SECRETARY OF DEFENSE ROBERT GATES: I wanted to address two or three things that relate to – that I think come out of the response to my budget announcements in early January. And I'm going to use my notes.
The first is that there is opposition clearly in some quarters to any reduction in the defense top line from the earlier projections, going from $566 (billion) to $553 (billion). That's fine as rhetoric, but let me describe to you the real world that I live in.
In fiscal year ’11, if we end up with a year-long continuing resolution, as increasingly seems likely, that will represent a $23 billion cut in the defense budget, below what the president asked for. This Congress would be responsible for that.
It’s the worst of all possible kinds of reductions, in significant measure because it comes halfway through the fiscal year. But beyond that, we can’t make up all of that through changes in contracts and programs and so on. And, in fact, most likely it would come out of operations and maintenance, even in war – operations and maintenance, through stretching out programs, which is what makes them very expensive; cuts in training and readiness.
And frankly, that’s how you hollow out a military even in wartime. It means lower flying – fewer flying hours, fewer steaming days, cuts in training for home-based – home-stationed ground forces, cuts in maintenance and so on.
So, again, if we ended up with this yearlong continuing resolution, this new Congress would be responsible for a cut that's nearly twice the size of our FY ’12 proposal and much, much more damaging.
So my question is about the seriousness of those who are worried about reductions to the defense budget, and I think they can demonstrate that seriousness by passing a defense appropriations bill, which still would be $10 billion less than the president has asked for.
So in short, talk about not cutting defense in FY ’12, as far as I'm concerned, is simply rhetoric without action on the FY ’11 defense budget that's already in front of the Congress.
Second, there have been some concerns expressed about a $78 billion cut in the projected defense budget over the next five years. First of all, to make clear to everybody, that’s in budget projections. The reality is the dollars in the budget will go up every year. And the impact on the services is very modest. Of that $78 billion, $54 billion are coming from – is coming from outside the services, from other Defense agencies and other cuts. Fourteen billion (dollars) is through changes in defense – in assumptions, like lower inflation. We're going to have lower pay raises than we had projected, and so on.
So $68 billion of the $78 billion don't touch the services, really, at all. Four billion – an additional $4 billion comes from restructuring the Joint Strike Fighter program, and I would argue that's actually to the advantage of the services. And $6 billion is from the force reductions in ’15 and ’16.
And my view is, on those force reductions in the Marine Corps and the Army, that’s far enough out in the future that if our assumptions about what the world is like prove to be not correct, there’s plenty of time to adjust and change those – change those figures.
So the bottom line is, of that $78 (billion) that supposedly is dramatically affecting our defense capabilities, only about $10 billion come out of anything having to do with the troops or investment funds or capabilities.
Finally, we have been able to carry out the promise to the services that the roughly $100 billion in savings that they found through the efficiencies, they will get to keep. Now, the reality is they’re having to deal with about $28 billion in must-pays – additional fuel costs, things like health care and so on. But they will get $70 billion more than was in their original program for investment through the savings they’ve identified that will be returned to them.
So I just wanted -- those were the three things that I just wanted to mention. And I – as you can tell, I feel especially strongly about the continuing resolution because the consequences for us – I mean, it’s one thing to talk about FY ’12 and then to express concerns about something that may or may not happen in four or five years, but I have a crisis on my doorstep. And I want them to deal with the crisis on my doorstep before we start arguing about the levels in FY ’12.
Q What will you do to make this point to Congress and try to –
SEC. GATES: Well, I'm talking to you guys, to start. (Laughs.)
SEC. GATES: And I obviously will address this when the chairman and I give the posture statements in mid-month.
Q This is something that every soldier, sailor, airman and Marine will feel this year, right?
SEC. GATES: The deployed forces in Iraq and Afghanistan will probably be pretty well protected. But it will have an impact probably on the services in a lot of different ways. And depending on how it comes out, as I say, it could have an impact on training across the entire force, on maintenance, on facilities maintenance.
