SEC. RUMSFELD: Well, good afternoon. Four years ago, President Bush took office determined to reform the United States military and the defense establishment. And while our world and the threats to our country had changed markedly since the end of the Cold War, the assumptions underlying U.S. force structure, planning, and our posture around the world had not changed to the same extent. In addition, this department still had bureaucratic business and management practices that in some cases were decades old, and which were an impediment to innovation, and achievement and adaptation.
The attacks on September 11th, and the campaigns in Afghanistan and Iraq provided impetus to the department's efforts to transform our military into a more agile, lethal and expeditionary force. I've noticed people have thought that when someone uses the words "agile," "lethal," "expeditionary," they think that means smaller. It doesn't. It isn't the size of the force that was wrong, it's the shape of the force and the capability of the force. All branches of the armed services have been restructuring to deploy more combat power with increased speed, lethality, agility and precision.
In one of several important management changes, the department has instituted a new National Security Personnel System that provides greater flexibility in hiring, assigning, and managing individuals, allowing the department to put the right people in the right positions precisely when they're needed. And we look forward to the steps that are going to be taken with respect to that new system in the week ahead.
And thanks to the capabilities of our forces and the bravery and professionalism of our men and women in uniform, some 50 million in Afghanistan and Iraq have been liberated from dangerous regimes and have recently had the opportunity to choose their own leadership.
President Bush's fiscal year 2006 budget request of $419.3 billion builds on these achievements and reflects the following key factors.
First, as a nation at war, an overriding priority must be to ensure that commanders have the troops and the equipment that they need to prevail in the global struggle against extremists. At the same time, we have to prepare for future threats, both conventional and asymmetric, and continue to reform the defense establishment accordingly. We must take care of our troops by ensuring that they and their families receive the support they need in recognition of their sacrifices and their service to our country. And finally, the department must be a responsible steward of the sizable sums that the president is asking the American taxpayers to invest in core defense programs for the coming year and the Forward Year Defense Plan.
Tina Jonas, the comptroller of the department, and Vice Admiral Bob Willard, director for resources of the Joint Staff, are going to provide some detailed presentations on the defense budget, and they will be available to respond to questions. I certainly want to thank them, and I should also thank the literally hundreds and hundreds of people in the department, military and civilian, who have been working since last January here in the building, as well as out in the combatant commands and in the Joint Staff and in the services, to fashion what I believe is an excellent budget for the Department of Defense for the coming year and the period ahead.
And with that, I will ask Tina and Admiral Willard to come up.
Q Mr. Secretary, could we just ask just one question on the budget?
SEC. RUMSFELD: You want one question? You don't want anyone else to get one in? Is that -- Charlie, is that kind of the --
Q Well, I'd like to lead off the questioning, if I could.
SEC. RUMSFELD: Did I take that correctly?
Q Just to lead off the questioning.
Q I have a question, Mr. Secretary. (Laughter.)
Q The budget suggests that -- the budget shows that Army spending is going down by $300 million in fiscal --
SEC. RUMSFELD: Which, as you know, is not the case.
Q Well, that's what I see.
SEC. RUMSFELD: Yeah, I should have mentioned that. I'm sure Tina and Bob will. The only way you can look at this budget is to look at the supplementals with it, and it would be a misunderstanding of the situation to come to the conclusion that you pretended you had come to. But of course you did not, being as knowledgeable as you are.
Q Well, are you hiding -- are you -- are they, in fact, hiding noncombat costs in the supplemental --
SEC. RUMSFELD: No, of course not.
Q -- by accelerating here?
SEC. RUMSFELD: No, that would be wrong -- (laughter) -- and we wouldn't do that.
What's happening here is that we started building this budget a year ago January. That's 13 months ago. Now think of this. We're in the 21st century with e-mails and camcorders and all kinds of fancy things, digital cameras, and so you start building the budget in January of last year, send it to the Office of Management and Budget of -- December of this year, they worry through it and send it to the Congress in February of this year. The Congress then looks at it and does what they do over February, March, April, May, June, July, August, September, maybe October, maybe November, and the world's going on. And then that budget is in play and funding activities from October 1st of this year for -- to September 30th of the following year. That's a total of two-and-a-half to three years, the cycle.
