioned a rescission on the Osprey funding. The blue ribbon panel's strong recommendation and the Marine Corps' expectation was that the money would stay within the program to fix the problems. If you're taking away whatever is allocated for procurement, you don't have money to fix the problems.

Zakheim: Well, you do. I mean, the original program, as you know, presupposed quite a bit of procurement dollars, and there was some R&D money but, you know, the assumption was they were well past that. Particularly what the blue ribbon commission has asked for is a lot more operational testing and, frankly, a lot more work on the physics, as you know. Now, that restructures the program, and that means that some of the money that was assumed or presumed to be for procurement no longer really is executable now. That's the money we were talking about. In fact, the original sums that were being bandied about were considerably higher than this rescission will be, precisely for the reason you just gave, because the idea was to make sure the Marines have the money between now and the end of the fiscal year to really get going with those recommendations. And I believe that the money that is left for them to do so will do so.

Q: Have you set a number on the -- minimum procurement number in this budget? That kind of sets a threshold for where you start taking money away.

Zakheim: We have set a number, yes.

Q: Can you give --

Zakheim: And what the number -- hey, I'm not in the numbers business today. I'm just the comptroller. (Laughter.)

Q: Do you have any doubt that the president will sign this?

Zakheim: No, I have absolutely no doubt.

Q: So it's a scheduling item.

Zakheim: Yes. Yes.

Q: And you expect it to happen this afternoon?

Zakheim: I expect it to happen imminently. But you know, imminent -- my God, I have a friend who was up for confirmation, and he's now confirmed. He's in this department. And he calls me one Monday; they told him it was imminent. And a week later, the imminent happened.

So I don't think it's going to take a week, but, you know, I mean, it could be today, could be tomorrow, could be the next day; I mean, I just don't know.

Q: So you don't expect any finagling of the numbers in between?

Zakheim: No. Finagling? (Laughter.) We're not finagling!

Q: Well -- but -- I mean -- do you expect him to change numbers?

Zakheim: No. Ah -- that's a different question. No, we don't anticipate numbers being changed. There is always the outside chance and, frankly, as a courtesy to both the president and the Congress -- because, after all, this is the president sending the numbers to the Congress. It's inappropriate for us to anticipate anything until it's actually out the door and in Congress's hands.

But I don't anticipate anything -- I mean, it'll be a surprise if there's a change, point one, and point two is I think "finagling" is -- that's a good example of the mindset that went around this town for so long. That's what we're trying to break.

I mean, there was a presumption of everybody -- you guys in the press, the folks in uniform, Congress, the staffers, that this is all gamesmanship every year. And, you know, I've been in the budget business a long time. I started out in CBO 26 years ago, and you know, I mean, frankly, it did get very creative in the last few years, and we're trying to go, you know, back to basics.

Tony?

Q: Dov, I mean, I've got to challenge that a little bit. If you look at the history of these supplementals, a lot of it was for unplanned contingencies.

Zakheim: But not all of it.

Q: Well, a great deal of it. (Inaudible.)

Zakheim: And that's why I didn't rule out supplementals.

Q: Excuse me?

Zakheim: That's why I did not rule out supplementals. I was very, very clear. If there is something that is an unforeseen contingency; I mean, something that happened that nobody predicted that gets us involved in military operations or something, of course. But one has to be very, very careful about how one treats supplementals and, indeed, how one budgets for them.

And the pathology wasn't that we would get involved someplace that we -- you know, I mean, Kuwait is a good example. I mean, nobody predicted Kuwait a week before it happened. The pathology was that you would underbudget, say for an acquisition program, and basically you figured, "Well, we'll go in with this low number and then we'll work it out and there'll be a supplemental," and there was a lot of that, and you know that, Tony. You've been around as long as me.

Q: If that's so, your numbers, if I understand them correctly, were based on your sense of where the ceiling was. The services came in with a shortfall based on what their expectations were of what they could execute before the end of the fiscal year. Given that there's a space between those two numbers, I would imagine either some of the things the services expected to do won't get done, or there is a certain amount of that figure which you're ascribing to "pathology," I mean, you're basically saying that the services invented.

Zakheim: No, I don't think --

Q: Could you address that distance between those two numbers?

Zakheim: Sure, and it is a fair question. I don't think that the services -- I think the services read the secretary loud and clear. I don't think that they gamed this one. I think that they recognized that it wouldn't get them anywhere and they didn't. But let me give you an example of what I'm talking about where you could see there would be a kind of dissonance between what the service comes in with and what shows up in the sup.