And so I – you know, I mean, the one thing I will do is everything in my power to protect all the money associated with family programs and – I mean, that – I will protect the money associated with family programs and with wounded warriors and so on. But it will have a big impact – it could have a big – I keep meaning to put it in the conditional. It could or would have a big impact across the force, other than the forces in Iraq and Afghanistan.
Q So in addition to the $54 billion in savings that you came up with in the non-military departments, are you looking at a higher number than that? Are you still working on that figure? Because I know you mentioned at your press conference on the 6th of January that you were coming up with a new – a plan to – you weren't satisfied with that.
SEC. GATES: The -- on the $78 billion?
Q Fifty-four billion [dollars]. I think you were referring to the August --
SEC. GATES: There are some areas. The one area where I was not satisfied is in the IT area. I think the near-term savings from IT probably are not significant. But in the – probably the third, fourth, fifth year and beyond could have – could have a significant impact.
Q I thought maybe you were looking at additional efficiencies or savings.
SEC. GATES: The piece that I said I was not satisfied with was pretty much limited to this IT piece. And we're already doing some things in that area. I just think we could do more.
Q Sir, do you think that some in Congress, particularly new members of Congress, see a continuing resolution as sort of a back-door way to bring government spending under control – that with all this talk about deficits, that they can live with this? It's a back-door way to make cuts, and otherwise they wanted to go public with it?
SEC. GATES: Yeah, I'm not going to – I’m not going to get into anybody’s motives and I'm not going to talk about anybody else in the government. I’m just – I’m just telling you what the impact of a year-long continuing resolution will be for Defense, and it could be dramatic.
Q Are there already steps that you're taking, sir, because of this continuing resolution? And is there a deadline for when Congress has to act to solve this problem?
SEC. GATES: Well, the continuing – the current continuing resolution runs out the 4th – I think the 4th of March, so there needs to be something done by that time. And, you know, we are – we are beginning to look at what the implications would – on how we would deal with a $23 billion cut.
Q Where do you get the $23 billion, by the way?
SEC. GATES: It’s because the continuing resolution puts us at about $531 [billion] – $530 [billion], $531 billion. And so our budget request was $548 [billion] for ’11, for FY ’11. So there's – I guess it’s $530 [billion]. So there’s $18 billion. And then there have been some changes in the way they've made the allocations for military construction and some other things that account for about another $5 billion.
But it’s just flat-out math. The proposed budget was $548 [billion]. The continuing resolution puts us at $530 [billion]. And then there's another between $4 [billion] and $5 [billion] that come out associated with milcon and so on. And even if they took the appropriations bill that was – the defense appropriations number that was used in the omnibus, that would still be – that’s $538 [billion]. So it would still be a $10 billion cut.
So, you know, I hear all this talk about all these concerns about FY ’12. We have a crisis on our doorstep.
Q Sir, I guess I want to follow up on your –
SEC. GATES: And I want to see how serious people are about this.
Q During your press conference early this month, you talked about this $78 billion over five years. You know, there's some people who – in Congress who said they’re worried that's too much, and there’s others who said it’s not enough.
SEC. GATES: That's why I think I threaded the needle just right.
Q But I wanted to ask you, at this point do you think -- which of these two fronts are you more worried about, that there will be continued pressure from – both in the near term and in the long term?
SEC. GATES: I'm looking at it – I’m looking at it, first of all, in terms of the most immediate crisis, then FY ’12, and then the five-year program. And what I have argued – I mean, I have argued that in terms of programs, we have – the cuts that we are proposing in programs, such as the EFV, are programs that have come – are initiatives that have come out of the services in EFV, the SLAMRAAM, have come as recommendations from the services because of affordability and other problems. And I think General Dunford testified about the EFV this morning.
And so my view is we have protected force structure, we have protected modernization programs, we have protected all the programs that take care of our people. And so our military capabilities are protected, looking into the future.