Now what does that mean? That means that there's no way in the world anybody -- a family, a business, this government -- can plan that way that well over that long a period of time. It's just not possible. So, what do you do? You have supplementals for those things that are of an emergency nature.
The supplemental that we have received already for this year was $25 billion. There will be a supplemental, I believe, released next week, probably, and we will have a stake in that as well, a sizable stake. The Army is engaged in a multiplicity of activities. They are -- and I'm only going to mention a few of them. They're in the process of rebalancing the skill sets between the active force and the reserve components so we don't have to overuse the reserve components. That means you have to retrain people and reequip people to do different things than they previously were doing. In some instances within the reserve component and/or within the active component, also skill sets will be being revised, and some will be discontinued and others will be added. That costs money and takes equipment.
The Army is, in addition, expanding from 33 combat brigades to 43 in the active force and a similar increase -- not the same numbers, but proportionately, I think it's about the same -- in the Reserve component. In doing so, they're pulling capability down from the divisions into the brigades and changing the capabilities of those brigades. That costs money.
Now they're doing it at a time that they're bringing back forces and resetting them from their deployments in Iraq, Afghanistan, Bosnia, Kosovo, wherever, around the world, Korea. And to do that, it offers a wonderful opportunity to do all of those things at once.
And so what they decided to do was -- because the bulk of that was in the nature of resetting the force, they decided to put it in the supplemental for this year and next year. And thereafter, we'll decide what portion of these various activities, which all impinge on each other, ought to be in a supplemental, as opposed to being in the regular budget.
But this is no -- it's all right out in the open. We've talked -- we -- in fact, we just met with all the big 12 Appropriations and Armed Services committees of both houses and walked through that very point with them.
Q Mr. Secretary, you said it's not the --
Q Mr. Secretary --
SEC. RUMSFELD: That sounds almost accusatory.
Q You said that it's -- just now you said that it's not the size of the force that's wrong but the shape of the force that's wrong. Is that a tacit admission that the 30,000 additional troops that have been added to the Army will likely be made permanent, a permanent addition?
SEC. RUMSFELD: The Army's wrestling with that question, and I'll tell you why: because here, again, there's three or four things happening at once that makes it more complicated than things normally are.
We know that the ground forces are stressed, and we know that we've had to increase them. And we have, by about 20,000; the Army's gone up. We've done it under our emergency authority without any change -- necessary change in statutory end strength. So that's one number, for the sake of argument. And that's how we're going to get this added combat capability to go from 33 to 43 combat brigades.
But we're also gaining something else. We're gaining additional military personnel in all services as a result of the fact that we're switching tens of thousands of jobs away from military personnel towards civilian and contract personnel. So all of those military people are freed up. So that's another number.
In addition, the Army is going through so many changes that we could add still another, and that is the fact that they're going to have people serve somewhat longer in positions. That means they are going to be fewer permanent changes of station. There's going to be greater longevity in spots, which, of course, means less wear and tear on families, less spouse changing jobs, less kids being hauled out of high school. So that's another advantage that accrues to the Army in terms of man-years of military personnel available to be used.
We're bringing people home from overseas and we're swapping out ships. There's just a whole series of things we're doing that we believe will put less strain on personnel. And what the Army said to me was they don't know, but they believe that there is at least a chance that when they take into account all of the efficiencies that I've just described and the new National Security Personnel System, which will make it more attractive to use civilian personnel than it has been in the past as opposed to military personnel, there is at least a good, strong possibility that they may not need over time an increase of that size, the 20 (thousand) or 30,000 that at least -- at least is currently available to them because of the items that I've mentioned. And they wanted to review that in a year or two as the modularity process goes forward.
So I'm going to turn it over to Tina.
Q Mr. Secretary, one last question.
SEC. RUMSFELD: No, we just did the last one, Ivan.
Q No, sir. He jumped in. I had one after Charlie, remember? (Laughter.)
SEC. RUMSFELD: Ms. Jonas and Admiral Willard, you're on.
Q Thank you, Mr. Secretary.
Q Thank you.
MS. JONAS: Thank you. Good to be here again this afternoon to talk with you about our fiscal year 2006 defense budget request. I will go through some of the numbers with you, and Admiral Willard will talk to you about some of the capabilities that we are investing in, and then we'll take a few of your questions.