There was one service that felt that they would have to, if they didn't get everything they asked for, freeze civilian hires, okay? Now, freezing civilian hires from the middle of July to September is not that big a deal because if you were offered a job in the middle of July you'd probably take it after Labor Day anyway, or maybe October 1, okay -- somewhere around there. You'd wait a couple of months. If you, on the other hand, were offered that job but were told, "Well, you know, we can't give it to you now, and you know what, we don't even know if we can give it to you next year," you wouldn't take the job.

And there was a real concern that -- and this was based on the old think, that, "Well, if we don't get it into the supplemental now we may not get it." And our whole point is, no, it will be in '02. The two are joined together.

Q: You're basically now assuring the services that anything they thought they needed in '01 and are not getting a supplemental will be in the '02 budget to start with.

Zakheim: There will always be a discussion in what's called a scrub, but any request that we recognized that was simply one to defer to '02, our commitment to them is we're putting it in '02, yeah.

Q: Can I just follow up on one other question?

You've used some very strong language to describe --

Zakheim: Me?

Q: -- the budgetary practices of the armed services here. When you talk in terms of pathology and chronic gamesmanship and finagling --

Zakheim: I didn't say -- (laughter).

Q: -- you suggest that --

Zakheim: Time out, time out. I didn't use finagling.

Q: Well, you cited us an example of the kind of thing that happens -- (cross talk) -- used first by a reporter --

Zakheim: No, I used an example of how you guys in the press picked up the same pathology.

Q: Yeah, I think -- well, all right. My question is, given that you're trying to change these things --

Zakheim: Yes.

Q: -- you've described as a pathology --

Zakheim: Yes.

Q: -- that would suggest that something more than some simple changes in budget practices --

Zakheim: Oh, that's absolutely right.

Q: -- are necessary.

Zakheim: Yes.

Q: Can you lay out for us what exactly you plan to do to change the mindset of the armed services and the way they look at this budget?

Zakheim: Well, I think the first thing is to be honest with them, okay? I think that the morale -- look, I've got a lot of friends who wear uniforms, and for many years I have, and I watched morale just plummet in this place. There was a total collapse of trust. People were told one thing and other things happened.

So I think the first way to restore this -- and this can get restored pretty quickly, actually, because I think there was a tremendous desire for this -- is just to be honest with folks. And if we're telling people, "Look, this is how we treated the '01 supplemental, and this is how we're going to treat '02." Then we have to deliver on what we say, and they have to see that we're making a good-faith effort. And no matter whom they speak to, they have to hear the same thing; that, yes, these folks are making a good-faith effort. So that's number one, just getting people to believe you and to trust you. And it's amazing how that changes the way people operate.

If there is no trust, then there are -- the people will resort to stratagems. It isn't just in budgeting, it's in any aspect of life, and you know that. If we deliver on what we say -- mean what we say; say what we mean -- I think this attitude will change because I think the services didn't like this. They didn't like the straitjacket into which they were put. And you talk to these folks all the time and you know it's true; they did not like this. They were forced by the nature of a system gone awry to operate this way. And what we're saying is, we're just not going to put them in that position again.

Yeah?

Q: Since you can't give us a total figure for '02, how about a more narrow figure on missile defense? Someone like -- Curt Weldon has suggested a one or two billion increase for '02. Is that about the ballpark or a little more than that?

Zakheim: Well, you know, I think that, obviously, Congressman Weldon is quite an expert on these matters. You know, hey, I mean what I say and I say what I mean; I wasn't going to give you numbers, and I'm not gonna.

Q: You don't have to give a specific number, just more or less than that. (Scattered laughter.)

Zakheim: I think -- I believe that the current level, as has been budgeted up to now, is seriously inadequate and we will have to add more. And if you look at what the secretary has said about it, what the president has said about it, you obviously are going to have to put more money into this program to do the kinds of things, you know -- the president said we want to try out all technologies; we don't want to rule anything out.

Well, you know yourself that's going to mean, if you're serious about it, it's going to mean considerably more money.

Q: More than one or two?

Zakheim: Considerably more. You're not going to get me to a number today.

Yes?

Q: Is this supplemental going to cover the health care changes --

Zakheim: Yes.

Q: -- that were legislated in '01 but not funded?

Zakheim: Yes. Yes.

Yeah?

Q: Two of the chronic shortfalls have been the defense health program and flying hours, and this has gone on, hundreds of millions a year, for five or six years. Now, either the models are hopelessly incompetent or those are gold watches, because they're always going to be made up. Do you have a sense -- and those are two big chunks of money -- have you, given that you've only had two and a half weeks and so on, have you been able to form a tentative --

Zakheim: Sure, two and a half weeks. (Chuckles.) On the health care, first, I think it's simply a reflection of the country-wide phenomenon. Health care has escalated dramatically, and if you are going to treat your military no less well than you're going to treat people out of uniform, then it's going to reflect the same degree of escalation.

