Thank you Mr. Chairman and thanks for your kind words. I appreciate the opportunity to discuss the President’s budget request for Fiscal Year 2012 – as noted, my last budget testimony before this, or any other, congressional committee ever. This time I mean it.
The budget request for the Department of Defense being presented today includes a base budget request of $553 billion and an Overseas Contingency Operations request for $117.8 billion. My submitted statement includes more details of this request. But, I would like to take this opportunity to address several issues that I know have been a subject of debate and concern in recent weeks and months.
First, the planned future reductions in the size of the ground forces;
Second, the proposed reforms and savings to the TRICARE program for working-age retirees; and
Third, the budget and strategy choices required to meet savings targets recently laid out by President Obama.
Nearly four years ago, one of my first acts as defense secretary was to increase the permanent end strength of our ground forces – the Army by 65,000 for a total of 547,000 and the Marine Corps by 27,000 to 202,000. At the time, the increase was needed to relieve the severe stress on the force from the Iraq war as the surge was getting underway. To support the later plus up of troops in Afghanistan, I subsequently authorized a temporary further increase in the Army of some 22,000 – an increase always planned to end in FY 2013. The objective was to reduce stress on the force, limit and eventually end the practice of stop-loss, and to increase troop’s home station dwell time. This has worked and I can tell you that those stop-lossed in the Army is now over. There are no Army soldiers stop-lossed.
As we end the U.S. troop presence in Iraq this year, according to our agreement with the Iraqi government, the overall deployment demands on our force are decreasing significantly. That is why we believe that, beginning in FY 2015, the U.S. can, with minimal risk, begin reducing Army active duty end strength by 27,000 and the Marine Corps by somewhere between 15,000 and 20,000. These projections assume that the number of troops in Afghanistan will be significantly reduced by the end of 2014, in accordance with the President’s and NATO’s strategy. If our assumptions prove incorrect, there’s plenty of time to adjust the size and schedule of this change. These reductions are supported by both the Army and Marine Corps leadership. However, I believe no further reductions should be considered without an honest and thorough assessment of the risks involved, to include the missions we may need to shed in the future.
Let me turn to another issue relating to the Department’s personnel costs, the proposed reforms to the TRICARE program. As you know, sharply rising health care costs are consuming an ever larger share of this Department’s budget – growing from $19 billion in 2001 to $52.5 billion in this request. Among other reforms, this FY 12 budget includes modest increases to TRICARE enrollment fees – later indexed to the national health expenditures – for working age retirees, most of whom are employed while receiving full pensions. All six members of the Joint Chiefs of Staff have strongly endorsed these and other cost-saving TRICARE reforms in a letter to the Congress.
Let us be clear. The current TRICARE arrangement – one in which fees have not increased for 15 years – is simply unsustainable. And, if allowed to continue, the Department of Defense risks the fate of other corporate and government bureaucracies that were ultimately crippled by personnel costs, and in particular, their retiree benefit packages. The House approved most of our proposed changes in its version of the FY 2012 authorization bill. I strongly urge the Senate to endorse all of our proposals.
Which brings me to the third, and last point, the difficult budget choices ahead for the Department. Last spring, we launched a comprehensive effort to reduce the Department’s overhead expenditures. The goal was – and is – to sustain the U.S. military’s size and strength over the long term by reinvesting efficiency savings in force structure and other key combat capabilities. The results of these efforts, frankly, were mixed. While the services leaned forward and found nearly $100 billion in efficiency savings, efforts to trim overhead costs of DoD components outside the military services were not as successful.
I believe there are more savings to be found by culling more overhead and better accounting for, and thus better managing, the funds and people we have. But one thing is quite clear. The efficiencies efforts the Department has undertaken will not come close to meeting the $400 billion in savings laid out by the President. To realize that projected savings target will require real cuts – given the escalating costs of so many parts of the defense budget – and, as a result, real choices.
Here I would leave you with a word of caution. We must not repeat the mistakes of the past, where budget targets were met mostly by taking a percentage off the top of everything, the simplest and most politically expedient approach both inside the Pentagon and outside of it. That kind of “salami-slicing” approach preserves overhead and maintains force structure on paper, but results in a hollowing-out of the force from a lack of proper training, maintenance and equipment – and manpower. And that’s what happened in the 1970s – a disastrous period for our military – and to a lesser extent during the late 1990s.
That is why I launched a comprehensive review – to be completed by the end of this summer – to ensure that future spending decisions are focused on priorities, strategy and risks, and are not simply a math and accounting exercise. In the end, this process must be about identifying options for the President and for you, the Congress, to ensure that the nation consciously acknowledges and accepts additional risk in exchange for reduced investment in the military.
Above all, if we are to avoid a hollowing effect, this process must address force structure – with the overarching goal to preserve a U.S. military capable of meeting crucial national security priorities even if fiscal pressure requires reductions in that force’s size. I’ve said repeatedly that I’d rather have a smaller, superbly capable military than a larger, hollow, less capable one. However, we need to be honest with the president, with you, with the American people, indeed with ourselves, about what those consequences are: That a smaller military, no matter how superb, will be able to go fewer places and be able to do fewer things.
As we embark on this debate about the future size and composition of the American military, it would be well to remember that we still live in a very dangerous and often unstable world. Our military must remain strong and agile enough to face a diverse range of threats – from non-state actors attempting to acquire and use weapons of mass destruction and sophisticated missiles, to the more traditional threats of other states both building up their conventional forces and developing new capabilities that target our traditional strategies.
Today, I ask your support for a leaner, more efficient Pentagon and continued sustainable, robust investments in our troops and future capabilities. Our troops have done more than their part, now it’s time for us in Washington to do ours.
In conclusion, I want to thank this committee for all you have done to support our troops as well as their families. From my earliest days as Secretary of Defense, I have made a point of reminding officers – from midshipmen to cadets to admirals and generals – that Congress is a co-equal branch of government that under the Constitution raises armies and provides for navies and now, air forces. Members of both parties serving in Congress have long been strong supporters of our military and are owed honesty and candor from the military and from the Department.
I have just returned from my 12th and last visit to Afghanistan as Secretary of Defense. The progress we have made there since President Obama announced his new strategy has been impressive. The sacrifices our troops are willing to endure to protect this country is nothing short of amazing – all they ask in return is that the country support them in their efforts through to success.
It has been the greatest privilege of my life to lead this great military for the past four-and-a-half years. Every day, I’ve considered it my responsibility to get our troops everything they need to be successful in their mission and to come home safely. Inmy visits to the combat theaters, military hospitals, and in bases and posts at home and around the world, I continue to be amazed by their decency, their resilience, and their courage. Through the support of the Congress and our nation, these young men and women will prevail in the current conflicts and be prepared to confront the threats that they, their children, and our nation may face in the future.
Thank you Mr. Chairman.