Okay. For fiscal year 2006, our budget top line is $419.3 billion. This is an increase of 4.8 percent over the enacted 2005 budget. It continues our strong growth, which began in 2001, representing a 41 percent increase in our budget since 2001.
We had some clear priorities, as the secretary indicated to you, with respect to this budget and building this budget, and they are as follows.
First, we wanted to make sure that we supported the global war on terrorism by supporting our men and women in uniform, giving them the tools that they need to fight and win. We wanted to restructure our forces and global posture. We're investing in joint capabilities for future threats. And, of course, we're taking care of our forces through pay and benefits.
With respect to the global war on terrorism, some of the specifics in our budget include restructuring our ground forces. The secretary spent some time on this, and we'll get into it in a little bit, but this includes the major restructuring that's going on with the Army. We added to our chemical and biological defenses. We added $2.1 billion over the program. In fiscal years '06 to '11, we have $9.9 billion. For homeland defense we include $10 billion for this year and we've included Operation Noble Eagle expenses in this budget, which we have not previously.
Very importantly for our forces, a high level of readiness funding -- $148 billion included for our Operations and Maintenance Accounts. That's $11 billion over the enacted level, and about $4 billion of that is for an increase in our readiness posture.
We maintain our commitment to enhance Special Operations Forces, $4.1 billion. We are including this year another 1,400 SOF personnel, Special Operations Forces personnel; 1,200 military and an additional 200 civilians. We are including about $362 million over the program, that's fiscal '06 to '11, to beef up our language capabilities. This has been an area of some focus and an area where we believe additional investment is needed to fight the global war on terrorism.
And finally, we continue to improve ore intelligence capabilities in this budget and significant sums in investment there.
Part of the global war on terrorism, as you just discussed a bit with the secretary, is the operations, our current operations Enduring Freedom and Iraqi Freedom, which we will fund in fiscal year '05 supplementals. This is in addition to the $25 billion that Congress has already provided to us. About two-thirds of this supplemental, which we hope to present the details to you next week, cover the basic costs of the war, which includes logistics, fuel, transportation, and personnel. But we are also including procurement funding in this supplemental request, and this will pay for some of the wear and tear that's been going on with our vehicles, our trucks, et cetera. Many of these things need to be replaced. We will also include depot-maintenance funding for this.
And, again, the secretary mentioned to you the army modularity program. We will be accelerating that for units that are rotating in and out of theater. For example, this September, the 4th ID will be rotating in, and using some of these funds we will provide them equipment that they need for their mission there.
We are going to include additional force protection dollars in this supplemental and IED-detection device funding in this supplemental.
And finally, we will include funds for the Iraq security forces and Afghan security forces in this supplemental as well.
Okay, I'm going to speak just a bit about the restructure, and then I'll turn it over to Admiral Willard to talk about the concepts behind our restructuring and force capabilities.
We talked about the Army achieving 10 new Brigade Combat Teams. The Marine Corps is adding combat support units. The Navy is supporting its naval fleet response plan, which has been a very key component and has increased their readiness significantly. And the Air Force continues its Air Expeditionary Forces arrangement.
And I'll turn it over to Admiral Willard here to take the next couple of slides and talk about the concepts behind the restructuring and some of our capabilities.
ADM. WILLARD: The next two slides really attempt to together capture one of the main objectives of this particular budget, and that was the restructuring of our ground forces and the restructuring of our posture around the world. And I'll try to capture both on these charts.
The first one that you see focuses on the Army and the Marine Corps. And frankly, they're central to that restructuring process. For the Army -- the secretary alluded to it -- we're departing from the division-centric Army of old and instead we're transitioning to a Brigade Combat Team concept for the Army that's going to be much more rapidly deployable and much more agile and, frankly, has a strong part to play in current operations, as well as our concepts for the future. So, this is a major reorganization of the United States Army. You can see the numbers on the increase in combat capability. It's estimated to be 30 percent. The available forces increase by about 60 percent, which is obviously sizable and germane to the global war on terror.
Our Marine Corps, likewise, is restructuring itself. The Marines are adding two infantry battalions, and then a combination of combat, and combat support elements in smaller numbers that will complete a restructuring to enable the Marine Corps to be likewise more rapidly deployable and a little more agile and supportive to what we're doing.
