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Fiscal 2003 Defense Budget Testimony – House Armed Services Committee (transcript)
As Delivered by Secretary of Defense Donald Rumsfeld, General Richard Myers, Chairman of the Joint Chiefs of Staff, , House Armed Services Committee, Wednesday, February 06, 2002

REPRESENTATIVE BOB STUMP (R-AZ) (CHAIRMAN OF COMMITTEE): Today the committee meets to receive testimony on the administration's defense budget for fiscal 2003. It's with great pleasure that we welcome back Secretary of Defense Donald Rumsfeld and Undersecretary Zakheim and also General Richard Myers, who will be testifying before the committee for the first time as chairman of the Joint Chiefs of Staff. Welcome.

GEN. MYERS: Thank you, sir.

REP. STUMP: Before proceeding, I'd like to take a couple of moments and recognize some very special guests who we have with us this morning: the Honorable Colin Kenny, chairman of the Committee on National Security and Defense of the Canadian Senate, along with seven of his colleagues. Well, welcome, Mr. Chairman. (Applause.) Very pleased to have you with us today and look forward to having many more discussions that we had -- like we had this morning. Thank you for being here, and thank you for taking time out of your busy schedule.

I invited Senator Kenny and his delegation to sit in on this hearing, and I understand they will have to leave shortly. So hopefully we can do it, Mr. Secretary, after your remarks, without any interruption.

Finally, I want to take this opportunity to introduce our -- two members of the committee, Jeff Miller of Florida and Joe Wilson of South Carolina.

Jeff was elected to the House last October to fill the seat left vacant by Representative Joe Scarborough. Jeff came to Congress from the Florida legislature, where he served as chairman of the Utilities and Communications Subcommittee. Jeff has a strong interest in military matters, which coincides with the considerable military presence in Florida's District 1. Jeff, we welcome you to the committee.

Our most recent addition is Joe Wilson, who was recently elected to fill the vacancy left or seat left vacant by the untimely death of our former chairman and friend Floyd Spence. Joe comes to us after a lengthy term in the South Carolina State Senate, where he last served as chairman of the Transportation Committee. Joe has also served in the Army Reserve and is currently a colonel in the South Carolina National Guard, serving as staff judge advocate. His family is also following in their father's footsteps. Joe's family -- his sons are in the National Guard, the Navy, and the Army ROTC. Joe, we welcome you both to the committee this morning and look for some -- many productive sessions. (Applause.)

Secretary, I know we have a lot of ground to cover today, and I'm sure most of the 60 members here would like to engage you in some questions. I'm going to dispense with a lengthy statement and try to get right down to it.

First, we're here today to discuss the budget context for today's hearing and the debate to follow has to be the war on terrorism and the goals and objectives laid out by the administration for winning it.

While it may seem fairly obvious to most of us in this room, I fear that this nation is, in general -- is struggling to grasp the enormity and significance of what this war means for the nation and a customary debate over national politics and priorities. I personally believe that the president established the proper balance and necessary vision for the nation to effectively pursue this difficult task.

However, our challenge as policy makers will be to resist the impulse to resort to business as usual through the long-term and unconventional nature of this conflict. With this in mind, I commend and congratulate the president and Secretary Rumsfeld for putting together a budget proposal that properly recognizes that the overriding priority facing our nation, and thus our government, is to provide for our national security. We can and will debate on whether this is precisely the right number, whether the right trade-offs were made within the proposed budget. However, there should be no question that we collectively have a duty to ensure that during this time of crisis we are providing the president and our men and women in uniform the necessary tools and resources to defeat the scourge of terrorism across the globe.

Let me remind the members that we will strictly enforce the five- minute rule today, and before we proceed further, let me recognize the ranking member of the committee, Mr. Skelton, for any remarks he may wish to make.

REP. IKE SKELTON (D-MO): Mr. Chairman, thank you, and before I begin, let me also welcome our distinguished group of senators from Canada.

Senator Kenney, we thank you so much; we enjoyed our discussion earlier.

And I join, Mr. Chairman, you in welcoming our two newest members, Joe Wilson of South Carolina and Jeff Miller of Florida. I look forward to working with both of them. And it's rather ironic how things happen, Mr. Chairman, that Joe Wilson has a good friend in South Carolina who was my role model when I was a young boy -- a retired Army colonel. And I find old friendships do match up years, years later.

Mr. Secretary, thank you for being with us.

General Myers, Undersecretary Zakheim, we appreciate you joining us today, and I want to commend both of you -- all of you for your leadership in the ongoing war on terrorism. I commend you on your commitment to the men and women in our armed forces. I think we're all very proud of what our troops have accomplished in such a short time -- their courage, their determination, their agility in adapting to new fighting environments is a testament to the strengths -- strength of our nation's spirit. We all are very proud of them. Thank you for your efforts in -- your leadership efforts.

I want to talk a bit about the president's budget request. Before I do so, let me briefly comment on where we find ourself today. America's effectively a nation at war. We find ourselves engaged in a global war against terrorism, where the first battlefields have been in remote Afghanistan and now the jungles of the Philippines. And this course of events was unimaginable some six months ago.

And if I may digress, Mr. Secretary, you and I had a very, very brief discussion a moment ago. You have an example citing Missouri's favorite son, Harry Truman, regarding defense budgets. And you might know, having known him as a student and knowing him as a young lawyer, I'm a bit sensitive regarding the Trumans and the Truman family. You say, "It's a tragedy repeated throughout history that free nations seem to have difficulty recognizing the need to invest in the armed forces until a crisis has already arrived." And then you go on to say in 1950 President Truman wanted a budget $3 billion less than General Omar Bradley.

There are a couple of other examples. One is a speech given in 1923 by Major George C. Marshall, where he decried the doing and undoing of national security. And of course, his words fell on deaf ears, and not too long thereafter, we found ourselves engulfed in the Second World War.

Another example -- and this is to your credit, if press reports are to be believed -- that you recommended a higher budget last year and the president and OMB turned you down on your request. That, of course, is not the case now, since we have been at war. So.

But let's put all that behind us and strive on, because we have serious work to do. Given the unexpected and unprecedented dimensions of this conflict, it's critically important that our global actions be driven by coherent national strategy. The president's required to submit a national security strategy to us in Congress within 150 days of entering office, and I'm disappointed that this strategy has yet to be submitted to the Congress by the president. And it should pull together the various elements of national power.

I appreciate your timely submission of the Quadrennial Defense Review although I hope that the details required, particularly regarding force structure, will soon be provided.

Now turning to the budget, let me first compliment you, Mr. Secretary, for succeeding in convincing the administration this year to submit a defense budget that reflects real growth in spending. This is long overdue. I have been advocating this for several years. In particular, there are a couple of great strides in the budget request.

The quality of life commitments remain central. Procurement funding is near $70 billion. Research and development investment is in excess of $50 billion. That's good.

Having said that, I do have a couple of concerns, if I may voice them. This committee must take its constitutional budgetary role seriously in considering the $10 billion war reserve included in this budget request, I know I do. And instead of expecting a blank check, the Pentagon should present Congress with a well thought-out proposal. It's interesting to note that a contingency fund, in my recollection, was requested by George H.W. Bush; turned down by Congress. A contingency fund was requested by Bill Clinton; turned down by Congress. And I think that we should use that and look at a number of high priority needs.

Now, given the range of the nation's strategic imperatives, we must also look seriously at our force structure and look at our end strength. Our troops are performing well in Afghanistan and now in the Philippines, but we're heavily stressed, both our active duty and Reserves, and I think you reflect that in your prepared statement. The QDR did not address the issue of force structure as I had hoped, and in recent reports -- (inaudible) -- services believe they needed additional end strength of 55,000 troops. General Shinskei, Secretary White testified right in this room last year, before we were engaged in this global war against terrorism, that the Army alone needs 40,000 more troops.

Mr. Secretary, your testimony indicates that you will not consider added troop strength and your end strength. And, General Myers, your testimony, prepared testimony, says that you are continuing to study the end strength issue. What additional study is needed to know that we need additional troops? My recollection is that the Army recommends 40,000 more; the Air Force 8,000 more; the Navy 3,000 more; the Marines 2,400 more. And my understanding is that you have agreed to recommend 2,000 additional Marines to that service.

Now, in a year when the president is requesting the largest defense budget increase in recent memory, and when our troops are fighting a global threat, I cannot believe that the current end strengths are adequate, and some of the $10 billion contingency fund should be dedicated to increasing the Army end strength at least by 5,000 soldiers this year, with subsequent increases to follow.

Beyond force structure, the pay raise included in the budget is 4.1 percent. It falls half a percentage short of what we did last year. And I know that you share our commitment to our troops, and I think we should strive to find a raise comparable to last year's.

Now, at a time when the overall budget is increasing dramatically, when we've heard so much about the disrepair of military facilities, I can't believe that the funds for military construction actually decline by $1.7 billion. Now, Mr. Secretary, you may recall our distinguished colleague from Pennsylvania, Mr. Weldon, and others, Mr. Ortiz I know was with him, convincingly documented the tremendous state of disrepair of our military facilities last year. And we must continue our efforts to improve the quality of the service and the quality of life for our personnel if we expect to retain and recruit the best and the brightest.

In my view, Mr. Secretary, the trend in shipbuilding worsens in this budget. Now, we've discussed this briefly. The request for five new ships falls well below the replacement rate and continues the dangerous trend that will soon bring the United States of America to a 200-ship navy, a level totally inadequate for the protection of the sea lanes and other American interests. We need to build seven ships, in my opinion, in fiscal year 2003, and nine ships in fiscal year 2004, to reverse the downward trend in our Navy shipbuilding.

At a time for such pressing needs for continued shipbuilding and force structure -- and for continued transformation, which I know you will touch upon, I think we may be devoting a great deal of money that we may not be able to spend as had hoped in the missile defense area. It's unclear to me whether the department can wisely execute all of the money that is requested in that area, $7.8 billion. And according to the Congressional Budget Office, estimates of $238 billion over 15 to 25 years in that area could well come to pass. Both theater and national missile defense are worthy programs to counter the potential threat to our nation, but just as the Germans rounded the Maginot line in France, September the 11th proved that terrorists will find unexpected ways to get around or avoid a single costly defense system.

Mr. Secretary, General Myers, Mr. Zakheim, we remain deeply proud of our troops. We want you to know we will work with you to make sure they have everything that they need to succeed both now and in the future. Again we thank you for your leadership. Yours is not an easy job. But we want you to know that we want to walk hand in hand with you. Please understand our concerns, and we hope we will have an open ear to yours. While we have a number of concerns in our budget, we hope that this committee will do an excellent job, under the leadership of our chairman, to support this global fight against terrorism.

And again, we thank you, sir, General, Dov Zakheim for being with us. Thank you, sir.

REP. STUMP: Thank you, Ike.

Mr. Secretary, the floor is yours. You may proceed in any way that you see fit.

SEC. RUMSFELD: Thank you very much, Mr. Chairman and members of the committee. I thank you and the -- Mr. -- Congressman Skelton for those words, thoughtful words.

I have submitted a rather lengthy statement which I would request be included in the record.

REP. STUMP: It will be in its entirety, Mr. Secretary.

SEC. RUMSFELD: I also want to join in welcoming our friends from Canada. We had an opportunity to visit earlier this morning. And we're very pleased they're here and thank them and their country for their fine contributions to the war on terrorism and for the very healthy and close working relationship that our two militaries have had now for any number of years.

So we -- and I know you all have to leave in a few minutes, and I just wanted to join in welcoming you.

The other thing I would like to do is to join the chairman and the ranking member in their comments about the men and women in uniform and the wonderful job they're doing across the globe. Anyone who does, as the members of this committee do and the people at this table do, travel and meet with the troops on a fairly regular basis can't help but come away with just enormous confidence in their dedication, their patriotism, their confidence, the training they've had and the very high state of morale that they bring to the important work that they're doing. They put their lives at risk for our country, and we all are deeply appreciative and grateful to them.

Mr. Chairman, the events of September 11th shattered some myths, among them the illusion that the post-Cold War world would be one of extended peace, where our country and our friends and allies could stand down, reduce defense spending and focus our resources on domestic issues. We learned on September 11th that that's simply not the case.

Now, through the prism of September 11th, we can see that our challenge today is not simply to fix the past but to accomplish several difficult missions at once: to win the worldwide war on terrorism; to restore capabilities by making delayed investments in procurement, people and modernization and infrastructure, as was mentioned by the chairman and the ranking member; and to prepare for the future by transforming for the 21st century.

There are some who say it's too much to ask that you try to undertake all three of those challenges at once, that it's impossible. Well, I don't agree. I think it is not only possible, but we have to do it. Our adversaries are transforming. They're watching the way we were successfully attacked, how we respond, how we may be vulnerable in the future, and I suggest that we stand still at our peril.

The 2002 budget, for these reasons, is a large one -- $379 billion, a 49 -- $48 billion increase from '02.

This includes about $19 billion for the war on terrorism. It has, as was mentioned, a $10 billion contingency fund, plus $9.4 billion for a variety of programs related to the war, both internationally as well as a fairly substantial portion for homeland security.

It's a great deal of money. It's hard-earned tax dollars. But let me try to put it in context. Last year, before this committee, I said that a decade of overuse and underfunding had left us in a hole that, regrettably, the president's 2002 budget, while also a significant increase, still left shortfalls in a number of critical areas, such as infrastructure, procurement, operations and maintenance. And we knew that. Moreover, I advised this committee that just to keep the department going in 2003 on a straight-line basis, with no improvements, simply covering the cost of inflation, realistic budgeting, making up for past overruns in shipbuilding, it would require a budget of $347 billion -- an increase of $18 billion over the 2002 request. Well, as high as that may have sounded when I said it last year, it turns out that the estimate was somewhat low.

If one combines the cost of inflation, plus must-pay bills, like health care, which is a breath-taking $18.8 billion in this budget, retirement benefits and pay, plus the realistic cost for weapons -- that is to say going back into the Forward Year Defense Plan and correcting those numbers so that they're realistic -- readiness, depot maintenance -- the correct figure is not $347 billion, it's $359 billion. When one adds that to the $19 billion for the cost of the war on terrorism, the total comes to $378 billion out of $379 billion budget request.

That's a significant investment of taxpayers' money, and we're investing it differently. We're accelerating programs we consider transformational. We have made program adjustments to achieve some 9- plus billion dollars in proposed savings to be used for transformation and other pressing requirements. At the same time, we're fully funding those areas that we believe we must to continue trying to reverse years of underinvestment in people, readiness and modernization.