On the other side of the coin, overall spending on defense in actual dollars will come down this year and will continue to come down, principally as a result of the lowering costs of war. We will go from, I think – correct me if I got this wrong, Geoff, but I think on the supplemental we will go from something like $160 billion in the OCO [Overseas Contingency Operations Fund] in FY ’11 to $30 [billion] to $40 billion less than that in FY ’12.
So -- and I would argue that the growth rate is coming down. You can't turn this supertanker on a dime. We have multiyear programs, et cetera. But we have – we are coming down to essentially flat growth by the end of the five-year period. And then there is the $78 billion.
And I keep coming back to the theme, you know, it’s kind of – I’m now much more sympathetic to those who say, you know, "What have you done for me lately?" People have forgotten about the $300 billion that we took out last year. Now, some of that will come back in replacement programs like the presidential helicopter, but the fact is there’s about $330 billion worth of programs that were cut just last year so – over a long period of time, not just five years.
So I think if you take what we did last year, what we’re proposing for the FYDP and what’s coming – what’s happening in overall growth rate and what’s happening in terms of the war costs coming down, I think that the Defense Department is in about the right place for the next five years.
And the thing that people need to be reminded of – I mean, I have said this before. When it comes to the deficit, we are not the problem. Defense spending today at about – is about – other than as a – other than for a few years in the latter part of the ’90s, defense spending today is as low a percentage of federal outlays as it’s been since before World War II, about 19 percent – 19, 19.5 percent.
Q: You mentioned earlier you didn't want to talk about other parts of government, but you are a very savvy analyst of the Congress. When you look at the Republicans who control the House today, it’s hard to get a read on where they are. The tea party members want smaller government, don't really know how that affects defense. Some of the traditional conservative Republicans who have been supporting growth in spending are not sure about your cuts. How difficult is your challenge convincing not just a congress that’s divided by party, but even when some of the parties are divided among themselves in brand new ways?
SEC. GATES: Well, I think the posture hearings offer an opportunity to do that. We started today with a briefing, or a hearing, with the deputy and the vice chiefs of all the four services. And so I think it’s – I mean, we now are entering into the regular congressional process and we respect their role in this process. And we will be completely transparent about all of this. And I think it’s our challenge to persuade both sides that where we’ve come out is about the right place. And if they end up having some better ideas than we do, we’ll take a look at them. But I think we need as much as we’ve asked for, but I don't think we need any more.
Q: If I could follow up on that, not only are you a savvy analyst of Congress, but I think you’ll go down in history as one of the most successful defense secretaries in explaining your point of view to Congress and getting them to accept it. In any way do you think that your announcement of a desire to retire this year weakens your ability to knock them over the head to get this budget passed?
SEC. GATES: Well, this is why I think the approach that we’ve taken is so important. I mean, let’s be realistic. One of the reasons that making these kinds of decisions on defense programs has been very difficult to make stick in the past is that often there were disagreements between the civilian leadership of the department and the uniformed services. For the last two years while we’ve been going through this process, the leadership of the military services has been deeply integrated into this process. Many of their ideas are what motivate this and inform it. The idea of incentivizing the services by saying, “What efficiencies you identify in your service you can keep as long as you attach it to a higher priority than just bureaucracy and overhead.” So I think that there is a strong constituency within the Department of Defense, including the military services, to actually affect the program that has been put together.
And there is a unity of view between the military service and the military leadership and the civilian leadership. So when you have that kind of buy-in to the process and to the outcome of the process, and all you had to do was listen to the four vices today to catch that, then I think the role of any one person becomes secondary because as an institution the department is behind this and the services are behind it.
Q: To follow up on Tom’s question, I think it’s a fair point, after you leave are you worried that the pressures from outside the department to cut more will increase? Are you worried that your legacy, in other words, it’s going to be tough to hold this – to keep this needle threaded the way you’ve tried?
