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Major Budget Decisions Briefing at the Pentagon

Presenters: Deputy Secretary of Defense Ashton B. Carter and Vice Chairman of the Joint Chiefs of Staff Adm. James A. Winnefeld Jr.
January 26, 2012

Note: This event immediately followed a Major Budget Decisions Briefing presented by Defense Secretary Panetta and Chairman of the Joint Chiefs of Staff General Dempsey. 

            DEPUTY SECRETARY OF DEFENSE ASHTON CARTER:  OK, well, welcome again. 

            I'm not going to try to repeat everything that's been said before.  We're really here to answer your questions.  I hope you all have a copy of the white paper here which describes the key decisions we've made in connection with the '13 budget and their connection to the strategic guidance, which we released a few -- a few weeks ago. 

            I'll just comment on one of the questions that was already asked. The -- I -- oh, I should say, by the way, that this is a pretty complete description of the many tens of individual decisions we've made.  There's many, many items -- individual items in here.  We're happy to answer questions about any of the items that are in the white paper. 

            We won't be releasing the full budget until the president releases the full budget, and we won't be going into detail on all of these items until we've had a chance to confer with Congress, which will begin next week. 

            But fundamentally, this -- the detail in here describes the enormity of the adjustments that we were required to make.  I think the secretary described it very well.  The base budget is not decreasing over the years ahead, but neither is it continuing to rise in real terms as it has over the past few years and as we planned before the Budget Control Act was enacted. 

            So the difference between the amount that we planned to have and the amount last year and that we now amount to have -- now plan to have, that's where the famous $487 billion comes from.  It's that difference over 10 years, $259 billion over five years, so an adjustment of about 7 (percent) to -- or 8 (percent) to 9 percent overall, which is a very substantial amount by any measure.  And if you add to that the reduction in overseas contingency operations or OCO spending and consider the entire defense budget, you can see that we needed to make the most consequential adjustments that this department has had to make budgetarily in more than a decade.  So it is very large.   

            These decisions were steered by the strategic guidance as the secretary and the chairman said -- that came directly from President Obama and from them -- and this sequence of strategy, then budget is obviously critical to us.  No part of the budget was unexamined; no part was sacrosanct.  You see everything in here.  I think we looked at everything.   

            So there are a lot of tough decisions in there.  Some parts of the budget were protected or even in increased, and inevitably that meant that -- because of their importance to the country and to the future, inevitably that meant that other areas took more cuts.  The result -- and the secretary made this point, I just want to emphasize -- re-emphasize it -- is a carefully balanced package.  It just can't be looked at or modified piece by piece since a change in one area inevitably requires offsetting changes elsewhere, right, on balancing the overall package.  So it is a package. 

            The paper describes it in three parts.  First, our continued effort to make more disciplined use of the taxpayers' money.   

            That was alluded to in one of the questions.  Second, we made investments in force structure and investment, in accordance with the strategic guidance.  And third, we made modest but important adjustments in personnel costs.  Because of the value we place on the people of the all-volunteer force, who are what make it the world's greatest force, there are lesser cuts in this category.  But the senior leadership, including the Joint Chiefs of Staff, believes strongly that this category needed to be included in the overall package. 

            So these are three parts of the package described in the white paper.  Admiral Winnefeld and I are pleased to answer your questions. 

            Q:  Thank you very much.  On the nuclear arsenal, President Obama has given his pledge to the aspirational goal of going to zero.  In the documents we were given to review before this briefing, there's no cuts at all, except for slowing one Ohio class submarine by a couple of years. 

            Does this imply that there will be no reductions in the nuclear arsenal absent negotiations with the Russians and that there's no pressure to cut the nuke force, even if it makes sense financially and at no risk to our country in the current environment? 

            MR. CARTER:  No.  There are no cuts made in the nuclear force in this budget.  The White House -- and we're obviously working under their direction -- are considering the size and shape of the nuclear arsenal in the future.  So when those decisions come, we'll factor them into our budget. 

            I'll make a couple of comments about what is in this budget that does bear upon the nuclear triad.  One you mentioned, which is a slip by two years in the development of the Ohio class replacement submarine.  This is not a strategic decision; this is a managerial decision made partly for budgetary reasons but mostly because that puts the Ohio class replacement on a more predictable and stable schedule. 

