SECRETARY OF DEFENSE CHUCK HAGEL: Fred, thank you. And thank you for your leadership and what you have done for this institution and what you mean to so many people and your commitment to this country over many, many years.
I want to also thank those who have been acknowledged by Mr. Zakheim tonight, also others who have had a rather considerable placement of effort in not only making certain that this magnificent institution became a reality, but what it means to our country and how you use it and, like everything, how it is relevant and continues to be relevant to today's challenges.
And I think there's no further piece of good examples and relevancy to what this institution means and can mean, will continue to mean of building on the legacy of President Reagan than what has occurred here today in -- in the confines of this building, bringing together some of the leading, most thoughtful individuals in our defense establishment, from Congress, from industry, from Department of Defense. So thank you all for what you continue to do and those who -- once again, who helped put this together. This is an extraordinary effort.
And especially to Buck McKeon, when he first called me about it months ago, I said if I am in the country, I will do it, and I think I amended that comment by saying, even if I'm not scheduled to be in the country, I'll make sure I am. As many of you know, when the chairman of your oversight committee asks you to appear, that's always a serious consideration that you apply to that request. (Laughter.) But, no, I was flattered that Buck would ask me, and I appreciate the opportunity, as well.
To my immediate predecessor, who is seated in the front row, Leon Panetta, a very distinguished international leader, distinguished Californian, Leon, good to see you again. We recently celebrated and feted Leon Panetta's accomplishments and his career on the other coast about three weeks ago. He didn't canonize him, but it was damn close that night. (Laughter.) So, Leon, thank you for all your guidance and help over the years, which I've, as you know, very much appreciated and our friendship.
And to another predecessor, Bob Gates, I know we will acknowledge him, as well, later this evening, but to Bob Gates, thank you for everything that you've done and what you continue to do and your careers -- both you and Leon -- have been spectacular and, in so many ways, have really, truly shaped very much not just the discussion, but the application of our power and our foreign policy over the years.
As Fred noted, I am someone, like many among you, who had the opportunity to also work for Ronald Reagan. So that honor in those days comes back in many ways to me today, and so much of what I learned about public service, I learned from example that Ronald Reagan gave us all.
And I've often thought, Fred, of my September 1980 meeting with then-Governor Reagan, when I was working on his campaign with Charlie and Mary Jane Wick, Bill Brock, Drew Lewis, Joe Rogers. Fred, you were part of that. Many in this audience were part of that.
We were at a dinner in September in 1980 at a home in the Virginia countryside outside of Washington, D.C., as many of you will recall, and Fred will, where then-Governor and Mrs. Reagan were staying through the election. The Reagans wanted to thank a group of us for the work that we had been doing, and in particular and event that we had just put on across the country. So they hosted a dinner for us. And as the dinner was ending, one of the governor's assistants asked me to remain afterward, because Governor Reagan wanted to speak with me privately.
I went into the house where he was staying, and the governor sat down next to me, and he told me that he wanted to talk to me about Vietnam. He wanted to know about my experience and what I thought about the Vietnam War. And as you, Fred, and so many in this room know, that was the kind of man Ronald Reagan was. He wanted to understand things. He wanted to know things. And he wanted to make a better world.
Though his individual accomplishments were historic, and he will be remembered for many important reasons, probably none more important than renewing the American spirit and calling for Americans to believe in themselves again and for American leadership at a defining time in the world. The United States is, once again, at an important time in history, an inflection point that again demands American leadership, supported by a strong economy, strong diplomacy, and a strong national defense, which has been the focus, as we know so well, and appropriately so, been the focus of this conference today.
The theme of this forum, Building Peace through Strength through 2025, has stimulated discussion today on virtually every aspect of our defense enterprise, from our long-term strategy in the Asia Pacific region to the health of our defense industrial base, from counterterrorism policy to the defense institutional reform agenda, and much more. This discussion comes at an important time to the Department of Defense, and I want to recognize and thank the senior leaders of DOD who participated in forums today and shared their important and valuable insights and assessments and evaluations.
This country has always been very, very fortunate to have men and women like those represented today from DOD at the right time, right place, right kind of commitment. We've been fortunate to have them, because they have been the leaders, the ones who have protected our security and guaranteed this country's freedom and our future.
I also want to acknowledge and thank the uniformed and civilian men and women and their families around the world who represent America's interests and protect those interests every day, every hour.