The 2003 budget was built, developed and guided by the results of last year's strategy review. Given the questions that were posed last year, I must say, when we look back at it, it's really remarkable what the people in the Department of Defense accomplished. In one year, 2001, the department developed and adopted a new defense strategy; we replaced the decade-old, two-major-theater-war construct for sizing our forces with a new approach, which we are convinced is more appropriate to the 21st century; we adopted a new approach for balancing the risks, the risks of wars, the various war plans, against -- not just against other war plans, but against the risk of not investing in people, of not modernizing, of not transforming. And the department does a pretty good job of balancing apples and apples against each other, but it's not done a very good job of balancing these different types of risks, which is a very difficult thing to do. And I'm not going to suggest for a moment that we're going to do it perfectly this year, but we have forced that up on the table continuously, and I think you'll see that this budget reflects that fact.

We have reorganized and revitalized the missile defense research and testing program, free of the constraints of the ABM Treaty after this summer. We've reorganized the department to better focus on space capabilities. We've conducted a nuclear posture review and adopted a new approach to strategic nuclear deterrence that increases our security while permitting what we believe will prove to be deep reductions in strategic offensive forces. And within a week or so, we'll present to the president and begin consulting with the Congress about a new unified command structure. And all that was done when we had about half of our presidential appointees confirmed by the Senate during the first half of the year and while conducting a war on terrorism in the second half of the year. Not a bad start for a Department of Defense that is military and civilian, public and private, congressional as well as executive. Not a bad start for a department that's constantly characterized as being impossibly resistant to change. It seems to me that that's an enormous amount of change in one year.

When I look back on what's been a challenging year, I feel we've made good progress, thanks to the wonderful work of the men and women in the department. They've put forth an enormous effort. In the course of the defense reviews, we identified six key transformational goals around which we've focused our defense strategy: first, to protect the U.S. homeland and forces overseas -- that was before September 11th; second, to project and sustain power in distant theaters; third, to deny enemy sanctuaries so we know that we can reach where we need to reach in the world; fourth, to protect information networks; fifth, to use information technology to link up U.S. forces so that they can fight jointly, as they must; and sixth, to maintain unhindered access to space and protect U.S. space capabilities from enemy attack.

The president's 2003 budget request advances each of those six transformational goals. With respect to homeland defense and protecting bases of operation, we have an increase of some 47 percent; denying enemy sanctuary, an increase of about 157 percent; projecting power into denied areas, an increase of 21 percent; leveraging information technology, and increase of about 125 percent; conducting effective information operations, an increase of 28 percent; and strengthening space operations, an increase of 145 percent.

Of course, we cannot transform the military in one year, or even a decade. Nor would it be wise to do so. Nor are we trying to. Rather, we intend to try to transform some portion of the force as we move forward each year, turning that leading edge of change that will over time lead the rest of the force into the decades ahead.

Moreover, investments in transformation cannot be measured in numbers alone, and I really bridle at the idea -- I get asked, well, what portion of the budget is transformational? And if you define it one way, people say it's about $20 billion; another way, people say it's about $50 billion. And Dov can show you the list of things that would fit in each of those categories.

From my standpoint, I think numbers almost are distracting. All the high-tech weapons in the world won't transform our armed forces unless we also transform the way we think, the way we train, the way we exercise and the way we fight.

Modernization. As we transform for the threats we face, we also have to prepare for the conflicts that we may have to fight in this decade. So we have to be attentive to today and tomorrow as well as the next decade. And that means improving readiness, increasing procurement, and selective modernization. To deal with the backlog that resulted from the overshooting, if I could put it that way, from the last decade, where the drawdown resulted in an overshooting, or a procurement holiday, some called it, we've requested $68.7 billion for procurement, an increase of 10 percent over 2002. It's projected to grow steadily over the five-year forward defense plan to more than $98 billion in 2007. And each year, it will increasingly fund things that I think can properly be characterized as transformational. We've requested $150 billion for operation and maintenance in 2003, including substantial funding for the so-called "readiness accounts" of tank miles and steaming days, flying hours.

People. If we're to win the war on terror and prepare for tomorrow, we have to take care of our greatest assets, the people in the department. We're competing with the private sector for the best young people in our country. We can't simply count on their patriotism and their willingness to sacrifice alone. That's why the president's budget request has $94 billion for military pay and allowances, including a 4.1 percent across-the-board pay increase; and $300 million in addition for targeted pay increases to probably be focused in the mid-grades; $4.2 billion to improve military housing, putting the department on a track to eliminate most substandard housing by 2007; funds to lower out-of-pocket housing costs for those living off-base from 11.3 percent today down to 7.5 percent in 2003, putting us on the track to eliminate it by 2005; $10 billion for education, training and recruitment; and a breathtaking $18.8 billion to cover realistic costs for military health care. Smart weapons are worthless unless they're in the hands of smart, well-trained, highly motivated soldiers, sailors, airmen and Marines.

While this budget includes proposed increases in a number of areas that I've mentioned, it also includes a number of areas where we've not been able to fund increases and where we've had cost savings. We're committed to pursuing what works and stopping doing what does not work. For example, we terminated the Navy's area missile defense program because of delays, poor performance and cost overruns; we're proceeding towards our goal of 15 percent reduction in headquarters staff; and the Senior Executive Council is seeking ways to ensure that we manage the department more efficiently.

The force structure subject came up. We made a decision not to make reductions in force structure last year. In the midst of this war on terror, whose final dimension is still unknown, it certainly is clear that it was not the time to be reducing force structure. We now have something like 60,000 Guard and Reserve on active duty. We have another 10,000 people that are being held in the service. So a total of 70,000 people. This is truly a total force situation.\

I don't know -- I would have to go back and discuss it with the people that were mentioned, in terms of the force structure comments that were made earlier this morning -- but if one thinks about the changes in the force sizing construct, from two major regional conflicts, where you would occupy two countries and proceed to capitals and occupy them for a period, and the shift to winning two major-theater conflicts, but occupying and invading and holding the capital of only one country, and stopping and winning the other conflict, and still being allowed to engage in a variety of lesser contingencies, has changed the force mix that we need and the demands on the force in a way that we believe has been very constructive.

I must say that that force sizing construct did not consider 70,000 people on active duty, in addition to what we had at that time.

Trade-offs. After counting the costs of keeping the department moving on a straight line and the cost of the war and the savings, we're left with about $9.8 billion. That's a lot of money. But it still required us to make a lot of trade-offs.

We were not able to meet our objective of lowering the average age of tactical aircraft. However, we are investing in the F-22 and the Joint Strike Fighter, which require substantial upfront investments and will be coming on line in the years ahead, which will have the effect of lowering the average age of aircraft.

While the budget grows faster in science and technology, we're not able to meet our goal of 3 percent. And clearly we were not able to meet the shipbuilding replacement rates, as has been already mentioned, in the year 2003, and we must in the future.

And as with every department, the Navy had to make choices. The shipbuilding budget is $8.6 billion. It procures five ships in '03. This is for several reasons. First, there are a number of problems, including contractor problems, and also past shipbuilding cost estimates that were off and which we need to fund. We're spending something like 600-plus million dollars to pay for past shipbuilding bills that had been underestimated in the forward year defense plan.

Second, the Navy made a calculation that in the short term, we can maintain the desired force level at the proposed procurement rate because of the relatively young age of our fleet, and that is more important now to deal with significant needs that had been underfunded in recent years, such as the shortfalls in munitions, spare parts, and steaming hours for the men and women at sea, which are fully funded in this budget.

Further, we're investing significant sums in SSGN conversion, which add capability to the Navy but do not add to the number of ships being built in the year 2003, and therefore they don't count in the ship numbers, while they do give us these capabilities.

The Navy's forward year defense plan budgets five ships in 2004, seven in '5, seven in 2006, and 10 in 2007. Congressman Skelton's correct; if we continued at a level of five, it would run us down to an unacceptably low number of total ships. Fortunately, the average age of the ships is relatively young, at 15 or 16 years. We will not drop off a cliff in the next period of years as we build up to the proper number of seven or eight ships a year, and the key is, we're going to have to fulfill that commitment in the out years and not let them slip.

So I want it understood that I recognize that.

Three-hundred and seventy-nine billion dollars is a lot of money. On the other hand, New York City's comptroller's office estimated that the local economic cost of September 11th attacks on New York City alone will add up to $100 billion over the next three years. Estimates of the cost of the national economy range about $170 billion last year alone and almost $250 billion a year in lost productivity, sales, jobs, airline revenues, media and advertising and costlier insurance for homes and businesses. And that's not to mention the loss of human life and the pain and the suffering of so many thousands of Americans who lost husbands and wives and fathers and mothers, sons, daughters, sisters, brothers, on a terrible day.

The president's proposed defense budget amounts to about 3.3 percent of gross national product. When I came to Washington, in the Kennedy and Eisenhower years, it was 10 percent of gross national product, and we afforded it just fine. In the mid-'70s, when I was secretary of Defense, it was around 5 or 6 percent. Today it's down to 3.3 percent -- is what we are devoting and investing to national security. It's a lot of total dollars, but it is a relatively modest percentage of our gross domestic product. We've gone from over 50 percent of the federal budget going for defense and national security issues -- today it's down to, I believe, 16.9 percent proposed in this budget. So it's been on a steady downward slope.

Congressman Skelton mentioned my point about the 1950s. The truth is that there was a big debate in the Congress and the country as to whether we should have a $15 billion defense budget or an $18 billion or a $23 billion defense budget, and the country concluded that we could not afford more than $15 billion. Six months later, we had not a 15 (billion dollar) or an $18 billion defense budget, but a $48 billion defense budget, and we could afford it just fine because we were in the Korean War.

And I think the point of this is to underline that the task for us is to invest before the fact. The goal is not just to win wars. The goal is to be -- invest before the fact so we deter wars, so we can contribute to peace and stability, which underpins all of the things that we want as human beings for our families, for our jobs, for our opportunities, for freedom. It is those investments by this committee and this Congress and this country, year after year, that contributes to peace and stability in the world, that makes all of those things possible.

Thank you, Mr. Chairman.

REP. STUMP: Thank you, Mr. Secretary.

Gentlemen -- and to thank our Canadian senators here, and if you --

Thanks for being with us, again.

SEC. RUMSFELD: As they go out, Mr. Chairman, it's worth remembering that it was Canada that housed those hostages in Tehran, Iran, back in the late 1970s, at great risk to all of them.

REP. STUMP: We appreciate that very much. Thank you.

General Myers.

GEN. MYERS: Well, Chairman Stump, Congressman Skelton, other distinguished members of the committee, thank you for the opportunity to appear before you today. It's really an honor to report on the state of nation's armed forces. We are a military force and a nation at war, as Congressman Skelton said. And as the secretary said, the attacks of September 11th shattered the prism through which we looked at the world.

In the span of a few minutes, we confronted the stark reality that adversaries can strike at us anywhere in the world, even inside our own borders.

President Bush came to the Pentagon the following day. The assembled troops told him, "We're ready, Mr. President." And they spoke for themselves and they spoke for all the men and women of our armed forces -- and they were right.

You can take the crew of the USS Enterprise, on their way home from a six-month deployment when they learned of the attacks. I think each man and woman on board felt a shutter as the captain threw the rudder hard over, increased the flank speed and came to a new heading to arrive off the Pakistani coast the next morning.

Or you can take the young Marines of the 15th MEU aboard the USS Peleliu off the coast of Australia as they began cleaning their weapons, knowing that they could soon be fired in combat.

Our bomber crews in receipt of alert orders began planning their strike missions a few days later.

And our Army Rangers and Green Berets began to collect detailed intelligence as they received their orders to go to a place called Afghanistan.

And they were all ready, ready to defend our freedom and to strike back against our nation's enemies. Fighting together as a joint team, they've achieved much in the first phase of this global war against international terrorism. I visited some of them. I saw them working hard on the front lines getting the mission done, regardless of the formidable obstacles they were asked to overcome. I saw them proudly wearing their -- the U.S. flag on their BDUs or on their flight suits. I saw in their eyes strength, courage and commitment, and I knew these young Americans would get the job done.

As I talked with them, one message came through loud and clear: this is truly a total force effort. Unless you ask, you probably don't know whether you're talking to someone from the Reserve or active component. Many of our Reservists and Guardsmen didn't wait to be called up, they volunteered. I heard about one Navy Reservist who sold his business so he could serve without distraction.

I think you all agree that these American heroes are unmatched in the world, and we have every reason to be very proud of them.

When I was a young fighter pilot, I never imagined that some day we would have to fly combat air patrols over places like Detroit, New York and many other locations here at home. But that, along with other defensive actions, is exactly what we've done in the five months since this war began. These actions on the home front are called "Operation Noble Eagle," and they include more than 13,000 combat air patrol sorties over the United States, flown by National Guard, Reserve, active duty and NATO aircrews. The Air Force alone has committed 260 planes and 1,200 airmen flying almost 57,000 hours from 29 different bases.

We've also established a Homeland Security Joint Task Force to provide command and control of the homeland security task. And as you know, we're helping our busy Coast Guard by augmenting port security. We also have 7,200 National Guard troops at 444 airports, and we're protecting many critical infrastructure sites.

Our overseas offensive actions have included air, land and maritime operations with three primary objectives: to disrupt and destroy global terrorist organizations, to eliminate safe havens for terrorists, and to prevent access to weapons of mass destruction from terrorist groups.

General Tommy Franks and his entire team have done a tremendous job in Afghanistan with Operation Enduring Freedom, and the results so far, I think, speak for themselves.

Working closely with our coalition partners and Afghan opposition forces, we drove the Taliban from power and severely degraded the al Qaeda network. The plan worked, and it continues to work. The Taliban were forced to surrender all major cities to opposition forces, and a number of Taliban and al Qaeda leadership were either killed or captured. We destroyed their terrorist training camps and centers, and the command-and-control sites as well. And for the first time, we combined humanitarian operations with combat operations as we air dropped rations and medical supplies and shelters, thus helping avert a humanitarian disaster of potentially extraordinary proportions. Our efforts have helped the Afghan people regain their lives.