On the next slide we refer not to an internal restructuring of our forces but, rather, a reposturing of our forces around the world. First, there is a Global Posture Initiative that I know many of you are already familiar with, that attempts to change the laydown of U.S. armed forces throughout the world. In addition, it brings troops home from Europe to the tune of about 70,000 military members and about 100,000 of their family members. And this is ideally suited to -- the laydown worldwide -- is ideally suited to facilitate our concepts for rapid deployment throughout the world.
Complementary to this is the Base Realignment and Closure initiative, which, while not impacting forces outside of the continental United States, restructures our forces from within with two main objectives. And one is to decrease excess infrastructure that we've identified we have had in the past, and also to posture internal to the U.S. for the return of the forces that are coming back from Europe.
The next slide attempts to capture just a menu of future joint capabilities. The first one that talks about network ground and air system is really represented by the future combat system of the Army. While modularity reorganizes our Army around the brigade combat team, future combat system modernizes that Army with 18 technologies and a network concept that's intended to take the Army into the 21st century. The stealthy agile ships and near-shore operations are our future concepts for expeditionary ops and center around platform programs like the littoral combat ship. The multi-mission surface ships are DDX-like. Our air dominance, which has been core to our investment in past budgets, is likewise supported in this one with future systems like Joint Strike Fighter and F-22.
In space, we have many initiatives ongoing. One that is illustrative, I think, of the future combat capabilities is transformational satellite, which is magnitude's increase in our bandwidth capability and is providing us for secure “comms” in our future operating concepts.
And finally, we have supported in this budget missile defense activities in order to achieve what we desire in the future in that regard.
MS. JONAS: And of course, taking care of our forces is a very important part of this component of this budget. We provide military increase in pay of 3.1 percent. This is up about 25 percent since 2001. We continue to invest in that area. In the housing area, we maintain our commitment to no out-of-pocket costs for our military. As many of you might remember, military men and women were paying about as much as 18 percent out of pocket in 2001. We maintain that commitment in this budget to no out-of-pocket costs, averaging about 4 percent increase for that -- for our men and women in uniform.
We continue the elimination of inadequate housing. By 2007, we will have completed our effort to eliminate all inadequate housing in the United States. And by 2009, we will complete overseas inadequate housing units. The total number of housing units that we expect, new housing units, is about 172,000 by 2007. So these are nice, new homes for our men and women in uniform.
Health care is also a very important component of this budget. What is new and funded here are benefits for TRICARE eligibility for Guard and Reserve. We add for that. And also an educational benefit is funded here for our Guard and Reserves. So those are some of the things that we're doing to support our men and women on the benefit side.
And just in conclusion, I think we've got a very strong and balanced budget here that funds the support of the war on terrorism, that restructures our forces and global posture, which gives us the kind of joint capabilities that we need for future, and of course we take care of our forces, as always.
So with that, we'd be glad to take your questions. Charlie?
Q How much will be spent on the Army's modularity program in the upcoming supplemental?
MS. JONAS: Good question. We're supposed to give you details next week. (Laughs.)
ADM. WILLARD: It's the fraction of modularity that is demanded in the here and now to fight this war fight. So again, while we're not in a position today to give out specific figures, the Army had to rationalize the supplemental request for modularity on the basis of what would serve as current operations, cost of war.
MS. JONAS: Tony?
Q Can you talk a little bit about how this defense budget and the long-term plan is going to help reduce the federal deficit? As you know, President Bush came out today -- and about annual -- a lot of the agencies are going to get about 2 percent increase; you're getting a 4.8 percent over last year. Where has the Pentagon paid at the bank in terms of cutting the deficit, i.e. the PBD, how much has that played into your plan?
MS. JONAS: We were planning to a number of about 422 (billion dollars), 422 billion (dollars) last year, so we've taken a little bit of a slice. But in this current year, we think we've provided some for that purpose. Over the program, we cut about 55 billion (dollars) and then added back approximately 30 billion (dollars) for -- primarily for the Army's restructure.
Q So what's the net on that? Fifty-five minus -- so a 30 billion (dollar) long-term cut?