SEC. GATES: Well, I think that’s always a challenge. I mean, that’s the other thing about some of the rhetoric that I've been hearing. I mean, the truth of the matter is historically the Congress takes several billion dollars out of the defense budget. It doesn’t matter what number the president sends up there. They take several billion out to pay for something else. I can't recall when the overall defense budget was plussed up by the Congress.
Q: What about you leaving? In the past you’ve declined to say anything much.
SEC. GATES: I'm continuing to do that. My lips are sealed.
Q: Well, Mr. Secretary, can you tell us, I mean, you yourself have said you’d like to leave in the not too distant future. I just want to ask you, what – as you look ahead, what sort of particular things are you trying to accomplish with your remaining time, particularly on the –
SEC. GATES: Well, first of all, I'm going to be around for a number of months. And I will be around through all the hearings, through the debate, and so on.
Q: But the other question was, during that time, the time you have left, however much that is, what are the particular things you're trying to accomplish that are your highest priorities?
SEC. GATES: I think at this point getting this budget approved is probably – is really – the wars will always be my highest priority, but next to that it’s getting these programs through and getting the business of the Defense Department on a far sounder basis going forward and really laying the foundation for a cultural change that I talked about last August in terms of a culture of savings as opposed to a culture of spending.
Q: And sir, can I just go back to the –
SEC. GATES: And the willingness to make tough decisions early on, on important programs. Not to wait until we’ve spent $3 billion on a program before we decide it’s not going to work or that the requirements have spun completely out of control. So getting people to do these things, to make these tough decisions earlier and before taxpayer money is spent or wasted is part of this overall -- and I think efficiencies is really – I’ve been looking for a better name for what we’ve been trying to do because it’s just not limited to efficiencies, and I’ve been unsuccessful in coming up with a name that everybody else would buy.
Q: How about gateskeeping?
SEC. GATES: No.
Q: Sir, could I just go back to the continuing resolution you – (inaudible). And in your discussion with members of Congress, have you gotten the impression from the leadership there that they would go along and pass the appropriation then?
SEC. GATES: I have the impression – I mean, this is all mixed up in issues. I mean, it kind of goes to Thom’s point. This gets mixed up in issues that range far beyond the Defense Department. But that’s where my responsibilities are, and this – my view is these issues are not optional. This has to do with the security of the country. And one of the – I mean, the irony in this would be one of the service chiefs’ concerns and one of the Congress’s concerns, the Armed Services Committee’s concerns, have been the lack of readiness for the full range of combat. We are just now beginning to get the kind of dwell time that would allow us to carry out that kind of training. And it would be incredibly ironic if now that we are able to do that kind of training we are unable to do so for the rest of FY ’11 because we don't have the money, because we end up on this continuing resolution.
Q: Sir, I want to ask you a separate question if I could. The president last night said that he wants “Don’t Ask, Don’t Tell” to be repealed this year. Are you in agreement with that?
SEC. GATES: Yeah, I think we can -- we can do that.
SEC. GATES: No. I see it in several phases.
MR. GEOFF MORRELL: One second Sir. Stanley and Hoss [Under Secretary of Defense for Personnel & Readiness Clifford Stanley and Gen. James Cartwright, vice chairman of the Joint Chiefs of Staff] are going to brief this all on Friday if you want to leave it to them. It’s up to you.
SEC. GATES: Well, I’ll just give you kind of the 30,000-foot one. I've asked that – it involves several phases: rewriting the regulations, getting the content of – putting together the content of the training, and then tiering of the training. And the front end of that I’ve asked to be accelerated to get done as quickly as possible. We don't know how long it’ll take to train the entire force, but I'm confident we can get it done this year, and we’re shooting to get it done sooner rather than later. I don't want to get into giving specific dates, but we are moving – we will move as fast as we responsibly can.
MR. MORRELL: Okay. Thank you, guys.