Now, there are all kinds of good ideas out there in terms of how to get our arms around defense health. We've got David Chu, who is on board now, who's an expert in this area and has served with me on the Defense Reform Task Force for Secretary Cohen, who has some creative ideas about this, and I would refer you to him. But we clearly have to get our arms around the issue, but we have to do it in a such a way that doesn't shortchange the people in uniform. So that one clearly is not a matter of gamesmanship.

On the flying hours, I think again part of this was the fact that there was some gamesmanship. It was, again, a presupposition in the past that, you know, "Hey, we'll do it this way, we'll get the money in a supp." I mean, you spoke to people who were putting budgets together for the following year and they were already assuming supplementals, and you know that.

And so we're telling people, "Look, we'll play straight with you, you play straight with us. You tell us what you need to budget for, then we can work the problems out, but not with these shadow categories, because there won't be supplementals, in normal circumstances."

Yeah?

Q: Can you give us a little sense of the interagency give-and-take on the development of this number, whatever it is? In other words, did the OMB say this is what you're going to have to work with? Would you have liked a little bit more?

Zakheim: Actually, I though the OMB folks were very, very helpful. If you look at, particularly -- I mean, Mitch Daniels had some experience with defense matters, you know, because of his Hudson Institute connection, and Sean had my job and did it very, very well. So we're talking about a group of people here who really understand defense needs, understand what -- and, of course, understand the president's commitment.

I mean, that's clear.

So I think that a lot of -- and here I think there was some inaccuracy in some of the reports -- a lot of the -- I mean, you guys love internal battles, and I don't blame you. I mean, that's what you do for a living; watch these battles. But I think in this case it wasn't really that way at all. And I feel very comfortable with our relationship with OMB.

Q: And can you help us understand a little bit, conceptually, about the '02 budget? Since so much of the thought process that will structure, ultimately, the direction the administration goes with defense is not going to be complete, how much do you feel will be reflected in your '02 budget? We are being told, "not much." (Laughter.) "In a few areas you will get some big kicks, but other than that, look to the '03 budget."

Zakheim: I'm not sure entirely about that. I mean, clearly, you know, this strategy review has been ongoing for a while. We're going to be able to derive some lessons, not all, on some areas, as I mentioned. On transformation, on missile defense in particular, there should be more money. Will it be at the level that we would expect in '03? Well, of course not. After all, it is a budget amendment. And will there be more forthcoming as a result of these studies and a result of the considerations in the Quadrennial Defense Review as well for that matter? You know, all those are going to input into '03.

But I think that '02 is the first real opportunity for the administration to show that it's putting dollars next to its principles. It's not the only opportunity, it's not the biggest opportunity, but it is the first opportunity.

Q: So you want to be judged, at least in the 12-month period, by the kind of dollars you put against that budget, and when people -- automatically you can assume they're going to stand up -- some are going to stand up and say, "Hey, that's not enough. That's not what you promised."

Zakheim: Well, again, what I would say is, you have, right now, a seven-month period between when this budget goes up in the next day or so, through December when the '03 budget is put to bed -- a seven-month period where you are essentially looking at three budgets.

The first one, the one that's about to go up, simply deals with the urgent requirements. It is not meant to be a pathbreaker. That's not the right place for it. The second one is one that starts to point in the directions in which we wish to go. And it will do so in a very unequivocal way. And then the third one, which is the first one we work on from start to finish, obviously will reflect, in a full-blown form, what this administration is trying to accomplish with respect to national security and defense.

So will '02 be the complete answer? No. But will it point the way in a very clear, distinct fashion? Absolutely.

Q: How do you --

Quigley: Just one or two more, please, ladies and gentlemen.

Q: How do you think the shift in the power in the Senate will affect the administration's ability to push through a much more robust defense budget?

And has that figured at all in your thinking in looking at the '02 budget?

Zakheim: I personally don't see that. You know, the senator who sponsored me in front of the Armed Services Committee was a Democrat. And I have always felt -- and maybe, again, this is just a hangover from my CBO days -- that this is just a nonpartisan issue. I think there is a tremendous sense on both sides of the aisle that national defense has to be updated, transformed, modernized; and that, most important of all -- whether it's the '01 budget, where all the programs, or the vast majority of them, are people programs, or '02 or '03 or the out years -- most important of all is that we have to treat our people decently.