Today, as all of you know, our institutions of national defense are undergoing a difficult transition from ending the second of America's two longest wars, in an era of significant budget growth, to one of reduced resources and a world presented with new threats and new challenges. Our defense institutions are also adapting to a changing strategic landscape. The world is growing more complex, volatile and unpredictable than what our nation faced just even 10 years ago. To navigate these strategic and fiscal challenges, DOD is undertaking a much-needed realignment of missions and resources.
While dealing with these immediate challenges, we have one immediate challenge, and that is of the steep, abrupt and deep spending cuts that have been imposed under sequestration. Last week, I outlined my six priorities to guide DOD's efforts to deal with these realities informed by the Strategic Choices and Management Review that we conducted this summer. Many of you in this room guided that, participated in that process, both uniform and civilian leaders in this room today.
These priorities include focusing on institutional reform, reassessing the military's force sizing construct, responding to our military readiness challenges, protecting investments in emerging military capabilities, maintaining balance across the force, and addressing challenges in military pay and compensation.
This forum today has explored each of these areas and more. This afternoon, as we bring the conference to a close, I want to highlight one of these priorities in particular, the need to respond to our military readiness challenge.
Readiness, defined as the ability of our forces to conduct operations and carry out missions as directed by the president of the United States, is the primary responsibility of our military and civilian DOD leaders. In recent weeks, we had been making a concerted effort to inform the Congress, the president, the American people about the growing difficulties we face in training, equipping and preparing our forces under a cloud of budget restraints and uncertainty.
These challenges are often not visible, but they are very, very real, and they will become more visible as they further jeopardize the security of our country, as our readiness capability and capacity continue to deteriorate. President Reagan understood the importance of the readiness of our defense enterprise, and as we discuss the challenges facing our force today and tomorrow, it is worth reflecting on the state of the military at the dawn of his presidency.
In 1981, President Reagan inherited a military that was still grappling with the legacy of the Vietnam War. The transition to an all-volunteer force, and the financial and institutional struggles of the 1970s.
His Army chief of staff at the time, General Shy Meyer coined the term "hollow force" in 1980. He coined it to describe the condition of his service in the United States Army. The military suffered from poor recruiting and retention, social problems, including drug abuse and low morale. It's people laced the equipment and training necessary to perform required missions.
As we all know, President Reagan's policy stopped this drift, and we began the rebuilding of America's military readiness and capabilities. But it took leadership, it took time, and it took resources. More funding went into military recruiting and training, and pay and benefits were increased to attract more qualified people into the military. And the investments associated with his defense build-up helped forge today's modern active and reserve force, while increasing readiness across the board.
During Ronald Reagan's presidency, many of you were part of this and were in Congress and part of his administration at the time. During his presidency, Goldwater-Nichols was passed, which represented one of the most significant changes in America's military since World War II. More than 30 years after President Reagan first took office, although we still face vastly different sets of challenges and circumstances across the department, we are once again grappling with military readiness.
Since 9/11, our military has grown more professional, more lethal, and more deployable, but it has also grown older, as measured by the age of our major platforms, particularly our ships and our aircraft, and far more expensive in every area, including the pay and benefits we provide our military personnel.
While our people today are strong and resilient after 12 years of war, they are under tremendous stress from years of repeated deployments, and so are the institutions that support them, train them, and equip them. As you all know, the department is currently facing sequester-level cuts on the order of $500 billion over the next 10 years. This is in addition -- in addition -- to the 10-year $487 billion reduction in DOD's budget that is already underway. That means we are looking at nearly $1 trillion in DOD cuts over this 10-year period, unless there is a new budget agreement.
These cuts are too steep, too deep, too abrupt. DOD took a $37 billion sequester cut during fiscal year 2013. And we are looking at having to absorb an additional $52 billion sequester cut this fiscal year. And we are currently operating with no budget, but rather a continuing resolution.
This is an irresponsible way to govern, and it forces the department into a very bad set of choices. Implementing the 10 percent across-the-board cut required by sequestration, the department has been forced to absorb even steeper reductions in the budgetary accounts that fund training, maintenance and procurement, the core of military readiness. Other spending categories, including personnel and infrastructure, simply cannot be cut quickly enough to meet the demands of sequester-level cuts. The result in a disproportionate loss in military readiness and capability over the next few years, one far in excess of what the simple math suggests.