            Second thing I'll note is we did protect the bomber force in its entirety in this budget.  Again, that's not just a nuclear bomber force, that's a conventional bomber force.  It's part of our capability.  And as we consider our force as it applies to the Asia-Pacific region and to the Middle East, bombers play important role in there.  That's the reason for protecting the bomber force.    

            And then, of course, we're beginning a new stealthy long-range strike platform, and we did protect that.  We're continuing with that. We started that last year.  So there are some things that bear on it, but no decisions that are strategic in nature reflected in the budget. 

            Yes. 

            Q:  Mr. Secretary, the Pentagon has said it's committed to Joint Strike Fighter.  Secretary Panetta lifted the probation on the B.  But at the same time, there's a slowing to production to allow for some more development to take place before you go into full-rate production.  Amid all that, the Marine Corps has expressed an urgency to get as many Bs in the fleet as possible to declare IOC as soon as possible and get those Harriers out of the fleet.   

            Do you expect that while the numbers of produced vehicles will be going down, that the numbers of Bs produced will be going up to accommodate the Marine Corps? 

            And then secondly, can you address whether or not any of the developmental requirements for JSF are going to address if there were any changes made as a result of some of the concerns we have over cyber warfare and its potential vulnerability to that? 

            MR. CARTER:  You asked several questions embedded in there, so I'll take a few and then ask Admiral Winnefeld to add whatever I leave out. 

            With respect to the Joint Strike Fighter, the secretary said it right.  We want the airplane.  We want all three variants of the airplane.  We got some good news this year with respect to STOVL. Secretary Panetta took the STOVL variant off what Secretary Gates called probation a year ago. 

            That was the result of some good engineering work done in the last year, gratified that that occurred.  And that means that all three variants can go forward. 

            At the same time, the issue with the Joint Strike Fighter of cost and the performance of the program in this difficult position when we -- part of the program when we're transitioning and trying to reach full-rate production -- that's still a concern to us.  All of those associated with the management of the program, our industry partners, ourselves, are working our way through that.  And we'll ride up that curve to full-rate production as and when it's economically and managerially prudent to do it. 

            As far as the STOVL variant specifically is concerned, I think that with STOVL probation behind us, all three variants are now in a more or less equal footing in terms of their engineering readiness to go forward.  And so it becomes to a decision for all of us and also for the Marine Corps of the rate of which they procure.  Let me see if I have the -- (inaudible) -- 

            VICE CHAIRMAN OF THE JOINT CHIEFS OF STAFF ADMIRAL JAMES WINNEFELD:  I don't want to add too much more to what Dr. Carter said.  It's just -- the JSFs all three variants -- a terrific airplane.  We're very committed to it, and it does represent the future of tactical aviation for this country and a lot of our partners.  We just need the manufacturability of this thing to catch up so we can start buying it.  And we're very anxious to get it into the fleet. 

            Q:  What about the cyber piece of that question?   What -- is any of the development being adjusted or directed to address any cyber vulnerabilities that might be in the aircraft? 

            ADM. WINNEFELD:  Not that I'm aware of.  Are you? 

            MR. CARTER:  There are -- we are very attentive, I'll just say as a general matter, to cyber vulnerabilities in weapon systems, ours and those of others.  It's part of the modern world.  It's a highly computerized airplane; like all our other computer systems, we have to be attentive it. 

            Yeah. 

            Q:  I know you guys don't want us to pick apart individual items, but I'm going to also and ask about the carrier and the decision to not cut at least one, as was talked about a lot.  Specifically, why, other than we need it?  You know, why not -- and why not any of the big-ticket items?  There's no F-22 or amphibious -- there's no giant, you know, cancellation here like we've come to expect in this town for finding quick savings. 

            MR. CARTER:  Let me ask Admiral Winnefeld, who, after all, was -- commanded  an aircraft carrier -- to speak to aircraft carriers in general. 

            I think if you open this paper, just to get to the last little thing you added at the end of your question, there are 50 or 60 things listed in there that we're not able to do because of the reductions in our planned budget from the Budget Control Act.  So I think if you go in here, you'll find plenty of things that we had planned to do that we're not going to be able to do. 