And maybe I should have begun with that. There is something fundamentally wrong -- my youngest kid is 19, okay? There is something fundamental wrong with telling your kids to go out there and risk their lives -- because they could die in a training accident or because they could be bumped off in some city somewhere in the world where they're on liberty -- and then you don't give them the proper housing. You keep them away for endless periods. You play games like this 179-day deployment so you don't have permanent change of station, and what that does to families. You've got men, you've got women who have got families, children, spouses.

If we don't treat these people well, if we don't fix the infrastructure they work in, if we don't fix the houses they live in, if we don't provide for their kids' education, if we don't provide for their well-being, if we don't provide for their health, why in God's name should they volunteer to protect you and me? And they're doing it. And so that is something that I think is not a Democratic issue or Republican issue.

Q: But one issue -- if I could follow up --

Q: (Inaudible) --

Zakheim: All right. Let him follow, and then you can jump in. Yeah?

Q: But one issue in particular appears to be a highly partisan issue: that's the missile defense issue. You said that the funding is considerably inadequate, and if we're serious about it, that it needs considerably more money.

Zakheim: Right.

Q: So what are the prospects for getting that more money for missile defense?

Zakheim: I'm reasonably sanguine, and I'll tell you why. I don't think it's as partisan an issue as you might, perhaps. And that is because we are not -- you know, I was there in '83 when the president gave a speech, and it was a very different world. We're not out there to zap the Russians, we're not out there to zap the Chinese, we're not out there to build astrodomes. We're dealing with defenses against countries whose values are very different from our own. We don't even know, necessarily, where those threats will come from in the next 10 years.

We are dealing with technologies that now clearly have been demonstrated to work in a way that they didn't. We know missiles can hit missiles. We know that you can field missile defenses. I mean, the Israelis have the Arrow, for goodness sake. It's an operational missile defense system, and it can take out Scuds, which happened to knock out our own folks in the Gulf War.

So the technology has changed, the international environment has changed. I believe there's a lot more international support than there ever was for this concept before. I believe that the fact that Europeans now see that there's not a distinction between theater and national missile defense means that there is indeed no proclivity on our part to somehow become a bunch of hermits or turtles under a protective shell for ourselves; that we really do see this as a larger protection scheme, just like offensive missiles protected Europe. They didn't build those missiles themselves.

The context has changed completely, and I believe that there are a lot of Democrats who see this. There are a lot who, up to a few years ago, were against missile defense and then supported -- for instance, what Senator Cochran supported a couple of years back. So I think even there, the context has changed.

You had a question.

Q: Dov, wouldn't you agree, in follow up to that, that most members -- historically, the Armed Services Committees on both sides of the aisle are kind of washed in the blood of the military lamb and they are for defense. But polls show that most Americans are not, or at least it's not high on their radar screen, major increases in defense spending. And wouldn't that raise questions in Congress in general, aside from the Armed Services Committees, whether you're going to get a lot more money?

Zakheim: Well, I think a lot of it has to do with whether the American people have really been engaged on defense issues. I don't believe the average American has been engaged on defense by his government, her government, for the last eight years. I just don't. It's my view. Call me partisan. And I don't think that in those circumstances most Americans know very much one way or another. You know, you ask the average American, how much do we spend on defense, you can get all kinds of answers.

But on the other hand, when people are exposed to the issues, they invariably -- and, you know, polls have shown this over and over again -- are very supportive. I think it's a function of engaging the public, laying the issues out for them, and, you know, we're a pretty good public.

Q: I wanted to ask you on restoring truth in the building here, in the morale of the building. Can you speak a little bit about the chronic practices of the military services, though, to give low-ball estimates of how these weapons programs are going to play out? And Aldridge wants to do a truth-in-budgeting --

Zakheim: Yes, yes.

Q: Talk about that portion of it.

Zakheim: Well again, I think that -- I'm not sure that the services are necessarily going to rebel against truth in budgeting. I think, again, it's been a function of the fact that if you look, particularly in the past few years, how much of the money that was supposed to go to acquisition migrated to operations and maintenance. Well, in that kind of environment, if you're a program manager, all you want to do is get the program started and figure out, well somehow it will take care of itself. And you know that if you give the real cost of the program, you're in trouble because nobody is going to want to fund it, because in any event, people anticipate the money is going to drain away.

Well, if you are honest about all aspects of this, if you protect the O&M side and protect the acquisition side, and you try to minimize this draining away of acquisition funds, which has been the case for so many years, and then you say to the military, "Look, you tell us what it costs. Now let's evaluate things on their merits." I happen to believe -- and maybe I'm naive -- that the folks in uniform will play ball on that. They have not been given a chance to play ball that way, so we want to do that.

Thanks a lot, folks. I hope I'll see a lot more of you.

Q: Thank you.

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