These results have been achieved with about 60,000 deployed troops in Central Command area and about 4,000 on the ground in Afghanistan. I think our success has been enabled by many factors. The following are the key factors: By clear and well-established national security goals; by the overwhelming support of the American people; by the outstanding leadership from President Bush and Secretary Rumsfeld, great support from Congress, and the close interagency coordination, particularly in this town; by patience in formulating our response to the attacks; by great support from our coalition partners and anti-Taliban forces -- and I was going to mention for our Canadian visitors that I think they now have over 200 soldiers on the ground in Afghanistan as we speak; by a good plan from Central Command that was well executed; by superb assistance from the services and supporting unified commanders, especially Transportation Command; by flexibility and adaptability at the tactical level; and ultimately, our great soldiers, sailors, airmen, Marines, Coast Guardsmen -- who have made this all happen.

Having said all that, though, there remains much to do. And even as we continue the long-term effort to win this global war, we must also sustain other global commitments, such as Operations Northern Watch and Southern Watch and other responsibilities in the Persian Gulf Region, the Balkans peacekeeping mission, and the defense of the Korean peninsula.

To fulfill our range of commitments and protect our global interests, we must make the investments necessary to maintain the quality of our force while preparing for future challenges of the 21st century. The best means of accomplishing these goals, in my mind, are to, one, improve our joint war-fighting capabilities, and two, to transform the armed forces of America into a 21st century force. With the help of Congress, we've come a long way in recent years toward improving our joint war-fighting capabilities. Certainly the operations in Afghanistan are proof of our progress, but there is much more to be done.

To illustrate, let's talk about the issue of interoperability. In recent years we've gotten pretty good at making sure that our legacy systems worked together. For example, we took a Cold War anti- submarine platform, the Navy's venerable P-3, we put on it some different data links and sensors, and used it to support ground units to hunt for Taliban and al Qaeda forces in Afghanistan. And we also flew the P-3s in conjunction with Air Force C-130 -- AC-130 gunships and the Joint Stars aircraft and Marine Corps attack helicopters. That they all worked together is a tribute to the ingenuity of all the people involved, but we need to take the next step. We must make sure that new systems are conceived, designed, produced with joint war- fighting requirements in mind. To do that, we need to change our thinking, to look at new systems as interchangeable modules that we can plug and play in any situation and in any command environment.

We've put a lot of effort into interoperability on the tactical level, like the modifications of the P-3s that I just described, but we must also concentrate on the operational level as well, where organizational and process improvements are just as important.

In my view, the area with the greatest potential payoff here and the current focus of our efforts is in the command, control, communications, computers, intelligence, surveillance, and reconnaissance, or what we call, for short, C4ISR. By improving our C4ISR, we can ensure our commanders have the best information available for rapid decision-making.

We've made progress in recent years, but we still have stovepipes that continue to cause gaps and seams between our combatant commands and the forces that are provided by our services. These gaps and seams must be eliminated. Close collaboration across the services, combatant commands, and with other government departments is key to success in achieving our national security objectives.

Additionally, we're developing a command and control architecture in our unified commands that will lead to an improved ability to accept and employ forces. We call this architecture the Standing Joint Force headquarters. This headquarters will provide the combatant commanders the ability to employ an agile and lethal force using the integrated C4ISR network that I described earlier and further enhancing our joint war-fighting capabilities.

The second key to maintaining the quality of our forces and preparing for future challenges is transformation. The secretary's already laid out for you our transformational goals for the 21st century, and I'd like to follow through with a couple of points.

First, for me, transformation is simply fostering changes that result, hopefully, in a dramatic improvement, over time, in the way a combatant commander wages war. I'm convinced that our force requires better flexibility and adaptability to achieve our national security objectives in new international security environment. Such dramatic improvement requires not only technological change but also changes in the way we think and also changes in how we employ our capabilities to achieve more effective results in less time with fewer lives lost and hopefully at less cost. True transformation must include training and education, doctrine, and organizational changes.

The second point on transformation is that while sudden technical, organizational, or doctrinal breakthroughs are possible and we should pursue them vigorously, it's important to note that transformation often results from an accumulation of incremental improvements.

And let me give you an example. When I was flying F-4s in Vietnam, we lost a lot of airplanes and pilots trying to destroy single targets, like bridges and anti-aircraft sites. We had to put a lot of people and equipment in harm's way to get the job done, because our weapons systems weren't very accurate. So out of that conflict and during that conflict, we developed laser-guided bombs. We found a way to steer them to their target. But as we found out in Desert Storm, there were still shortfalls with laser-guided bombs because you needed relatively good weather to be able to acquire the target and to see the target through bomb impact, and we still needed to put aircraft in harm's way to keep the bombs on target. But we had achieved a significant improvement in bombing accuracy.

Now if you think about where we are today, we've got bombs that are really impervious to weather conditions, that steer themselves using satellite-generated global positioning system signals. And let me also point out that when we were fielding the global positioning system, no one was talking about using it for bombing at that time; it was seen merely as a better navigational tool.

So what we've done is linked incremental improvements in several different technologies to achieve today's precision strike capabilities with accuracy that amounts to a truly transformational change.

But the transformation is not just about more accurate bombs. The real transformation is in the target set, where we have advanced from needing multiple sorties to strike one target to using one sortie to strike multiple targets.

There's also been a transformation in our thinking. Bombs are not merely regarded any more as area weapons. Instead, they can be used like bullets from a rifle, aimed precisely and individually. The foundation for that breakthrough was laid over 30 years ago, It was a tactical innovation in the midst of war. And on that foundation we've built successive improvements to get where we are today.

We're laying that same foundation of future breakthroughs in the midst of today's war. For example, the arming of unmanned vehicles -- unmanned aerial vehicles is a tactical innovation that we're just beginning to explore.

We can't accurately foresee the future, but I'm confident we're working on other capabilities that, when coupled with improvements in armed, unmanned vehicles, have the potential to change significantly the way we fight and perhaps the nature of warfare itself. That and similar possibilities is why I believe the service recapitalization and modernization programs are so important to transformation.

Members of the committee, I'm pleased to say that our forces remain the most powerful and the best trained in the world. Their excellence is due in no small part to your unwavering support for our troops. We have made tremendous strides in recent years, providing our people a comprehensive set of quality-of-life improvements, especially in the areas of pay and housing and health care. The quality of life also includes adequate training, modern equipment, modern infrastructure and spare parts. I ask that we continue to keep faith with both our active and Reserve component members, as well as our retirees.

Sustaining the quality of life of our people is crucial to recruiting, it's crucial to retention, and it's crucial to our readiness to fight. But more importantly, it's the right thing to do for our heroes, who at this very minute are serving in harm's way, defending our freedom. They're the practitioners of joint war- fighting and the creators of transformation. They make things happen and should always be our top priority.

The men and women of your armed forces are committed to achieving victory, no matter how long it takes, no matter where it takes us. And they're counting on all of us to provide them the tools they need for success today and success tomorrow. They deserve our best effort.

Mr. Chairman, I welcome the opportunity to work with you and the committee as we continue this fight against global terrorism, and I thank you again for the opportunity to be before you today, and I look forward to taking your questions.

REP. STUMP: Thank you, General Myers. The chair recognizes the gentleman from California, Mr. Hunter.

REP. DUNCAN HUNTER (R-CA): Thank you very much, Mr. Chairman. And Mr. Secretary and General Myers, Dr. Zakheim, thank you for a very solid presentation. This is a marked increase in last year's defense budget. In my estimation, it's not enough. And the reason I've come to that conclusion is simply because I've looked at the requirements. And if we look at the -- at the requirement analysis, whether it's the Joint Chiefs' analysis that was done or the CBO analysis, where they simply took our fleet of trucks, tanks, ships, planes, estimated the life expectancy of each platform, giving an optimistic expectation or analysis and a pessimistic one for each platform, and try to figure out how many of those we needed to replace each year, if you look at aircraft alone, everything from small helicopters to the heavy stuff, we need to build about 450 aircraft a year to keep the air force, the aircraft fleet in the services, half-way modern. We're building about a hundred, if you look through the tables. So the Joint Chiefs' recommendation was that we spend in excess of $100 billion on procurement; 100- to 110 billion CBO said just looking at it dispassionately. With an optimistic view, you need to spend about 90 (billion). We're spending about 70 (billion).

If you look at ammunition down through the line, the $3 billion shortage that the Army has and other shortages that are manifest in the precision munitions charts and other analyses, we're short on munitions by an excess of $10 billion.

Operations and training, we're short, according to CBO, about 5 billion a year. And if we look at the pay gap that exists between the civilian sector and the military sector, we still have a pay gap.

And if you close that pay gap, it's going to cost us about $10 billion a year for the next five or six years. If you add those together, you come up with a $50 billion delta between last year -- 343 -- and what I think a reasonable analysis says we need to be spending.

Nonetheless, we're going in the right direction. This is a marked increase. My recommendation, though, would be that we take another lesson out of the Korean War scenario. There were a couple of lessons to be learned there. One was that while we thought that we had reached transformation because we then had a monopoly on nuclear weapons, we found out as our forces were driven down the Korean peninsula that our bazookas, for example, bounced off Russian-made tanks at the Osan Pass. So while we thought we had high technology that would deter others from attacking us, we found out that we'd neglected the ham and eggs -- that is, the ability to build armor- piercers that could stop this newly minted Russian armor.

So as you look across the force, this budget acknowledges -- and I think, Mr. Secretary, you've been candid -- that we haven't been able to replace tactical aircraft, in fact, aircraft across the board, that are getting remarkably aged. Two-thirds of your Navy aircraft are over 15 years old. The Army choppers are now averaging about 17- 1/2 years old; they were 10 years old on average 20 years ago. So we have a lot of platforms that need to be replaced. And I know you understand that.

Let me just put my marker in that I think we need to spend more. And I would like to see this five-year plan go up, and certainly not down. Nonetheless, I want to congratulate you on turning this ship in the right direction.

SEC. RUMSFELD: Thank you, sir.

REP. STUMP: The gentleman from Missouri, Mr. Skelton, is recognized.

REP. IKE SKELTON (D-MO): Thank you, Mr. Chairman, and thank you both for your remarks and testimony.

Let me mention first, if I may, Mr. Secretary, the phrase "occupation forces" is a relatively new one to me regarding sizing and end strength. We will note that we fought a significant war against Iraq and did not choose to occupy that country, as you know. So I just wonder if that is a very good phrase to use. No need to respond on that, but I just raise that issue.

I do have a question --

SEC. RUMSFELD: I'd like to respond.

REP. SKELTON: Go ahead.

SEC. RUMSFELD: Just very briefly. The reason I use the phrase is because when one looked at war plans and went underneath into the details, it was very clear that the force sizing construct of two major theater conflicts had evolved over time into a capability, or a, quote, "requirement", unquote, that would have enabled essentially a force to not just win the war and stop it, but to, in fact, move into the country towards the capital. And that is a different force requirement than is the case if you do it in one case, one theater, and in the other simply stop and win the war without having that additional requirement of moving into the country and taking the capital.

REP. SKELTON: Thank you very much.

General Myers, the Army chief of staff and secretary testified right where you are sitting last year for the need for 40,000 additional soldiers. My understanding is the Air Force chief of staff requested -- this is secondhand to me, but I believe it's correct -- 8,000; additional Navy, 3,000; Marines, 2,400.

Do you support the views of your service chiefs on this issue?

GEN. MYERS: As the secretary said, I think a couple of points pertain, Congressman Skelton. One is that we do have a new force- sizing construct that came out of the Quadrennial Defense Review. And I don't know exactly when they testified, but my guess is they were testifying before --

REP. SKELTON: They did. Before September the 11th.

GEN. MYERS: Well, that's one point I think we need to keep in mind. The other point is what Secretary Rumsfeld said earlier, that when they testified, we also hadn't started this war -- global war on terrorism. So we have some requirements today that were not foreseen when they testified. And I think what we need to do is look at those requirements. I'm aware of them, but I have not seen the analysis from the services at this point, and I think we need to look at those in light of both of those issues and --

REP. SKELTON: When you look at them, would you be kind enough to share them with this committee?

GEN. MYERS: Absolutely.

REP. SKELTON: Mr. Secretary, one question, if I may. Would you give us your thoughts or positions on the American presence in the Sinai, Bosnia, Kosovo, please?

SEC. RUMSFELD: Yes. You asked for my personal views --

REP. SKELTON: Yes, sir.

SEC. RUMSFELD: -- and I'm happy to provide them.

REP. SKELTON: Yes, please.

SEC. RUMSFELD: We've been in the Sinai with a force of hundreds of service people for about 20, 22 years. That strikes me as a long time. There's no question it was prudent to put them in at the outset. Probably is no question that it would be advisable for us to keep a presence today of some sort. I have been working with the folks in Egypt and Israel and the U.S. government to see if we can't fashion a way to begin drawing down some of the U.S. forces that are currently in the Sinai simply because I am convinced that we've got a lot to do that involves warfighters and training to be warfighters, and that that role is something that can be done by others, with our help and encouragement. We also provide some intel in that Sinai area, and that's a perfectly proper thing to do.

Everyone always says, "Well, it's not a good time to do that." Well, it's never a good time to do that. And my attitude is, we need to get about it.

With respect to Bosnia, General Ralston, the CINC over there, is doing a very good job as SACEUR and working with the NATO allies. The saying, "Go in together, out together" -- that's fine. But my attitude is, it isn't "in together and stay forever"; it's "in together and out together" and at some point we need to substitute warfighters for people who can do the police work that's necessary. And the people who indicated that they had a responsibility to provide that police and civil structure capability ought to get about the task so that we can in fact draw down some of those forces. We've come down quite a distance -- I don't recall the numbers, but it would be like 4,000 or 5,000 down to heading towards 1,800, I think, over the next six, eight months. And I think General Ralston and NATO have done a good job, and we're moving in that direction.

The problem is, you're not going to get the rest of the way out until you get the civil side built up and make -- we don't want to go in, create a stable situation and then come out and leave an unstable situation. But nor do we want to go in and stay there forever. It's unnatural to have foreign forces in other countries. At some point, the institutional capability of those countries has got to be developed so that they can provide stability for themselves and we can move out.

Kosovo is a more complicated situation, but I think that over time we ought to be able to find ways for all of the participating countries to bring those forces down as well.

REP. SKELTON: Thank you very much.

SEC. RUMSFELD: Yes, sir.

REP. STUMP: The gentleman from Colorado, Mr. Hefley.

REP. JOEL HEFLEY (R-CO): Thank you, Mr. Chairman.

And thank you all for the job you're doing for America. This is a tough time, and I can't think of anybody I'd rather have there than the people we see before us here.