In implementing these readiness reductions, the military services have justifiably protected the training and equipping of deploying forces. That's to ensure that no one goes into harm's way unprepared. That is our most important obligation. But the cost of meeting this obligation has been to sharply curtail or cancel training for forces not deploying to contingency operations or war. These cuts are being felt across each of the services.
Consider that since sequestration began, just a couple of examples. The Navy's average global presence is now down more than 10 percent, with particularly sharp reductions in regions like South America. The Army has had to cancel final training rotations for seven brigade combat teams. That's more than 15 percent of the entire force, and it now has just two of the 43 active-duty brigade combat teams fully ready and available to execute a major combat operation. Air Force units lost 25 percent of the annual training events that keep them qualified for their assigned missions, and Marine Corps units not going to Afghanistan are getting 30 percent less funding just as the service is facing more demands for more embassy security and more Marines around the world.
These are all current readiness realities, and they have all occurred since the imposition of sequestration in March. But the effects will be felt for a long period of time to come. By continuing to cancel training for non-deploying personnel, we will create a backlog of training requirements that could take years to recover from. And inevitably, we are shrinking the size of the force that is ready and available to meet new contingencies or respond to crises across the globe.
The president, the Congress, and the American people are proud, justifiably proud of our military's swift response to the typhoon that struck the Philippines. We are able to help and do so much and will continue to do more, because for years we've placed a priority on training, equipping and preparing for scenarios like this natural disaster. Our humanitarian disaster relief expertise is further built through extensive training and annual exercises with our allies and our partners. We must maintain high readiness to have these kinds -- these kinds of capabilities, also, not only in the Asia Pacific, but around the world. When America responds to these kinds of human tragedies the way we are, the world sees the best of who we are.
The steep readiness cuts I have described are adding to another challenge facing the military today, which is the need to reorient the force to meet new and emerging threats. For 12 years, the bulk of U.S. forces have been organized, manned, trained and equipped to respond to the specific requirements of the wars in Iraq and Afghanistan. As the demand of the second of these two wars comes to an end, the military has been reorienting its training in order to build into the forces a broader set of capabilities across the spectrum of conflict, particularly at the high end. Admiral McRaven spoke to that, I'm sure, today, as did other leaders of the Department of Defense.
These efforts have also been seriously disrupted by sequester-level cuts. The cumulative result of all these challenges is clear and underscored by the conclusions of the Strategic Choices and Management Review that I had directed last spring. If sequester-level cuts persist, we risk fielding a force that is unprepared. In effect, we would be gambling that we will not face a major contingency operation against a capable adversary in the near term. And even if we prioritize a more ready force that is better equipped and better trained, the military would be much smaller and able to go fewer places, do fewer things, especially if crises occurred at the same time in different regions of the world.
We will need Congress to be our partner, to be our partner in successfully engaging and fixing these serious and deep problems. It will require Congress giving the Department of Defense the time and the flexibility to strategically implement budget reductions and make the difficult choices needed for the future.
We must also roll back sequestration and fully fund the president's budget request. The members of the Congress here today -- in particular, the chairman of the two Armed Services Committees -- I also want to thank for not only your understanding of this, but your help, your leadership, and what you are doing to deal with these issues.
And I tell this group -- and I tell Americans when I speak across this country -- that this country's fortunate to have these two chairmen at this time directing our efforts and pushing for the right kind of cuts, the right kind of reorientations, and helping the Department of Defense and our leaders do what we must do together to do this wisely and carefully. So to Congressman McKeon, thank you. Chairman Levin, thank you.
Leaders across the department will continue to give their best and their most honest and clear-eyed assessment to America's elected leaders about the consequences of leaving these steep and damaging cuts in place. They will continue to give the best advice they can. We need the certainty, however, of a budget. We must have some certainty for our future. This perpetual dark cloud of uncertainty hanging over this department further hinders responsible and wise planning and confidence, confidence in who America is, that we will fulfill our commitments to our allies and our partners, and a clear signal to our adversaries, who question our commitment.
In prioritizing readiness, we will have to pursue savings in every area across the department, not only by paring back overhead and infrastructure, but by reforming personnel and compensation policy, a very difficult issue. This may be our most difficult challenge, but without serious attempts to achieve significant savings in this area, which consumes roughly half of the DOD budget and is increasing every year, we risk becoming an unbalanced force, one that is well-compensated, but poorly trained and equipped, with limited readiness and capability.