MS. JONAS: Well, we took about -- I mean, we added the 25 (billion dollars). So I mean, we can get you the exact numbers on that. I know we were going to talk to you about that. But I think -- in overall, I think we took some significant cuts, but we think it's balanced and we realigned our program consistent with the president's priorities and consistent with the secretary's priorities.
Q I have a question for Admiral Willard, please. Admiral, as a former F-14 driver, you talk about air dominance, some experts looking at this budget say the Achilles Heel is the hit the Air Force took, of instead of getting its 381 requested Raptors, it's only getting 179. And experts claim that the F-15s are long of tooth, and that you can't maintain dominance over the battlefield with only 179 aircraft, and that the Pentagon is being penny wise and pound foolish.
ADM. WILLARD: The F-22 capability is one that I think everyone in the department admires and desires. That particular program has encountered some cost growth that causes it to be a challenge for us, but at the same time the F-22 is not the focus of air dominance necessarily, but rather a part of joint air dominance, and that's a subject that we're going to view into in some detail in the upcoming defense review. So it's hoped that in viewing air dominance as contributed to by all of our fixed-wing aircraft and ground systems that make up that particular capability area, we'll be able to determine precisely what the F-22 contributes and ensure that we balance that contribution across the range of military operations.
Q A quick follow-up. If you find that 179 is not sufficient, will you increase it, increase the numbers?
ADM. WILLARD: I think --
Q Because the Joint Strike Fighter is not a fighter --
ADM. WILLARD: The defense review is intended to complete a holistic view of air dominance, and I think the department is prepared to give any consideration to the conclusions that we draw from the review.
Q Some members of the House and Senate Armed Services Committees are saying that this budget is under-funded. Ike Skelton, for instance, the ranking member of HASC, says it's a reduction compared to what was predicted a year ago, would have a significant adverse effect on the future of our national security.
You know, some people at Heritage are saying that given those kind of comments, this is -- there's likely to be more jockeying than usual. This is more of a starting point on negotiations than a DOD budget usually is. Any thoughts?
MS. JONAS: Well, again, we think this is a very balanced program. We think it's a strong increase. We're about 4.8 percent over the prior year. We think that is sufficient for us to take care of our men and women in uniform, provide them the tools that they need, the resources that they need to fight the global war on terrorism.
ADM. WILLARD: I think that particularly, if you take the budget and the supplemental as a package, we have done a balanced job in attending to current operations, global war on terror in the future, the transformation of the force and readiness, collectively. So it's a good budget.
Q Do you have some more work to do with the committees or --
Q I want to ask you on two other cuts you made, to get your rationale on it. It's too bad the secretary didn't stick around longer on this point. In missile defense, you got a billion-dollar cut this year, 800 million (dollars) a year going forward, and going down from 12 to 11 aircraft carriers. Can you explain the rationale of each of those?
MS. JONAS: Mm-hmm. Admiral?
ADM. WILLARD: I'll attend to the last one first, If I may. Just the decisions that were made through the three-week period in December were informed decisions that involved participation by all of the services and leadership in the department. And some of the savings that were offered were based on a variety of future operations concepts and the ways to get there, and some of the changes that have been made that have changed the way we do business in the last three years.
Taking the Navy consideration for reducing its carrier force by one aircraft carrier, the major change in the Navy over the past year or so, has been the introduction of the Fleet Response Plan. The carrier force at 12 was sized for the presence and rotation demands around the world, and it was sized previously to supply about three aircraft carriers and another on demand, at any given time. The Fleet Response Plan is a complete change in the way the Navy is approaching maintenance and training and readiness of its carriers. And as such, it's capable of now fielding about six aircraft carriers within 30 days, and either one or two additional carriers in the next 90. So the current Fleet Response Plan is capable of providing for the president's needs, regardless of whether there are 12 or 11 in the top line. So, again, it's a concept change, and a capability that the Navy is -- will achieve with that number.
Q And how about the missile defense?
ADM. WILLARD: Missile defense has been approached a variety of different ways. General Obering is attempting to look at a variety of options and neck those down to result in the programs that he'll settle upon to advance missile defense. There is a combination of efficiencies in those savings and the initiation of that process, whereby some of the optional programs that were previously being funded are now being narrowed down to those that are showing the most promise and development.