And as Mr. Hunter said, we're going in the right direction, I think, on this budget. But I'm a little confused as to how much actually the increase is. I know in the press reports that it's thrown around a $48 billion increase. But if I look at page 3 of this document we have here -- and I assume that's what you have before you -- I see military, over-65 health care accrual and civilian retirement and health care accrual, and that's 11.4 billion (dollars).

And my understanding is that that's not any new dollars; that that's dollars that are shifted to your budget that you have to take care of now, but it was in somebody else's budget last year. So I wouldn't call that new defense spending.

I'm not quite sure what realistic weapons costing is, but when we get to the bottom line there, it says that we have almost $10 billion for everything else besides what's on this page. And -- for instance, I look at the -- at your military construction budget -- and Mr. Saxton will speak in more detail about this, I'm sure -- but we go down in military construction. We hold it almost stable in housing. We've been working very hard in recent years to try to provide these young people that dedicate themselves to serving their country with a decent place to live and a decent place to work. And yet we're -- in this budget, we're making no progress on that.

And everywhere I go, I find bright, dedicated, patriotic young people willing to serve their country, and I'm ashamed at the type of conditions we put them in and the type of equipment we give them to operate on. I was at Pendelton last week, and you look at the trucks that the Marines have out there -- just trucks, something as common as trucks; that's not high-tech. And the age of those trucks is disgraceful. You look at the airplanes, you look at what they're doing in the depots -- they're doing amazing things in depots to try to keep some of these old aircraft running, but you rarely find aircraft that are younger than the people that are flying them.

So I guess I would have to conclude with Mr. Hunter that this is going the right direction, but we're not -- we're not near there yet. And I wonder if you could comment on what the real number -- and maybe Mr. Zakheim can do that; I don't know -- what the real number of increase is, so when we talk to our colleagues and when we talk to the press, we can tell them what the real increase is -- not the accounting shifts and so forth but what the real increase is. If it's 48 billion (dollars), that's what I want to say. If it's not 48 billion (dollars), I want to be more accurate.

SEC. RUMSFELD: Well, let me just briefly comment on your question, and it's an important one. The military over-65 health care accrual, which was passed by the Congress and was not funded by the Congress, was not in the out years. That is the $8.1 billion that you mentioned as part of the 11.1 or 2 (billion dollars). The civilian retirement and health care accrual is another 3.1 (billion dollars), and I think that's where you get to the 11.4 (billion dollars).

Military and civilian pay raises: That's another 2.7 (billion dollars.) That's -- which -- I don't know which basket you put that in. Is that a real increase? Sure is to them.

REP. HEFLEY: I think it is a real increase, yes.

SEC. RUMSFELD: Realistic weapon costing, you asked about: That, very simply, is the fact that the -- for example, the shipbuilding budgets of prior years were not enough to pay the contractors for the contracts that we legally signed and we owe them the money for.

That right?

MR. ZAKHEIM: Actually, that isn't even counted in that one.

SEC. RUMSFELD: It's not?

MR. ZAKHEIM: It's not even in that one. Realistic's separate.

SEC. RUMSFELD: Realistic -- realistic figures were, when we looked out into the forward-year defense plan last year, we looked at how the estimates had been made. And where there had been two estimates, one by the service and one by the so-called CAIG, as I recall, we looked at the history, and the history was that the services had always -- not always, I shouldn't say that -- in many instances had underestimated the cost, and the CAIG had had a higher number.

Dr. Zakheim and Paul Wolfowitz and I decided to go through and fund it at the CAIG level because it had been closer over time, and I have a feeling it will prove to be more accurate than the numbers that were in the forward year. And we call that realistic weapon costing. Unusually -- well, it is a bit unusual -- we think we are fully funding readiness and op tempo. In prior years, there seemed to have been a pattern to somewhat underfund it, with the understanding that it would get lopped in in the supplemental later. Our budget this year and last year is designed to be presented to the Congress without the need for a supplemental, except for cost of war. And therefore, we have that number.

What does it all come out to? It comes out to the fact that it looks like to me we are just about at a wash with this new budget if you consider the pay raise, you consider the realistic budgeting, you consider the military health care, that's now going up like mad, and all of those things, except for the fact that we've terminated some programs and moved some things around, and we have, therefore one could say, something like $9 (billion) or $10 billion out of the $49 billion to work with as new money. However -- then you have to exclude the cost of the war, $19.4 billion, as I recall.

That's not really quite right, though, because there's a lot we can do within those numbers to save money. There's a lot we can do, and we believe we're getting a much better effect than simply the $9.8 billion. So I think it would be a little misleading to say that that's the number.

Let me just elaborate on the question that Congressman Hunter asked, and it goes to your question, as well. You mentioned the CBO report and the so-called requirements to replace platforms. That's a useful way to look at it, but it's only one way to look at it. It seems to me we have to also recognize that if you have 10 weapons -- bombs, for the sake of argument -- and they are 10 dumb bombs, and we buy 10 precision-guided munitions, the lethality and the accuracy and the effectiveness is notably different. It's still 10 things. If we have a soldier on the ground and he doesn't have a laser-guided targeting capability, and you have one that does, you've got a very different effect on the ground. If you've got an aircraft that's dropping x numbers of bombs, and the new aircraft can drop 10x bombs, you've got a very different capability and lethality.

It seems to me if you have an unarmed Predator that's out there gathering intelligence information and you replace it with an armed

Predator, that not only can gather intelligence information, but then can actually fire a Hellfire or, even better, an upgraded Hellfire with a better warhead that will do a better job, you've got different lethality. So I think we have to keep that in mind as we look at the platform question.

REP. STUMP: The gentleman from Texas, Mr. Ortiz.

REP. SOLOMON ORTIZ (D-TX): Thank you, Mr. Chairman.

Mr. Secretary, welcome. I noted the absence of any consideration for the civilian personnel who contribute so much to our readiness. And maybe it was my oversight or somebody's oversight. But we all know that they contribute a lot and they keep our equipment and they fly to many places to be sure that the equipment is ready and flying and moving. And maybe that was just an oversight or maybe it was my oversight, but maybe you all can address it later.

But you know, a recent department release noted that the budget reflects over $9 billion in savings from acquisition programs.

Some of those changes, management improvements and other initiatives, these were savings were used to fund transformation and other pressing requirements. We remember that other than the cancellation of specific acquisitions, programs or systems, rarely do we really see any planned efficiency or savings materialize.

My question is how do you plan to fund the transformation? How do you fund it and other pressing programs if the savings do not materialize? Because many times, we make assumptions that we're going to save so much much, but they do not materialize. How are we going to fund those programs, the transformation and other programs that we talk about?

SEC. RUMSFELD: Two things, Congressman. First, I'm advised that, as I recall, civilian pay is handled not department by department, but across the government. And therefore, it's not surprising it's not isolated out in this budget. Second, Dr. Zakheim advises me that I think in this budget is a 2.6 percent increase for the civilians across the board through the government.

With respect to the savings, the savings that are specified in this budget that we believe are going towards transformation -- and as I indicated earlier, transformation's in the eye of the beholder, like beauty, and people can slice it round or slice it square -- but the $9.8 billion -- correction, the $9.3 billion of program adjustments are real. We know where they are, and that money is available and is invested in what we believe to be important priorities for the department.

REP. ORTIZ: -- another question that might seem parochial, but it's not because it ties into defense. There's an ever-increasing population of veterans in South Texas, Mr. Secretary. Of course, we have a lot of winter Texans who go south because of the great weather that we have. Now, some of these veterans, due to the lack of local facilities, are required to travel for six to seven hours to go to the nearest hospital, which is in San Antonio. And what is sad about this is that these veterans, including some from the Second World War or Korean War, they meet at a funeral home so they can get transportation to travel all the way to San Antonio.

Last year, Chairman Hobson of the Appropriations, Mil-Con Subcommittee, visited naval air station Corpus Christi, where we have a hospital, a 195-bed hospital that is not being used. Today, I'm asking for your support for this demonstration project where the VA and DoD can work together. And I know that we have other facilities in other parts where VA and DoD work together, and it can bring a lot of savings. I just hope that you can support this project, the DoD and VA project that they're starting in Corpus Christi naval station.

SEC. RUMSFELD: Congressman, I used to be stationed at Corpus Christi when I was a Navy pilot back in a lot of years ago, and I know the location and like it. I will say this: I will support what you said. I will try to achieve it. I'm constantly amazed at the number of prohibitions that exist, earmarks in our legislation -- over 2,000 earmarks last year -- that get us tied up to the point that it's -- we're always amazed that we're not allowed to do this, we're not allowed to do that, we can't manage this, we can't manage that.

But I personally will see what I can do to achieve what you're saying.

I quite agree. When you've got underutilized hospitals, forcing people to drive hundreds of miles is mindless. And we ought to do something about it. Congressman Kirk's been after me on the same subject and has been working the subject in Great Lakes, in that area, where there's a VA hospital and a military hospital. And we're -- I think there's going to be a memorandum of understanding or an arrangement that's going to be signed sometime later this month. Is that -- this week. So occasionally we're able to bring rationality and coherence to these things, and we will give it a good go.

REP. ORTIZ: We appreciate that. And this has a lot to do with retention. When these older veterans who have served tell the young ones "They have not been able to deliver," you think I'm going to encourage my young ones to stay in the military? I think this is very, very important. And I thank you, Mr. Secretary.

SEC. RUMSFELD: Thank you, sir.

REP. STUMP: The gentleman from Texas, we have a commission taking place right now, Solomon, that would study the possibility in certain areas of the military and the VA sharing. I imagine -- I think the report's due in about a year.

REP. ORTIZ: Thank you, Mr. Chairman.

REP. STUMP: The gentleman from New Jersey, Mr. Saxton.

REP. JIM SAXTON (R-NJ): Thank you, Mr. Chairman.

Mr. Secretary, thank you for being here with us. It's a pleasure to be able to welcome you here today, and to General Myers and my friend Dov Zakheim.

Mr. Secretary, let me just follow up on the concerns expressed by Mr. Hunter and Mr. Hefley relative to the -- I guess the way to say it is that we're headed in the right direction, but we express our concern that perhaps we haven't gone far enough. Let me just concentrate on the military construction area in the budget that you have requested, that you have submitted.

I'm actually kind of disappointed in it. In fact, I'm very disappointed in it. The military construction budget has shrunk remarkably, and this is on the heels of what you laid out just last year when you were here at this time. You indicated to us that the recapitalization rate for military facilities was 192 years, and that it was your goal to reduce it to 101 years by this year, which I believe in your testimony indicates that we're now figured that we're at about 121 year recapitalization rate, and our goal is to get to 67. And (Ray) Secretary DuBois (deputy undersecretary of Defense for Installations and the Environment) came to visit with us on July 11th last year and said, and I quote, "Our fiscal year 2002 budget initiates an aggressive program to renew facilities." And as a matter of fact, the 2002 budget did just that. In fact, we increased military construction from 5.2 to 6.5 billion, and family housing from 3.6 to 4.1 billion.

This year it's a different story, however. The military construction budget request shrunk from the 6.5 that we had last year to 4.8, a 26 percent reduction. And family housing increased from 4.1 to 4.2, a 1.7 percent increase, adjusted for inflation is no increase at all.

Now, I read in your testimony that you expressed a concern or a justification by saying that the investments in milcon had to be delayed until the out years when we know what facilities will be closed. Mr. Secretary, I don't think that dog hunts. I think that we're putting the cart before the horse here, and I'll tell you why.

You have also -- you indicated also that you believe that we cost the taxpayers money by delaying BRAC, and I think just the opposite is true. Here in the testimony this morning I have heard several times both by you and General Myers that our force structure requirements are still not fixed. And you indicated, Mr. Secretary, that we have 70,000 more people on active duty today than we did a year ago, and you also spoke of the desire that you have -- and I think perhaps rightly so -- to bring troops home from the Sinai and -- and these are all indications that our force structure is far from settled.

Therefore, one could logically ask the question: How can we fashion the facilities for a bed-down when we don't know what our force structure is?

And so our thinking in delaying the BRAC from '03 to '05 was to allow us to operate effectively and cost-effectively and to know what it is that we are designing our bed-down for. And so to say that we are delaying the modernization of military facilities because we need to get the BRAC out of the way first is the dog that I don't think hunts.

SEC. RUMSFELD: Well, Congressman, first let me correct something I said earlier. I think I said something like 60,000 Guard and Reserve, plus holding 10(,000) in, for a total of 70(,000). Dr. Zakheim tells me the number is actually closer to 76,000 Guard and Reserve, and holding in about 10(,000). So it's actually larger, which is a number that came from -- this morning from the services. And I wanted to have the record correct -- (chuckling) -- which makes your point even more strongly.

Let me respond this way. The -- you're right. On the military construction, last year we were hopeful we could keep running that recapitalization rate down towards something like 67 years, and we were headed that way. And we did have a nice increase last year, both in mil con and in housing. Housing this year is up from 4.1 to 4.2, modestly. Mil con's down to 4.8. Why?

I think the dog does hunt. If you're making choices -- and in life we're always making choices, and we believe -- all the chiefs, every former secretary of Defense who's alive unanimously believe that we've got a force structure that is somewhere around 20 to 25 percent larger than we need, that it costs us money.

We decided that in terms of the housing, we should keep investing, because of the needs of the men and women in the uniform. But in terms of modernizing facilities, why not ease up on that until we get the BRAC behind us and know where we are? And it seems to me to be a reasonable thing to do -- not just that, but we also have to provide force protection for a hundred percent of our bases when we honestly believe we only need 20 percent of our bases.

Now is that number right for sure? I don't know. Only we'll know after we work our way through the BRAC. But we don't need to delay BRAC two years, it seems to me, to find out what we think we need. I believe that we are doing a great many things to stop using men and women in the armed forces for non-military activities. I'm starting to stop detailees that are sent all over this city, hundreds and hundreds of them. We're trying to do as we said -- bring the drawdown in Bosnia and the Sinai. Every single use of men and women in uniform today for the homeland security, whether it's for Customs or INS or borders or airport work, we're requiring that there be an exit strategy for every one of those, so that we know that the people that these forces are helping, on an interim basis, have a work plan to replace them with people who ought to be doing that work, as opposed to men and women who are being trained -- I'm sorry -- not 20 percent of our bases; we need 80 percent of our bases.

Yes.

My gosh; I saw those faces, and I -- (laughter) -- and I admit I don't know that that's the right number, but we do believe that we've got somewhere around 20 to 22 percent more bases than we need.