That is not the military that our men and women signed up to be part of. They signed up to be a part of a team that trains, deploys and protects their country. We need to give them the opportunities and the resources they require to successfully accomplish the mission. We must not revisit the mistakes of the 1970s.
Another one of Ronald Reagan's lessons was that our nation relies on a flexible and dynamic economy and a strong industrial base. Southern California has long been a critically important source of innovation and new enterprise in aviation. Later next week, I will visit another industrial stronghold in Maine, the Bath Iron Works, to see our new state-of-the-art Navy destroyer, as well as how that community is being impacted by DOD's current resource uncertainties and reductions.
The challenges that face our nation today are great. We must build on America's unparalleled capacity to meet those challenges and resolve them. No one understood that American capacity, that unique American capacity more or better than President Ronald Reagan, whose first inaugural address, in that address, he said this: "The challenges of our day required our best effort and our willingness to believe in ourselves and to believe in our capacity to perform great deeds, to believe that together, with God's help, we can and will resolve the problems which now confront us. After all, why shouldn't we believe all of that? We are Americans."
Well, I recall, as many of you do, that evening celebration the morning that he uttered those words. It was a bitterly cold night at January in 1981, as our nation celebrated a new beginning. It was as if the cold winter winds swept away a nation's doubts and fears and replaced them with a renewed American spirit. That spirit infuses this library, this town, and still infuses this country and our people, for as Ronald Reagan said, we are Americans, and we must never think that we cannot resolve the problems which confront us because they're too big or too overwhelming.
We have within our grasp more capacity to solve problems today than at any time in our history. It is now up to us, up to us, at this defining time in our history to lead America into a new and hopeful world. Thank you very much. (Applause.) Thank you. Thank you.
MODERATOR: Thank you, Mr. Secretary, for being here today and for those very straightforward, insightful remarks. I know we've allocated time for a couple of questions, and I would like to ask if those who would like to ask a question, please go to the microphone.
But we want to start off with a question from someone who is well known to this group. He is known in here as a trustee of the Presidential Library. He's known through California's former governor. He's known in Washington as a former senator. He served during President Reagan's time. He was on the president's Foreign Intelligence Advisory Board and was a great political ally and friend, and that's Governor Pete Wilson. (Applause.)
FORMER GOV. PETE WILSON: Mr. Secretary, thank you for coming today and for -- as Fred has observed, your very straightforward discussion of the critical subject of readiness. In your remarks, you correctly identified the risk that's involved if we somehow encourage the belief on the part of enemies that we lack commitment.
My concern is this. Iran has provided no credible evidence that they have any intention of slowing, much less stopping the development of nuclear weapons. And what we have seen is that most recently, ironically, a French socialist prevented our making a concession to ease the very effective sanctions, economic sanctions that we have imposed on Tehran. Earlier, we backed down from our -- our commitment for missile defense with our allies, Poland and the Czech Republic.
My question is, given the evidence, how can we rationally believe that the Iranian government is not hell-bent upon developing nuclear weapons? And, with that as a premise, can you tell us as much as you can as to what the administration proposes to prevent it?
SEC. HAGEL: Well, very simply -- thanks, Governor Wilson. Good to see you again, Pete. Thank you very much for what you've done for this state and our country.
Very directly, what this administration's objective is, to prevent, as you say, like previous administrations, is Iran from developing the capability, the capacity to build nuclear weapons and have nuclear weapons. I think President Obama's been consistently very clear on that.
Now, that as the baseline -- and that hasn't changed -- as to more specifically your question on engaging Iran, I believe -- I always have believed -- Ronald Reagan believed you engage people. You engage people with a very clear-eyed understanding of the dangers. You keep a military that is the strongest military in the world with an entirely large scope portfolio of capabilities, those capabilities that now are significantly beyond the range of where we thought we would be required to have military capabilities even 10 years ago. Admiral McRaven and others are experts in this area, but space, cyber.
We know that Iran since 1979 has been a state sponsor of terror. This president, this secretary of state, this secretary of defense is very clear-eyed about this threat. We have partners and allies and friends in the Middle East. We're not going anywhere. The president's made that very clear. Because of a rebalance to Asia Pacific does not mean we're retreating from anywhere in the world. The president has said, Secretary Kerry has said, a bad deal is worse than no deal. There will not be a bad deal.