Q Last year, Congress took the initiative to provide the extra $25 billion basically to provide gap coverage between the calendar year and the fiscal year. As we get to the end of this fiscal year, how will you expect this time for the services to cover those basically last three months of the calendar year?
MS. JONAS: Well, first of all, first things first. We need to get our fiscal year '05 supplemental before the Congress. We carefully monitor the execution of funds, the operating tempo, and what our resources are needed. And we're in constant consultation with the Congress on the requirements of the military.
So the answer is we don't know yet what our full requirements will be. Those are dependent upon the operations in the field. But we believe that the '05 budget will be -- supplemental will be sufficient to get us through.
Q Excuse me. There's continuing criticism of the Pentagon for not including that supplemental spending, the war spending, in the current budget. And can you just go through the justification of why you need to put it in the supplemental and whether you think, for instance, operations in Afghanistan will be part of the regular budget next year?
MS. JONAS: Well, what we have included in the baseline budget for this year are Operation Noble Eagle expenses, and those are ongoing and will be.
Clearly, it's been our practice in past to use supplementals to meet the emerging requirements that we have. And I would say that there are several advantages that supplementals have. Primary among them is that it allows us to be more accurate in our estimating and allows us to be flexible in those resource requirements. And the Congress has been absolutely terrific on helping us pass these supplementals quickly, and we hope that they will pass this supplemental quickly as well.
Q Thank you very much.
Wanted to ask how the impact on the defense industrial base of some of these out-year cuts is going to play into the budget. For example, the Air Force told us last week that shutting down the C-130J line will cost between $500 million and a billion dollars, which isn't included in any of the budget projections. Where does that and costs like that fit into your plan?
MS. JONAS: I'll let the admiral talk to this.
ADM. WILLARD: Yeah. It's certainly a consideration, I think, in all our deliberations to include the upcoming defense review. The impact of the decisions on the industrial base and the adequacy of the industrial base to support the department is always part of the ongoing considerations when we ultimately make a decision.
The lines that pertain to the savings that were taken in December are once again going to be part of capability areas reviews in this upcoming defense review this year. And in that, we view not simply the single program that you're referring to but all of the programs that contribute to capabilities areas where the department is heavily invested.
Q What about the shutdown costs? Do you have any idea about what the scale-back costs will come to for all of these different changes?
MS. JONAS: We'll take a look at the expenses that we see as we continue our review. I mean, we have a lot to review in the defense posture review -- in the Quadrennial Defense Review, pardon me.
Q It's a little bit off topic, but how much do you guys calculate the global war on terrorism has cost so far, adding up all the supplementals? I always see conflicting numbers, from $100 billion to $230 (billion).
MS. JONAS: Right. I think we've had appropriated $190 billion, I believe. Our current estimates on the costs are about $172 billion, I believe.
Q And then you add on to that the supplemental that will be introduced next week.
MS. JONAS: We'll add that on.
Q A hundred and ninety is Afghanistan and Noble Eagle and Iraq, right?
MS. JONAS: That's right. That's right. So the thing we're doing differently in this budget, remember, is we're putting the Noble Eagle costs in this.
Q (Off mike.)
MS. JONAS: I think we're about 3 billion (dollars).
Q Three billion!
STAFF: We have time for about one more and then we'll close it up.
Q (Off mike.)
MS. JONAS: Oh, we do have an answer for that one. We can give it to you.
Q (Off mike.)
MS. JONAS: The Army -- they had underestimated in past years, so this is just bringing them to their actual expenses.
Q Except for what you spent on --
MS. JONAS: I think the transportation --
ADM. WILLARD: It's actually -- all the services have a similar line, and it's simply the administrative costs of returning UA personnel back to the service. So it's something that in past years was under-funded, and in this year's line it happens to be funded.
Q How does something like that happen? Is that just a clerical error? I mean, how does something -- if they're spending $1.5 million every year, why do they, for two years, cut it down to, you know, half a million? How did something like that happen?
ADM. WILLARD: Well, I think that there are discretionary dollars within the services to move around within their programs as needed, and those are trades made in the year of execution by the service. But once again, there's been no change in trend as far as the Army is concerned; it's simply a numbers issue.
Q Thank you.
ADM. WILLARD: Thank you very much.
Q Thank you.
MS. JONAS: Thank you.
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