REP. SAXTON: Mr. Secretary, Mr. Chairman, if I can just follow up and just -- just ask this question: Wouldn't a more logical approach be to say to us in your budget submission, "These are the facilities that we need to modernize," rather than to just put the brakes on and bring it all to a -- it's not a screeching halt, but it's a big reduction.

SEC. RUMSFELD: Yes.

REP. SAXTON: And it's a -- you have the latitude to say, "Here's where we need to invest our money." You didn't do that. You said, "We'll just stop."

SEC. RUMSFELD: The -- well, I mean, fortunately, the Congress decided to have a BRAC, and I think that's the right thing to do. As you know, I wished it had been two years early, but I understand people disagreed with that, and there was a negotiation, and an arrangement was made. The approach we've taken seemed to me to be reasonable.

REP. SAXTON: Okay, but it's -- I'll let it go at this, but if you can make reasonable decisions about what base structure you need before you have more structure -- and if you can do that, that's fine -- then just submit those needs in the budget, and we'll do our best to accommodate your wishes.

SEC. RUMSFELD: Mm-hmm.

REP. SAXTON: Thank you.

REP. STUMP: We have a vote -- a 15-minute vote and a 5-minute vote.

Mr. Taylor, you want to try to squeeze your question in right now, or shall we recess and come back?

REP. CHARLES TAYLOR (R-NC): (To Rep. Stump.) I'm going to --

REP. STUMP: All right, the gentleman from Mississippi.

REP. TAYLOR: Thank you, Mr. Chairman.

Mr. Secretary, General Myers, thank you for being here.

Mr. Secretary, I have to express my extreme -- well, let me start off with the good things. Congratulations on how well things are going in Afghanistan, and so --

SEC. RUMSFELD: I better zip up my pockets now, right? (Chuckles; laughter.)

REP. TAYLOR: (Laughs.) (Inaudible) -- like a cheap suit.

SEC. RUMSFELD: (Laughs.)

REP. TAYLOR: You know, Mr. Secretary, a year ago, you warned about complacency, and I heeded your warning.

SEC. RUMSFELD: I haven't told --

REP. TAYLOR: A year ago, you warned this committee about complacency -- that the American public was getting complacent. I fear that your budget tells me we're getting complacent as far as -- as far as the need for a United States Navy. I don't quite buy your argument that our problem stems from -- it's going to be a word or two off -- prior-year budget problems or contractor problems.

SEC. RUMSFELD: The prior-year budget was 600 million (dollars).

REP. TAYLOR: The prior-year budget problems are that there wasn't enough money in the prior-year budgets. The contracting problems are, there aren't enough contracts to keep our six major shipyards, whose only customer is the United States Navy, going. And when they go away, no one is going to invest $500 million to start a new shipyard. It just -- there is not enough return on investment. You are a businessman. You've got to understand that.

If we don't put the -- and you're actually, once again, building less ships and asking for less ships in the budget than even the Clinton administration. The fleet is the smallest it's been since 1933. You and I know that. You don't correct it by putting five ships in the budget; you correct it by putting 10 ships in the budget. We are on line for a 150-ship Navy, Mr. Chairman, because again, we can only budget money one year at a time; that's in the Constitution. So all our plan is, is for five ships -- a 150-ship Navy.

The second thing I would hope you would touch on: I continue to watch and listen to what the president says and continue to watch our actions with regard to Colombia. In this year's president's budget, he's asking for a hundred -- close to a hundred million dollars to train a battalion to protect the Occidental Petroleum pipeline down in Colombia.

My hunch is, if we are to get further involved military in Colombia -- and we both know plans are being drawn up to do that -- the president's not going to go before Congress and say it's to protect that pipeline; he's going to say it's about drugs -- the same reason this Congress passed Plan Colombia, one billion, three hundred million dollars.

I really don't -- I have mixed feelings on that because I do believe in the evil of drugs. I wish we would take stronger steps to go after drug users in America. I wish we would have drug testing not only for all DOD employees, but every single federal employee, including us.

The inconsistency I see, though, is I heard the president talk a lot about drug dealers in Afghanistan prior to the guys that we're for winning -- prior to the guys that we're for winning. Since then, I have not heard one word from our president, or anyone else in the State Department, saying, "Okay, now, one of the things we're going to do to fix Afghanistan is to destroy the drug trade there."

We changed Japan fundamentally after World War II: we gave the women the right to vote; we passed a constitution; we did away with the king. We changed Germany fundamentally after World War II: we created labor unions, a free press, all those things the Nazis never would have dreamt of. We've enjoyed 60 years of prosperity in both those countries because of the fundamental changes. That is a fundamental change that we have to make in Afghanistan if we expect any peace at all.

And again, I see the incredible irony of we're going to send Americans down to Colombia because of drugs, but we're going to turn a blind eye in Afghanistan. It's one or the other.

And I would love to hear your comments on that.

SEC. RUMSFELD: Yes, sir. Thank you.

First of all, we're not going to a 150-ship Navy. It would be a harmful thing for this country. We happen to have a fleet that's relatively young at the present time, and the reason is a lot of them were built in the 1980s.

Second, if we look at the out years, we do get to 10 per year.

Third, you're quite right about the defense industrial base and the shipbuilding base. Dr. Zakheim and the Navy are working with the shipyards to see that a lot of the work that needs to be done that does not in a given year result in a digit of one or two ending up in the shipbuilding numbers of ships for that year, there's still a lot of work that needs to be done, that it's balanced in a way that we do in fact preserve that industrial base. It's very important.

With respect to Afghanistan and drugs, you're right, it's a serious problem. They have been a major provider of heroin. It is something that I'm aware of, I'm attentive to; the folks -- I guess Tom Franks is going to be testifying with you tomorrow, possibly, General Franks. He is sensitive to it. The administration is. And there's no question but that it would be a -- and there's no question but there's a linkage between terror and drugs and crime in that country. And we need to do -- take the kinds of steps that you're talking about to see that Afghanistan does not just simply revert back into a major exporter of heroin.

REP. STUMP: Mr. Secretary, it would be necessary for us to take a recess, about 15 minutes -- hopefully no longer than that. The chair intends to recess at the sound of the gavel. (Gavels.)

(Recess.)

REP. STUMP: (Gavel.) The committee will please come to order. The gentleman from New York, Mr. McHugh is recognized.

REP. JOHN MCHUGH (R-NY): Thank you very much, Mr. Chairman. Mr. Secretary, General Myers, Dr. Zakheim, welcome. I should start off by saying I have enormous respect for all of you as individuals. The job you have been doing has been incredible. And I think I speak for all Americans when I say how deeply appreciative we are for the amazingly effective work that you have done behind our troops in this recent war on terrorism. And as such, I'm tempted to just say, "Me too." I don't think there's a lot to be gained by subjecting you gentlemen and taking your valuable time simply recounting many of the concerns that have been expressed here this morning. But I did just want to briefly fill in some of the spaces on those concerns.

Gentlemen, I -- and Mr. Secretary particularly -- I continue to be troubled -- and in my life, I spend a lot more time worrying about what tomorrow may bring than what today has given me, and that's probably not the healthiest of attitudes -- but I continue to be concerned about the issue of force structure and end strength. I compliment you, Mr. Secretary, for the reconfiguring of our national defense strategy. The Two MTW had, in my opinion, outlived its efficacy, its realistic application. And I think to think more about what ways we'll be fighting rather than whom we might be fighting is a much more sensible approach.

But I listened very carefully to the president in his State of the Union message, and he spoke about an axis, a triangle of terror. And I was struck by that not because of the questionable validity of it, because I don't question it in the least, but by the unusual courage and forthright manner in which the president said it. And that kind of frank talk is something that we don't hear in this town so much.

That, I think, however, should cause us to reexamine where we might find ourselves in the future. We have abandoned Two MTW. I understand that. I think the president at least should cause us to consider Three MTW. If you look at where we are today with respect to Afghanistan, with all of those other deployments that you have spoken about very eloquently, Mr. Secretary, that's far below the level of a Two MTW. It's far below the level of the new analysis. And yet we're strained. As you have noted Mr. Secretary, 76,000 Reservists; stop- loss on 10,000, and none of us want to see the military have to manage its force structure in that way.

So I join with my colleagues who have expressed the concern about ensuring -- and particularly, along with Ike Skelton, want to say that I'm not certain that maintaining the current force structure is the answer. I happen to believe at the moment that a growth of that is probably not just appropriate but necessary. Nevertheless, as I said, that's a worry of tomorrow.

I also want to associate myself with the comments of my Military Construction Subcommittee chairman on my immediate left here, Mr. Saxton, with respect to what many have said on the proposed cuts in that budget. I don't see how we could possibly do a BRAC in '03 and approach military construction without having any idea as to what the shape and the forces of the troops ultimately will be.

You try to work through those things, I understand that. But in spite of the comments, apparently the surprise by some, on page 25 that in some cases Congress either increase or cut requested programs in milcon, I would hope that we would exercise that prerogative yet again.

Nevertheless, as the Personnel subcommittee chairman, I think you all have done more than a credible job, a very laudable job in carrying forward with the president's commitment to do better by our troops. I look at the health care costs, and they were significant, Mr. Secretary, you're absolutely right. That was a program that Congress magnanimously authorized and didn't fund. And it's over $8 billion in the monies there. And I compliment you.

The pay raise; holding to that promise that again Congress made, that the president happens to believe in very strongly in providing the 4.1. And I look forward in our subcommittee deliberations to having the completion of that formula on the targeted pay increase you spoke about. That follows on with the historic pay increase last year that the president initiated and, of course, you, Mr. Secretary. And just on and on and on.

And I had a chance about two weeks ago to go to Kosovo and Bosnia, and I missed you by a few hours in Uzbekistan, Mr. Secretary, so I'm not saying anything you don't know.

I have never done anything in my life that gave me more pride in my nation and for the actions of others. And our troops -- and I was there mainly to see the 10th Mountain Division. I'm kind of proud of them. They were in all three of those locations. But I've met Special Forces folks, Marines, Air Force, Navy -- are just incredible people. And I hope the American public truly understands over the long term after the memory of September 11th does not fade but becomes hopefully somewhat gentler, that these folks are there for us still.

So Mr. Secretary, I look forward to -- and General Myers -- look forward to working with all of you to try to continue this commitment. I don't think anybody, I would hope, on this committee and no one in this Congress reasonably expected that the deficiencies that have grown over the past decade or so in the United States military was going to turn around overnight, particularly when we're in a recession. And while I have troubling aspects about this budget, I think in balance it is a very positive one. And I thank you for your efforts and look forward to working with you. And certainly, if you have any comments or anything like that, I'd appreciate it.

SEC. RUMSFELD: Well, thank you very much, Congressman McHugh. I have nothing to add except that you're so right. The men and women in the 10th Mountain Division and also the total force that's involved in all the services over there are just a thrill to see and to talk to, and you can't do it without coming away with a great deal of energy and respect and admiration for what they're doing.

GEN. MYERS: And if could add, the 10th Mountain I believe is in 11 different locations right now, some of them in the Caucus and the Balkans and so forth. They are really spread out. Their division commander just graduated from the Joint Staff. And I'll see him here in about 12 days. I'll be over in his territory, and we're going to look around Uzbekistan and Afghanistan as well.

REP. MCHUGH: All right. I thought you were telling me General (Franklin) Hagenbeck and the 10th was coming home. But I will --

GEN. MYERS: They eventually will, sir.

REP. MCHUGH: I will quote a great American. I was not there, but I was told that the secretary said -- and I'm not trying to be parochial here, but he said in his comments when he was in Uzbekistan, the sun never sets on the 10th Mountain Division.

GEN. MYERS: He may actually be right.

REP. STUMP: The gentleman from Hawaii, Mr. Abercrombie.

REP. NEIL ABERCROMBIE (D-HI): Thank you very much, Mr. Chairman.

Mr. Secretary, I think that -- I don't know if I distinguished myself, exactly, but I think my remarks earlier in the session were distinguished by the fact that I find myself -- I found myself in agreement with you on many issues. I know this caused you great pause, and -- (laughter) --

SEC. RUMSFELD: (Laughing.) No.

REP. ABERCROMBIE: -- at the time Mr. Moore and I discussed this at some length. We wanted to kind of cushion the shock.

SEC. RUMSFELD: (Laughs.)

REP. ABERCROMBIE: But I assure you after my comments today things will get back to normal. (Laughter.)

Just following up very quickly on Mr. Saxton's, on the discussion with Mr. Saxton. As you know, I'm a loyal soldier in his army on this. If the department is cutting the military construction request because of uncertainty about which bases to invest in, it's not quite clear to me -- and I -- just looking at the budget summary and then reading through your remarks and that of General Myers, then what exactly the rationale is for the projects that are being requested in relation to the general proposition put forward to you that if the department has bases that it does think need to remain open in order to accomplish the tasks that it sees either immediately before or likely to be before it over the next few years, then you should say so. And then perhaps we can deal with the BRAC question. You don't necessarily need to answer that right now, but I do think at some point you need to make clear what your rationale is for the existing requests as opposed to the admonition to Mr. Saxton and others that a BRAC needs to be more definitive.

SEC. RUMSFELD: I'd be happy to do it right now.

REP. ABERCROMBIE: Okay.

SEC. RUMSFELD: I'd prefer to, as a matter of fact.

The department in the broadest sense is without an opinion as to different bases. The services have to make choices. And I'm advised that Dov Zakheim, who was in the meetings with these folks throughout the past month, indicated to me that they will very likely do it on the most urgent basis. In other words, the need -- where the need is the most urgent, the services will do that. The broader decision was a macro decision. It was simply that, given the fact that BRAC is coming in '05 and we have to make choices between ship building and aircraft building and one thing and another, that we favor in this general area housing for people and a slower increase or new money with respect to the modernization overall.

REP. ABERCROMBIE: Well, we -- I'm sure you would agree, then, that where that housing is going, then, the committee is liable to think that that's where you think the bases are liable to be staying open.

SEC. RUMSFELD: If they're assuming that there is something in the Department of Defense -- Office of the Secretary of Defense's mind on this, that would be a misunderstanding of the situation. I --

REP. ABERCROMBIE: That the department has anything in mind? (Laughs.)

SEC. RUMSFELD: Absolutely not.

REP. ABERCROMBIE: Okay.

SEC. RUMSFELD: I have no -- and no one in the OSD does.

REP. ABERCROMBIE: Speaking in the --

SEC. RUMSFELD: Whether someone in the services do or not, that'll be something you can discuss with them next week when they're here.

REP. ABERCROMBIE: Okay. Very good. Thanks.