But I also would say, Pete, when you're dealing with something like this -- and many of you in this room have negotiated a lot of big issues -- that with that clarity and being clear-eyed about Iran's objectives, we believe, always have, and what our objective is, is that are there ways through an engagement that we can find an opportunity to move to some higher ground of accomplishing your objectives, our objectives, in a way other than war?
Now, we -- we know about that option. But aren't we wiser and smarter in the use of all of our power if we're able to do that? And that's what engagement is about. Engagement, as I've often said, is not surrender. It's not appeasement. Engagement is not even negotiation. I don't know if we will ever get to that point.
We have the P5-plus-one partners that we're part of in this. Each must have a voice, needs to have a voice. We have partners in the region that we listen carefully to.
But it is my opinion, Pete, that this administration, this president, and all of the senior leadership in this administration, is very clear-eyed about this. This administration is not going to try to force something that doesn't fit to get a deal. We won't do that. The stakes are too high for our country and for the world. Thank you.
MODERATOR: Another question? If you'd come to the microphone in front, please.
QUESTION: Peter Lichtenbaum with Covington & Burling. Thank you, Secretary Hagel. My question takes us to another equally challenging problem, Syria. And I wanted to ask you from a military standpoint, what is your view and the administration's view of the military objectives that we have in providing aid to the opposition forces there and our capabilities and efforts likely to achieve those goals from a military standpoint?
SEC. HAGEL: Thank you. Well, I think everyone in this audience knows quite clearly that the situation in Syria is as complicated and difficult as any in any one country that I'm aware of. This is not an easy, black-and-white option of choices of who you support. You have opposition forces that make up -- are made up of many factions, factors, including Al Qaida, Al-Nusra, some of the most deadly terrorist fighting groups, most sophisticated fighting groups in the world.
You have those who are and have been legitimately opposed to the ruthless dictatorship of the Assad family, many components to the opposition. You have a sectarian war dynamic that probably starts in Beirut, runs through Damascus, all the way to Baghdad, that we're still seeing play out in a very dangerous way. Again, you don't need to look much beyond what's going on in Iraq on -- in Iraq today. This very deep, difficult, complicated, but very real religious civil war is part of this.
Those are just a few of the complications of what is going on in Syria. Now, then it becomes the question, to your question, well, how do you deal with that? Well, is there a military option? What are those military options? We've learned I think something the last 12 years in getting into two wars. I recall in the United States Senate some of my colleagues sitting here, Kit Bond, Carl Levin, others, testimony from our senior foreign policy and military leaders regarding Afghanistan and Iraq. We'd be out of there in a year; we'd be out of there in two years.
Well, we've learned a lot. And that doesn't mean you don't use military force or you don't employ your military in training capabilities. In fact, we're one of the focuses on our reorientation that is underway right now is building -- capacity-building for our allies. We're doing that everywhere. We're doing it in Latin America. We're doing it in Asia Pacific. And that's going to be an important part of our future so that it isn't just the United States that the world has to look to and we lead, on whether it's using our military or somehow obliquely involving our military in training.
The president has been very clear, I think, on working toward some kind of -- and I think he's right on this -- as other leaders, diplomatic, political resolution, solution on, how do we end this bloodshed? How do we end this disaster? And at what point do you use your military, whether it's -- as I said, whether it's active kinetic military force or training. These are all different options that we constantly review, the president constantly reviews. I think everyone knows that our humanitarian assistance is more significant than anyone's. We're working with partners in the area.
I don't -- I haven't seen a solution presented by any of our senior leaders that would end that conflict in Syria by just using -- not only if that's an option -- kinetic military force is always an option, but using our force or -- or getting us, the United States military, involved in directly training and equipping. I haven't seen a good option for that that gets us to where the end state should be that we should always be asking. Where does this go? Where does this lead? What is the end state? What do we want to accomplish?
Difficult problem. Difficult situation. But we are working with our allies. We're working with the international community on trying to resolve this. There are lines now that may produce some results, but this is going to be a reality, I fear, in some parts of the Middle East for some time to come.
MODERATOR: Thank you, Mr. Secretary. Ladies and gentlemen, please join me in thanking the secretary for being with us this evening.
SEC. HAGEL: Thank you. (Applause.)