Now, if I could move on to a challenge here, I think. And it is, in fact, if you -- summarize your testimony in the grossest terms here, but it's not meant to be anything more than a generalization for purposes of illumination.

You had three challenges there. The third one is transformation. You went on then to elucidate six major goals with respect to transformation. Yet all through the testimony there's no reference to the now infamous -- I shouldn't say "infamous", but what the press has seized upon as a key element in the president's presentation in the State of the Union, this so-called "axis of evil". I don't see any relationship in the summary of your testimony, and that's why I say I realize this is a gross generalization in your testimony, in fact, a summary of your position. But there's no -- I don't see the -- how the six major goals and the -- especially the transformation challenge of the three challenges relate to this in any way that makes coherent sense, policy sense. And I'll bring it up for this reason.

There's a proposal for a new CINC for homeland defense. How that's supposed to work is beyond me. Why we're not using the Guard, Reserve, the governors, the police and fire departments and the coordination we already have is beyond me. I think that needs to be elucidated a lot more clearly before there's going to be any new CINC approved for homeland defense. How that then relates to the question of transformation and these goals in the context of this -- what to me, I want to be frank with you, is almost an incoherent enumerating of these -- Iran, Iraq and North Korea. It -- and then all of a sudden we find ourselves involved in the Philippines, and what are called exercises are clearly not exercises. These are combat operations. And what I'm worried about --

SEC. RUMSFELD: Oh, I can't wait to get into this. (Laughs.)

REP. ABERCROMBIE: Okay. Well, that's good. That's fine. Because we need to.

SEC. RUMSFELD: Good.

REP. ABERCROMBIE: What I'm concerned about is the thing that concerned me -- and we're both old enough now to understand that circumstances that are originated in the Vietnam conflict, the consequences of which we're still dealing with today, which is military activity becomes our policy and becomes a substitute for a coherent foreign policy, a coherent policy with respect to our relations with other countries and how would it conduct ourselves. That's what concerns me. And it concerned me back in the early '60s when I was involved in trying to get a coherent understanding of it then. And I don't want to see us in a situation where our military activity -- and you and I have had this discussion on this committee and over at the Pentagon on precisely this point. And I think that that's something you want to avoid as well. And I'm sure the president wants to avoid it. I'm not sure the president is well served by those who are urging him to continue that kind of rhetoric. Now I don't have either the time nor is this the proper forum to --

REP. STUMP: The gentleman's right; you don't have the time.

REP. ABERCROMBIE: -- illuminate the differences those three. But if you can -- if you can address that question, I'd be very grateful.

SEC. RUMSFELD: You bet. Let me take them in sequence here.

First, the Philippines. It is a training exercise for us. Our forces are not engaged in combat. You're quite correct that there's 4,000 or 5,000 Philippine Army people that are on Basilan Island that are going after the terrorist network that is holding two Americans hostage, and that have killed a number of other hostages. You're quite right.

Our people are there -- the Philippines has a constitution that argues and says they shall not have foreign combat soldiers engaged in their country. We understand that; the president of the Philippines has said that. Our people are there for two reasons. One is to be engaged in the training process with the Philippine army on Basilan. And they're a relatively small number -- less than 600, as I recall.

We also have involved some American forces in the Philippines in an exercise in a totally different part, it just happens to be occurring.

REP. ABERCROMBIE: Yes, I understand that.

SEC. RUMSFELD: I think it would be not a correct characterization to equate that with Vietnam. And I recognize the sensitivity you're concerned about, and I share it. I can also say that we've got a very clear chain of command and rules of engagement, and these people are not out there shooting up the place; they are there with the rules of engagement that are totally in self-defense, and they're not there as -- engaged in combat along with the -- they're functioning basically at the battalion level, not down at the squad level.

Second, the new CINC. You say it's beyond me. What about the governors, the mayors and so forth? The short answer is, we understand posse comitatus. It's there. It's the law. We're not proposing to change it. The first responders, with respect to homeland security, in fact are the people at the governors and the mayors and the local level across the country. The reality, however, is that it is taking an enormous amount of time for the Department of Defense to deal with all of these different activities, and we need to do it in orderly, coherent way.

We've decided that we very likely will later this week be recommending to the president of the United States that there be a commander for the Northern Area, that will include the United States, and that that individual will help to put some discipline and coherence into the multiplicity of requests and demands to U.S. forces in different places like airports, and INS, and Customs, and border guards, and what have you, and for special emergencies, for weapons of mass destruction, for example.

REP. ABERCROMBIE: I hope that recommendation will include then the relationship of the Reserve and Guard.

REP. STUMP: (Sounds gavel.) Mr. Abercrombie?

SEC. RUMSFELD: Oh, it does. It does.

Last, with respect to the president's State of the Union message, I think the way to look at his remark about Iran, Iraq and North Korea is, as he put it, the nexus between the terrorist states that exist, that are on the terrorist list, and that have active weapons of mass destruction programs, and the new risk that that poses for the world. And it was an important statement. It was a statement that had clarity. And I think that we ought to register it and recognize the fact that those are three nations that have active weapons of mass destruction activities, and that it does create a situation for the United States of America, and our friends and allies, and deployed forces that reduces our margin for error. We best not be wrong when we're dealing with weapons of mass destruction. Thank you.

REP. STUMP: The gentleman from Maryland, Mr. Bartlett.

REP. ROSCOE BARTLETT (R-MD): Thank you very much.

Mr. Secretary, I'd like to take this opportunity to say hello to my fellow traveler to the Russian Duma during our debate on ballistic missile defense. Yours, sir, was perhaps the most effective voice there in trying to help our Russian counterparts understand that our initiatives in this area do not represent a threat to them. Thank you very much for your help.

I have several questions I'd like to get on the record, so if your answers maybe are as short as my questions, we can get them on.

First of all, when you last testified here, you stated that you were considering privatizing the commissaries. I thought then, sir, and I continue to think that this is not a wise idea for any number of reasons. And I and a number of my colleagues would be happy -- I see them shaking their heads -- be happy to come and meet with you personally, if you still are considering this. I would like to know what your present plans are in this regard. And if you still think that this is a good idea, we'd like to know how exactly would the business case work, since the commissaries sell groceries at cost.

SEC. RUMSFELD: Congressman, thank you. I am still considering it. It is not something that I would do at the OSD level; it's something that would be done by the services. Some commissaries already have been privatized and they work very, very well. And it is up to the services to make those judgments.

And whether or not they will in the period ahead, I don't know, but I certainly hope they're considering it.

REP. BARTLETT: I want to --

SEC. RUMSFELD: And we would have to do it in a way that it provided as good or better service at the same or better prices for the men and women in uniform, let there be no doubt.

REP. BARTLETT: With those caveats, sir, we won't do it, because I don't think there's any way to do this at lesser cost and maintain service to our military. We'd be happy to make our case -- and a number of my colleagues would like to comment -- make that case to you or whoever else in your group needs to be convinced that what we have now is best for our service people.

I want to thank you very much for the current level of funding for the Defense Commissary Agency, in spite of some rumors that it was going to be cut. And we would like your commitment, sir, that future year budget will also contain adequate funding for this very important quality-of-life service.

SEC. RUMSFELD: Mr. Congressman, as you know, this is not my budget. This is the president's budget. And what he puts in it in future years is -- and recommends to the Congress I can't say.

REP. BARTLETT: (Laughs.)

SEC. RUMSFELD: But the president --

REP. BARTLETT: But in this area, sir, you're going to be very persuasive in what ought to go in the budget.

SEC. RUMSFELD: The president proposes and the Congress disposes.

REP. BARTLETT: Okay. (Laughs.) Thank you. We hope that means you're committed to adequate support in the future. (Laughter.)

Last -- a few days ago, I traveled to Pope Air Force Base, Fort Bragg, Naval Station Mayport, Jacksonville Naval Air Station looking at our MWR facilities. I was then, as I've always been, impressed with the commitment and dedication of our people there. No profit motive, sir, could make them more committed to service to their customers. They have had a pretty heavy hit because of increased security as a result of 9-1-1. Now we spent a lot of billions of dollars bailing out the -- our airline industry. And so I wonder if you have in your budget some appropriated funds to help these very important services through these rough times, because their decrease in sales were not of their doing, sir. It was a result of increased security.

If the appropriated funds aren't in there, I hope that you will put them in, because this is very important quality of life for our service personnel, and they've had a pretty heavy hit in some of these locations because of increased security. Customers just couldn't get there.

SEC. RUMSFELD: Well, I -- I would -- I'm not knowledgeable enough to answer your question, although I'd be amazed if there were any funds in there for that purpose.

MR. ZAKHEIM: I think that's right.

REP. BARTLETT: Well, if there aren't, there should be. It's not going to take much, but this is a very important service for our people.

Just a real quick question about BRAC. I've had a BRAC closing in my district, sir. It did not save money. We would have spent less money if we'd have kept that base open.

Also, I'm not sure that we know what size infrastructure we need, since I and a lot of my colleagues believe that the present end strength, the present force strength is not adequate to our future needs. And so I think that we'll be a little wiser when we finally decide where we're going for base closing. I'm not at all opposed to BRAC. If we have excess facilities, we need to dispose of them.

Sir, if a base is good enough for our military people to live on, for their families to play on, shouldn't it be good enough to give away without millions and millions of dollars, as a matter of fact, in the collective billions of dollars of clean-up? And sir, will you support legislation that says that a base is good enough for our military people to live on and their families to play on, it's probably good enough to give away?

SEC. RUMSFELD: (Laughs.) I favor bases where people live to be appropriate for them and reflective of the respect we have for them. This idea of giving away bases, I don't know quite how to follow that. It seems to me that there are a variety of things that can be done with bases. One is they can be kept and used for the men and women in the armed services to fit our force structure. Another is, they can be closed in part or in whole and kept in reserve in case they are needed for future force structure adjustments.

Third, they can be disposed of either through sale or gift to a public entity or a private entity. And all of these things have been done over time with excess facilities.

REP. BARTLETT: That was not a direct answer. I just think --

SEC. RUMSFELD: But I thought it was pretty good. (Laughter.)

REP. BARTLETT: But so we are spending billions of dollars collectively cleaning up bases that were quite good enough for our military people. I think when we do that, we're making a statement that our military personnel are second-class citizens, that they can live on a facility that's not even good enough to give away. I don't think that's the right statement to make. And I think that most of the money we spend for cleanup is not productively spent If the pollutant is not migrating and does not present a clear and present danger, I do not support spending any money removing it. If our military could live there safely, then it ought to be good enough to give away.

SEC. RUMSFELD: Congressman, let me ask Dov Zakheim to offer some authoritative data.

MR. ZAKHEIM: Well, thank you, sir.

Congressman, first of all, as you know, we're not the ones who set the environmental requirements. And --

REP. BARTLETT: I know you're not, sir. I would just like your voice of reason to help us change what I think is a silly procedure in our country.

MR. ZAKHEIM: Well, again, this isn't really up to us. We just try to do the best we can with what we're given by the law.

Secondly, although in individual cases such as the one you're citing, there may have been costs that seemed to be in excess of the savings at a given point, the latest estimates coming out of even GAO are indicating that we are now starting to realize savings from base closures. The savings are amounting to -- it looks like it will amount to about $6 billion a year for the roughly 25 percent that we did close. And therefore, ultimately you would see roughly the same order of magnitude of savings. So it really is a function of what -- you know, a snapshot. If you look at it at a certain time, you may not yet see the savings, but ultimately you will. And it is interesting that the entire analytical community -- CRS, GAO, CBO, whoever you want to pick -- all say the same thing as the secretary indicated, as all other former secretaries of defense have said, it makes sense to close bases.

REP. BARTLETT: Mr. Chairman, I think the majority of our committee probably does not believe that there are savings, and if you have persuasive numbers, we would be very appreciative if you could give those to us. Thank you very much for your indulgence Mr. Chairman.

REP. STUMP: The gentleman from Texas, Mr. Reyes.

REP. SILVESTRE REYES (D-TX): Thank you, Mr. Chairman.

And Mr. Secretary and General, good to see you here. Welcome. And we appreciate the job that both of you have been doing under very difficult circumstances. Thank you again.

SEC. RUMSFELD: Thank you very much.

REP. REYES: As you are aware, Mr. Secretary, there are many of us on this committee that are very much concerned about the A-76 process. I certainly am one of those. And for many years, we have been pointing out the many problems with those processes. Last fall I learned of yet a new one. In November I learned that Fort Bliss -- the Fort Bliss Directorate of Information Management is being reviewed for outsourcing. So on November 5th, I sent you a letter raising concerns from a national security perspective on this very matter. To date, Mr. Secretary, I have not received a reply to this letter, and I hope that that indicates that you're taking another look at this issue.

SEC. RUMSFELD: What's the date of the letter?

REP. REYES: November 5th.

SEC. RUMSFELD: I just got a bunch of mail from October and November, and a number of Christmas cards this week.

REP. REYES: I'm going to give you this this morning. (Chuckles.)

(Laughter.)

SEC. RUMSFELD: Well, good. I -- for anyone who wants to write me, please fax me.

REP. REYES: (Chuckles.)

SEC. RUMSFELD: There -- the rest of it is not getting through very promptly.

REP. REYES: No, and I will give you a copy of it.

But let me just kind of paraphrase the concerns that I raised. This new study, the -- this new A-76 study, covers all of communications, which includes secure communications on the post. Some of the DOD functions, I think, should not be considered for outsourcing, including this very important one, in -- certainly in light of the September the 11th attacks on this country.

The communications system study was planned before the attacks, but as I understand it, based on the latest information, it's even continuing now.

A couple of areas that are critical:

As you know, secure communications is paramount in terms of our ability to maintain the integrity and the safety of our facilities and of our men and women in uniform. I hope that once I give you this letter, that you can reassess the types of activities that are being considered under the A-76 process and that we would not move into an area, again, that would jeopardize the safety of our facilities and/or our men and women in uniform.

In fact, when my colleague Mr. Bartlett talks about BRAC and other issues where we've been asking to see the number of -- or the amount of savings that have been involved, last spring Congressman

Weldon held a hearing, at our request, on this very issue, the A-76 process. In that hearing, he asked the deputy undersecretary for Installations, Mr. Randall Yim, how much the A-76 process has saved to date. He gave us one figure, and then when we asked each of the service representatives for their figures in each service, they gave us yet another figure. Interestingly enough, they did not correlate.

And those are the kinds of issues that I think we need to look at when we talk about the A-76 process, when we talk about a program that either jeopardizes national security or displaces loyal workers that, when they leave a facility, all the institutional knowledge is gone. And we at a time of war need to reassess that.

So if you would answer that, and then the next -- the other question that I have deals with what has already been asked on the Northern Command. As you know, Mr. Secretary, I spent 26-1/2 years in the Border Patrol, the last 12 as a chief, and know and understand the importance of the integrity of our borders and doing a good job, especially under wartime conditions. I was a chief in McAllen during the Gulf War, and we actually, I think, stepped up the effort.

But I'm concerned because I have been in opposition to militarization of the border, and I'm concerned, and I would like for you to tell us what the role of this new command is -- would be and how it interfaces with the United States Border Patrol, the Customs, the inspections process. There has not been enough information that has come out to give me a sense of necessity for this.

SEC. RUMSFELD: Right. Well, Congressman, thank you. We will certainly take a look at the letter, and we'll pick it up before we leave today.

REP. REYES: Okay.

SEC. RUMSFELD: With respect to the second part of your question, the reasons there's not been much discussion is the unified command plan is -- has -- is still in its discussion phase in -- within General Myers and the civilian side of the Pentagon. We've not briefed the president. We've not started consulting Congress. We've not started consulting our allies, except in the case of Canada, because something leaked out.

And so we -- General Myers has talked to his counterpart up in Canada about how NORAD would work.

In short answer to your question is, the United States military has no intention or plan of getting involved in INS or Customs or Border Patrol activities except on a very short time basis. We have been asked to supplement each of those three, and we have put a time limit on it. Each of those three has to have a plan as to how they're going to train up and get people to replace us. And that should happen -- I can't say how many months it'll take. But Secretary White has been negotiating -- each of those memorandum of understandings has a specific agreement on each one. And it will be very short-term. The short answer as to -- six months, through August 15th, is the latest.

The short answer on the command and how it would interface with the Border Patrol is the -- anything that the U.S. military do is going to be in a supportive role except for a couple of unique, distinctive things that involve weapons of mass destruction, as I recall --

(To Gen. Myers.) Is that -- ?

GEN. MYERS: That's correct.

SEC. RUMSFELD: -- where we are a first responder, for example, in the capital area on some things. But overall, anything that the command for the United States would be involved in would be supporting other elements of the federal government or the state governments or the local governments at their request.

REP. STUMP: Mr. Thornberry of Texas is recognized.

REP. MAC THORNBERRY (R-TX): Mr. Secretary, I think thanks to your persistence that we are getting some traction on transformation. As you said earlier, a lot of it is in the eyes of the beholder, and even some folks from your department will use the label "transformation" when they're talking about some improvement of some sort. You're got some people that use that label when they're talking about any sort of high tech weaponry. But let me ask you to address two concerns that have been expressed by people who have been cheering your transformation efforts.

One deals with what we buy. The concern that has been expressed is that what this budget does is just pile on some additional spending on some new technology, but it doesn't really make any hard choices. And if you don't make hard choices, you're not going to really affect the culture that makes transformation stick. And so, on the what we buy side, the argument is that we're not really making tough choices. I realize you have a chart on some Army programs that are going away; I guess the answer would be Well, that's not really significant, you didn't cut anything that's high profile. And -- anyway, you can address that.

The second concern that some have expressed is that what we buy doesn't really matter. And as a matter of fact, you say yourself, I think today and in your speech last week, that all the high tech weapons in the world doesn't transform the U.S. unless we also transform the way we think and train and exercise. And so, what some people will say is what matters is the organization, the personnel promotion system, professional military education, the doctrine, experimentation: that's really what's going to transform us, and that there's not as much movement in that area as is necessary.

So, I'll let you have at both of those aspects.

SEC. RUMSFELD: Well, first, you're quite right. There is a -- there are a cluster of people who fancy that transformation exists in firing some senior military officer who's not transformational, if you will, or cancelling some major weapon system that they conclude is not transformational.

We saw an editorial in one of the big newspapers this week talking about the Crusader weighing 70 tons. I don't want to put up a defense for the Crusader, but last time I looked it had been reduced to about 40 tons.

But the vision of transformation being cancelling a major weapon system or firing somebody I think is excessively simplistic.

Second, it is a matter of culture, I think, and how people think. And I honestly believe that probably as important as anything else we do will be the selection of the next six, eight, 10 combatant commanders and chiefs and vice chiefs in the military, and the people that they then put under them as they go forward over the next four, five, six years, and the people after them go forward over the following five or six or 10 years. And I suspect -- and matter of fact, I told the president this the other day. We just sat down and -- Dick Myers and I went over, and said we've got eight or 10 major positions coming up, four-star positions, and that who we decide on those is so important in determining what this military is going to look like, what the culture will be, how people will think, how they'll behave, how bold they'll be, and whether they're going to still be in the same mindset of pre-September 11th. We're going to spend a good deal of time trying to do that right.

And I think that the business of canceling some big system or firing somebody as an answer to transformation is nonsense.

GEN. MYERS: Congressman, can I just -- can I follow on for just a second? As I said in my opening statement, I think we're in agreement that transformation is more than things; it's also how you organize yourself, what your doctrine is, and so forth. And you've got to be careful in this area about deciding what transformation is and what it is not. I mean, this is not a simple subject because it's always hard to predict the impact something might have on the future.

I would offer the avionics upgrades to the venerable B-52. When those upgrades were approved by Congress and put on these aircraft, I don't think people thought that, gee, the B-52 would be providing close-air-support to Army forces on the ground in Afghanistan with joint direct attack munitions. I mean, that was not the concept. But that turns out to be, at least in some respects, a fairly transformational event. So we've got to be -- I mean, this requires lots and lots of thoughts.

We know some things that are in this budget will probably be more transformational than others, at least to lead to it. But even sometimes the simple things can do the same thing. So I think we're in agreement.

REP. STUMP: The gentleman from Maine, Mr. Allen. Then Mr. Chambliss.

REP. THOMAS ALLEN (D-ME): Thank you, Mr. Chairman.

And thank you, Mr. Secretary, both for being here and for your leadership in helping to guide this country through an extraordinarily difficult time. And I want to simply echo what others have said about the men and women in our armed services, who are making all of us very proud around the world. It's inspiring.

I have to say, I do want to talk about shipbuilding -- no surprise, I'm sure, to you -- because back in Maine, the Bath Iron Works Yard is, you know, 40 miles away from me. And when we look at the administration's proposed budget on shipbuilding, it is profoundly discouraging, profoundly discouraging.

A year ago, Mr. Secretary, you came before this committee and basically said that the ship construction was way too low. You said the right number is nine. And it's been going on for year after year after year, and it's about ready to fall off a cliff in about four or five years. And Mr. Zakheim agreed that it was about to fall off a cliff.

But when I look at the chart, instead of even the six ships that we were constructing in fiscal '02, we have been, we've got five in '03, five in '04, seven, seven and 11 over the next five years. There's really no progress until you get out into a -- you know, a fifth year, which is so far away that none of us can really predict. But the line for DDG-51s, for the first time goes down to two in '03, '04, '05, '06 and '07 -- every single year. And I think this is a real serious mistake.

Now, I know you've given a partial response. I just want to give you a reaction to two suggestions. One is, this year, as last year, you come and you say, well, there are contractor difficulties, and that's why we can't spend all the money we would like. But as Mr. Taylor has said, that's really hard to accept.

I mean, I know there are some engineering problems with one yard on one program, and there may be others, but it's not an industry-wide phenomenon.

Secondly, the reason, I think we know, shipbuilding's at the bottom of the list is the suggestion that a $600 million cost overrun has prevented the construction of a third DDG in the fiscal '03 area. You know, you've got a $331 billion budget last year, proposed $379 billion budget this year. And just to mention one thing on $250 million, last year, Mr. Secretary, you said several times you needed every nickel in the budget for missile defense, and then the day after the House and Senate voted on the conference report, the department cancelled the Navy Area program and restructured SIBRS-Low, saving, I think, about $250 million. I'm just suggesting that within this budget, I think it's possible to find the money you need for even one additional ship in the coming year.

I just don't believe, when you look at what happened after -- when we began in Afghanistan, the Navy gathered in the Gulf and we moved 50 ships over there. They were how we began to get ready for this conflict. And it seems to me we're making a terrible mistake if we drive the Navy shipbuilding budget down as far as you have in this budget. And if you keep, frankly, the missile defense number where it is last year -- because it does seem to me that we have to look at some of the priorities after September 11th. I think we should look hard at the missile defense, the national missile defense numbers. I think the administration should make a major effort to negotiate North Korea's program away, and I think if you did that, there would be savings there to find additional funds for shipbuilding.

And that's a long speech, and you knew it was coming, but I'd appreciate your response, Mr. Secretary.

SEC. RUMSFELD: Well, Congressman Allen, thank you very much for your kind words. I'm for the Navy. I was in the Navy. When I said we needed every nickel of the last year's budget, I was right. I do not believe I said that we need every nickel for missile defense; I said we needed every nickel for everything that was in the budget.

We will continue to cancel things that aren't making it. And the program you mentioned, the Navy program, was not making it. We have no choice but to do that. If it's that late, that far over and that much not working, we will do it again and again if we have to.

The Navy was enormously important in the Afghan exercise, you're absolutely correct.

No one here has said that it was the contractor problem that led to what we've proposed. No one has tied it to any one thing. We have mentioned a series of things. And the Navy made the decision that they felt that at this point, with the average age of the ships what it was, that we could do it this way and that they had higher priorities. They're going to be here next week and you'll have a chance to talk to them. But choices have to be made.

The shipbuilding budget, you're right, is five, unless you count the two important conversions, which are not nothing.

Fourth, with respect to Bath, Dr. Zakheim recognizes the importance of the industrial base.

He has been discussing with people ways that we can see that the various needs of the Navy with respect to shipbuilding -- not just whether or not a new ship arrives in a budget in a given year, but the other activities are arranged across the country in a way that we do preserve that faith. We are aware of what you're saying. We are concerned about the Navy. And we intend to see that we do have an appropriately sized Navy. But I do think that the four or five things that relate to the shipbuilding budget here are not trivial, they're real.

Dov, do you want to comment on that, particularly with respect to the allocation of activities?

MR. ZAKHEIM: Well, as the secretary said, the issue isn't just the number of ships, although that's clearly important, but given that the average age of ships is about 16 years, that's not really what is the fundamental challenge than it is how to maintain the shipbuilding base we have. Remember, when I came into this business we had about 27 yards functioning; now we're down to a handful. So it's important that we keep them functioning, it's important we keep the designers and the engineers and the production line people working, too. It's a question of how you balance that. What the Navy did -- and they will explain this to you -- is they felt that first and foremost, as the secretary has said, we weren't going to play -- we weren't going to come back with more supplementals for things that we had underfunded. The Navy felt it had to be up front and fully fund readiness, which it did. It obviously funded all the personnel-related programs, which it did, including the health care. It funded munitions to higher rates, which it did. And when it came to shipbuilding, the concern was could we be a little more flexible.

We are looking, as we speak -- and I'm personally involved in this. And I think you know this, congressman -- that to try to deal with the problem of maintaining the base in its widest sense, not just the number of yards but the people who are working in them. That's critical to this country. We don't disagree on this at all.

REP. STUMP: The gentleman from Georgia, Mr. Chambliss.

REP. SAXBY CHAMBLISS (R-GA): Thank you very much, Mr. Chairman.

And Mr. Secretary, I told you privately before the meeting, but I'm going to tell both you and General Myers publicly what a great job you've done at the Pentagon, not just in this current conflict. But you've brought common sense and a business perspective to the Pentagon that's been long lacking. And we appreciate the job you've done.

I also appreciate the job you've done informing the public about the war. I think the way you have dealt with the press has allowed the American people to find out really what's going on and to have a great appreciation for the job that our folks are doing. And I hope you will continue those types of briefings that you've been giving. And you and your people are doing a super job there.

SEC. RUMSFELD: Thank you, sir.

REP. CHAMBLISS: I hate to ruin my reputation over at the building by continuing to say nice things to everybody that comes up here at budget time, but I'm particularly encouraged about a couple of major decisions that you have made with respect to multi-year purchasing. I think this is again such a win-win situation for, in this case, the Air Force, but particularly our men and women who are flying, and the American taxpayer when we look at continuing with multi-year purchases on weapons systems like we're going to do with the C-130 and the additional buy that we're going to make on the C-17. The C-17 certainly has been a model program for multi-year buys, and I'm pleased to see us moving in that direction on the 130s.

Also, General Myers, I had a good conversation with General Lyles last week when he was at Robins Air Force Base about the long-term depot strategy that I know is in the final stages. I have been encouraged by some things that I have heard from staff on the briefing they've been given. I think we still have got some kinks to be worked out there. But I'm pleased to see that we're moving in the right direction on that. Partnering in the depot system is again a win-win situation that helps the private sector, helps the public sector, but most importantly, helps the war fighter. And I look forward to visiting in detail with General Lyles about that.

Mr. Secretary, last year when you came up here to talk with us about the budget, there had been a recent overnight decision with respect to the B-1s. And a couple of us were throwing some darts in your direction that day because it had been a very recent decision.

SEC. RUMSFELD: More than a couple! (Laughter.)

REP. CHAMBLISS: Yes, sir. And I think we were right to question that decision. But our -- and we worked through that. And as I told you early on it may be the right decision, but it sure needed to be handled in a much better way.

You recognize that, and all your people recognize that, and I thank you for the cooperation that y'all have given us there.

But my question is: I don't see any long-term strategy for a long-range-bomber program. And yet I look at what we've done with the B-1s after that decision was made to reduce the B-1Bs from 93 to 60. I guess it's 92 to 60 now. We're flying those B-1s over in Afghanistan. They've done a superb job. We've needed a long-range bomber over there. We're flying B-52s on a regular basis, and, gee whiz, if we're going to talk about age of airplanes, I think the youngest B-52 is something -- what, 40 years old or whatever -- 35, maybe.

And the B-2 perform magnanimously over there, but I'm just wondering if there's any rethinking of the decision on B-1Bs -- not necessarily with respect to where they're going, but with respect to reducing the number of those airplanes. If we are, what are we going to talk about doing with respect to long-range bombers? And I just asked Mr. Hunter if he had any problem with a multi-year buy on B-2s, which I think a lot of us would agree with. But we all know how -- what an expensive system that is, but I'm just wondering if there is any thought being given to a long-range plan for long-range bombers.

SEC. RUMSFELD: Well, let me respond very briefly and then ask General Myers to make a comment.

But we are pleased with the decision with respect to the B-1s. We do believe that the remaining B-1s will be more capable and effective on behalf of our country. You're quite right; there's no question but that the long-range bombers, all three, have participated in the Afghan activity and done a good job.

The long-range bombers do help, particularly with fixed targets, and the FSGNs, of course, will also, with the conversion, be helpful with respect to fixed targets.

General, do you want to comment on the broader question?

GEN. MYERS: You bet.

Well, first of all, in the '03 budget, I think, if you haven't seen already, Congressman, you're going to see hundreds of millions going to upgrades to our bomber fleets, the B-2, the B-1 and the B-52, to keep them updated. In addition, I believe the Air Force has started to look at, "Okay, what's the follow-on to the bomber fleet? What's the next thing we might want to do?"

And that is -- that is just beginning. We think we can sustain the current fleet in the time it'll take them to do their analysis and come forward with perhaps another program. And I think they've opened their aperture up quite wide. This -- it could be an air-breathing system like the current bombers, or it might be something else. And -- but that is just -- that discussion inside the Air Force, as I understand it, has just begun.

REP. CHAMBLISS: Well, I know there, in your thought process, there are some B-1 hangars that are being vacated that B-2s will fit nicely into, if you get to that point. (Chuckling.)

REP. STUMP: The gentleman from Arkansas, Dr. Snyder, is recognized.

REP. VIC SNYDER (D-AR): Thank you, Mr. Chairman.

And thank you, gentlemen, for being here.

You know, Mr. Secretary, we -- this is our first hearing in the beginning of this session, so we always come back and notice how we're all aging together. But it appears to me, you appear younger than the last time you were here, so you're probably both the right person for the job, and it agrees with you.

SEC. RUMSFELD: (Chuckles.)

REP. SNYDER: I wanted to ask, in your written statement, you state that defending the U.S. homeland from attack and protecting U.S. forward bases should be our top priority, and we're all trying to come up with ways to spend your $10 billion contingency fund and look for other ways to spend money.

But one of my concerns is not under the domain of this committee, but it is our embassies. And when you look at the number that they have for strengthening security at embassies, it's up a little bit, but not very much. And my guess is that if your mandate had been not only to protect U.S. forward bases, but also embassies, that that number would have been substantially higher. I think about 80 percent of our embassies need substantial work, as far as making them safer.

I just wanted to encourage you to -- perhaps you or have someone from your staff meet with General Williams, retired Army Corps of Engineers. I think Secretary Powell brought him on to look at the embassy situation. This may be one of those ways that in order to protect U.S. military personnel and civilian personnel, there may be -- perhaps would benefit from some shifting of funds around to try to do a better job with our embassies, because there is no myth about this; our embassies will be attacked again. I mean, we can count on that, and we'd better do the best job we can of protecting them.

I want to ask a question about Iran, and give you an opportunity to comment. USA Today, and I think the New York Times, had an article about the comments made yesterday by the foreign minister of Iran acknowledging that their border, their 560-mile border, is porous. They've had a lot of problems not only stopping drug interdiction (sic), but they are acknowledging they do have problems enforcing that border. Some have described this as a conciliatory tone yesterday.

I just wanted to ask for your comments. Do you anticipate that you all will seek to sit down with Iranian officials and try to come up with some kind of coordinated way of stopping the holes in that border?

SEC. RUMSFELD: I have not had a chance to read what the Iranian official said, and I don't know what element of the government he is from -- he or she. But --

REP. SNYDER: Foreign minister.

SEC. RUMSFELD: It was the foreign minister?

REP. SNYDER: Yes.

SEC. RUMSFELD: Clearly, Secretary Powell and the president will come to some judgments as to the interaction that we have with Iran, as opposed to the Department of Defense.

It struck me that it would be useful to state the facts, and the facts are what I stated over the last day or two. It is a problem to have those porous borders. There is no question but that al Qaeda, and probably Taliban as well, have moved across those borders not just into Iran, but into other countries, and that we do need help. We're getting a great deal of help from Pakistan. They have been really terrific and stepped up and put army forces and border forces along that border to try to help capture people that were -- al Qaeda that were moving across the border into Pakistan. That has not been the case in Iran. And I wish it were.

Iran also, of course, has been active in other types of terrorist networks with people moving into Damascus and down into the Bakaa Valley.

So, as a state that has been listed as a terrorist state, it struck me that given the pressure that we believe exists in Iran among young people and women ,particularly, and the unusual governmental arrangement they have, where it's not ever clear -- it's very clear where the ultimate authority is, but it's not clear where the earlier authority is -- it struck me that getting the facts up on the table and letting the world think about it, and the people of Iran think about it, would be useful. And from what you've said, it may very well prove to have been useful.

REP. SNYDER: Just a couple of comments, Mr. Secretary. The earlier comments made about BRAC. I agree with you. I may be the only member of the committee, I don't know, that agrees with you. But the comment was made about savings. It's not just savings, it's efficiency. And we always forget about the "R" part of it, the "realignment" portion of it. So I think the documentation is there. The amounts may be iffy, but that there has been savings.

Just a comment about Sinai. I appreciate you putting that on the table. We have a couple hundred Arkansans there, an activated Guard Unit, now. But to me it's part of transformation. I mean, surely, once every 22 years, or whatever it's been --

SEC. RUMSFELD: (Chuckles.)

REP. SNYDER: -- we can sit down and say has technology changed?

SEC. RUMSFELD: Exactly.

REP. SNYDER: Is the border situation stable enough? Do we have the ability to accomplish the mission?

I hope that the -- you know, the message always is, we will always, whether it's peace or war, irregardless of what's going on with the situation, find ways to the most efficient and effective way to use our personnel and technology to accomplish the mission. I mean, you're not going to jerk several hundred people if the mission isn't accomplished, but if you can do it and still accomplish the mission, I see it as being part of the transformation.

SEC. RUMSFELD: Exactly right. Thank you.

REP. SNYDER: Thank you for your service. Appreciate it.

REP. STUMP: The gentleman from Illinois, Mr. Kirk.

REP. MARK STEVEN KIRK (R-IL): Mr. Secretary, welcome.

SEC. RUMSFELD: Thank you.

REP. KIRK: We are so thrilled to be able to move the VA-Navy sharing in North Chicago, and I think that's going to guarantee an estimated 25 percent reduction for both agencies as we improve the health care for people there.

I want to touch on three things real quickly. Your $10 billion request -- I understand there's only about a four months' running time for combining the Noble Eagle and Enduring Freedom, and given the direction of the "axis of evil" speech, I think that's prudent.

Secondly, on the base closings, we've got about 85,000 Reservists called up -- in one estimate, 8,000 of them on security detail. If we have 25 percent too many bases, that means at least 2,000 Reservists were called up to protect bases that we don't need --

SEC. RUMSFELD: It's exactly right. Force protection is very expensive, and if you have base structure you don't need, you've got to protect it, and that's expensive.

REP. KIRK: So it seems to be pulling us off where we need to be. I very much support you on transformation, with a particular emphasis on Asia. When we decided Europe was the priority on December 8th, 1941, it made sense -- overwhelming amount of U.S. trade was with Europe, not Asia.

We now do 40 percent more trade with Asia than Europe, and my understanding is, three-quarters of our flag officers are related to

European missions, as opposed to Asian, and that 85 percent of our language training in the military is European languages, not Asian. I wonder if you could talk about that in the context of transformation.

SEC. RUMSFELD: We have looked at the language training, and you're quite right; the old pattern of favoring, fostering in our academies and our war colleges and our language schools the so-called Romance languages has -- it's had a tail, it's persisted. And I can say that in recent years there's been movement and changes with respect to that, but you've certainly put your finger on something that's important.

Part of the problem on Europe with respect to flag officers -- and I'd defer to General Myers on this -- is NATO. I mean, the reality is that there is an awful lot of superstructure at NATO, and getting changes in that is not something we can do unilaterally; it's something that requires us to work with our NATO allies. And it is a -- I suppose it's an understatement to say that it's a sensitive question.

General?

GEN. MYERS: I'll leave it there. I think that's exactly right. It's -- and that's something that the secretary, by the way, has been pushing on and -- for all of us to look at that. And General Joe Ralston over there in -- as our Supreme Allied Commander in Europe, is working on bits and pieces of that as we speak.

REP. KIRK: I'll leave you with a chilling thought. The IMF projects that the Chinese economy will be larger than the U.S. economy in the 2020s. Quiz question: When's the last time the U.S. military fought a country with an economy larger than ours? Answer: 1813. And that military marched into Washington and burned the Capitol down.

We are going to face a time at the end of your transformation in which China will have more resources at her command than the United States, and so this Asia focus, I think, cannot happen too quickly.

SEC. RUMSFELD: I guess the -- one hopeful aspect of that is that straight-line projections tend not to prove out.

REP. KIRK: That's correct.

SEC. RUMSFELD: We hope.

REP. KIRK: Thank you, Mr. Secretary.

SEC. RUMSFELD: Thank you.

REP. STUMP: The gentlelady from Virginia, Ms. Davis. And we could try to get you in -- I believe you had a question --

REP. DAVIS: Yes.

REP. STUMP: -- the second buzzer. And I believe, Mrs. Wilson, you want to make a comment as soon as she gets through. Maybe we can get through before the -- time to go vote.

REP. JO ANN DAVIS (R-VA): Thank you, Mr. Chairman.

And thank you all for coming. And I must say I couldn't be any more prouder of our men and women in uniform than I am. They're out there working with less than perfect conditions.

And I will tell you -- and you can correct me, General Myers, if I'm wrong, but it's my understanding that 79.3 percent of the strike mission funds are accredited to the aircraft carrier. And you had to know I was going to go there, Mr. Secretary. Given that, I've heard all along that we needed to have 15 aircraft carriers; the projected budget has us go down to 12. And I'm quite concerned that we've now moved the CVNX out to 2007, and I've even heard that we're talking of split funding, 2007-2008. Right now I think that we have some areas -- we have the Mediterranean, I believe, where we're not -- we have no presence, the first time in, with an aircraft carrier. And I do hope this puts to rest any argument about the need for large-deck carriers versus small-deck carriers.

Having said that, I will say there's two other areas of the budget that really concern me, and that's the elimination of the Navy Area Missile Defense. I was at Dahlgren this past Monday, and that is something that I'm not real sure we should have eliminated, and maybe that's something I can talk to you about separately later. The other is the elimination of the DD-21, as I believe that technology is critical to the new CVNX, although they tell me the DDX is going to be the technology, but they also -- the brains -- and I'm not an engineer -- tells me it's not the same technology and that it could be a problem.

I guess I'd just like you to comment on that. I know you've commented on shipbuilding. I have a concern about the industrial base, Dr. Zakheim, so that is a concern. Norfolk Grumman, Newport News, is a concern to me. We have problems right now even keeping the engineers and designers that we need. And it is a concern, we start slipping the aircraft carriers -- if you'd like to comment.

SEC. RUMSFELD: Thank you very much.

The Quadrennial Defense Review left the carriers at 12. We did move the carrier one year to the right in the '03 budget. With respect to the missile defense decision, my recollection is that that was required by law under Nunn-McCurdy, that it had breached in several respects.

Do you want to comment to that?

MR. ZAKHEIM: Yeah. As you know, Nunn-McCurdy had required that a program that breached 25 percent cost increase, broke that ceiling, could only be continued if there was certification from my colleague, the undersecretary for acquisition. That not only was the program a national security requirement, but that e could guarantee both that it was being managed properly, it would be continued to managed properly. Nunn-McCurdy was passed in the mid-'80s. There has never been a program cancelled under Nunn-McCurdy until now.

REP. JO ANN DAVIS: Well, correct me if I'm wrong; I thought Nunn-McCurdy stated that you had to do reporting. I don't believe it required that you eliminate a program.

MR. ZAKHEIM: No, the law -- you cannot continue to fund a program if you do not certify it. And the undersecretary, Pete Aldridge, my colleague, could not certify because he was not convinced that we could manage this program in the future. And he basically sent a message to all program managers that if they do not get programs under control and can't convince him, Nunn-McCurdy is going to bite as Congress intended it to.

REP. JO ANN DAVIS: The problem with that that I see is that I hope we're not putting our Navy ships in danger by not continuing with this.

GEN. MYERS: Congressman Davis, let me just comment on that point. The requirement for the program did not go away with the cancellation of the effort. There are two separate issues, and one was the ability to fulfill the contract and the work that was going on, and that's the thing that Secretary Aldridge could not confirm. But the requirement is still valid. So we recognize that.

REP. JO ANN DAVIS: Okay. If the requirement is there, then where are we going with it?

GEN. MYERS: Well, it's going to have to be restructured.

MR. ZAKHEIM (?): That's right.

REP. DAVIS: Okay.

MR. ZAKHEIM: You asked about the DDX as well.

REP. DAVIS: Yes.

MR. ZAKHEIM: My understanding is that the DDX is going to be a true testbed. It's certainly not the first naval testbed we've had. And they're going to be testing out all sorts of technologies. Again, the feeling was the DD-21 was not taking us in the direction in which we wished to go, but the Navy is apparently going to look at all sorts of technologies to test on the DDX. And my understanding is that it by no means indicates -- and I want to be very clear about this -- that DDG-51, for example, is our last surface class. I mean, it's just not to be. There should be no misunderstanding about that.

REP. DAVIS: Thank you, Mr. Chairman.

Thank you, gentlemen.

REP. STUMP: The gentle lady from New Mexico, Ms. Wilson.

REP. HEATHER WILSON (R-NM): Thank you, Mr. Chairman.

Mr. Secretary, you've probably endured enough today, and I would just ask -- I do have a number of substantive questions that we can deal with at another date. But I would like to ask, I've got some concerns about matters relating to women in the military, and I've asked to meet with a senior member of your staff, and we haven't been able to coordinate that and do that. I would like to be able to do that with someone whom you designate, if you would agree to.

SEC. RUMSFELD: Good. We'd be happy to do that.

REP. WILSON: Thank you, Mr. Secretary.

REP. STUMP: Mr. Secretary, if you don't have any closing remarks, that about concludes it.

SEC. RUMSFELD: I do not. Thank you very much, Mr. Chairman.

REP. STUMP: Thank you very much sir, and General, and --

GEN. MYERS: Thank you, Mr. Chairman.

MR. ZAKHEIM: Thank you, Mr. Chairman.

REP. STUMP: Thank you very much.

The committee is adjourned.

END.