            Now, you're right, they're not the things that are most important to our strategy and to our future.  That's precisely -- it's the things that are most important to our strategy and our future that we've protected. 

            Sandy, over to you for the aircraft carrier. 

            ADM. WINNEFELD:  Specifically, as far as the carrier goes, I think it's well-documented -- and we carefully examined inside the department and in fact consulted with the White House, and everybody is in agreement that the capability, the flexibility, the independent capability of a carrier from basing, the applicability of that ship in an anti-access environment and its particularly useful role in the Middle East and the Pacific, which is where we have emphasized most of the regional strategic focus here, just makes it a particularly adept platform for the type of things we want to do strategically in the future.  And we saw it just didn't -- made no sense to take out any carrier force structure, and so we're going to stick with 11 carriers and 10 air wings. 

            Q:  Could I follow up on that real quick? 

            On the Navy, the strategy prioritizes the forward posture and talks about, especially, in the Western Pacific.  Yet the secretary talks about getting rid of logistical ships and fleet support ships, and also getting rid of what I presume to be the Ticonderoga class cruisers as well, without replacement.  How does that square with the posture of being forward deployed, especially in the Western Pacific, with those ships leaving the fleet? 

            ADM. WINNEFELD:  Well, a couple of things.  First of all, one of the things we all have to remember about the strategy is in many cases it's a lot -- it's a lot more about where you're going to cut rather than where you're going to add.  And there are much fewer reductions, I would say, in the things that are focused on the Pacific, to include naval forces.  And if you look at the Navy's plan -- and this gets to the chairman's point -- this is really a budget that has to look out to 2020 for some of these particular decisions, and particularly Navy-type things because they are big muscle movements. 

            You're going to find a gradual shift in the Navy's force structure from east to west, and so -- in terms of aircraft carriers, submarines, logistic ships and the like.  You'll see that gradually flowing over there.  And I'll leave it to the Navy to articulate that over the coming week or so. 

            MR. CARTER:  You also -- I should -- I would just add, looking at what we're doing with Australia, the possibility of berthing littoral combat ships in Singapore, what we're doing on Guam -- there's quite a bit that represents a movement into the Asia-Pacific and around to Southeast Asia and the -- and the Indian Ocean.  So you have to look at the whole picture. 

            Q:  On ground forces, the secretary emphasized that you want to keep mid-grade officers, NCOs, people who, you know, have gotten a lot of experience from Iraq and Afghanistan.  Given that a lot of this budget and the strategy diminishes in some ways the institutional role of the Army in national strategy and cuts the Army's end strength, envisions some minimal roles for them, what do you say to someone in that situation, who's also going to be adjusting to a peacetime Army, which may not be as fulfilling as what they joined up for, for why they should stay? 

            MR. CARTER:  I want to say something about that first and then ask Admiral Winnefeld.   

            I want to dispute the premise of your question there about the institutional Army.  The Army's in the midst of a transition -- a strategic transition.  It has, as all of our services have, but the Army particularly, of necessity been very riveted on counterinsurgency operations in Iraq and Afghanistan and is now returning to full- spectrum training and full-spectrum capability.  So it -- and -- so it will be the -- still the army that can dominate any other army anywhere, and so it's trying to build forward into that post-Iraq and, eventually, post-Afghanistan Army.  So it's got a very important role in the strategy, it has a very important role in the Asia-Pacific area, it has a really vital role in the Middle East.   

            So I'll let Sandy answer your question, but I just wanted to -- the premise is not right. 

            ADM. WINNEFELD:  I would say, you know, all four services are absolutely critical in this strategy and to try to single one service out as being less critical than the other is really not -- doesn't really get the point of the whole strategy.  And I sort of have summed up privately in my own mind that if the military itself were a stock right now, I'd be buying it.  And I would be applying that to the Army equally as well to the Air Force, the Navy and the Marine Corps.   

            The Army's got a critical role in this strategy.  Just because we're drawing it down to reduce some of the capacity we've built up in a counterinsurgency environment tends to ignore the fact that they have a tremendous potential role in Asia -- and particularly on the Korean Peninsula, if North Korea should ever become foolish enough to be aggressive there -- and all the way through the spectrum of missions that the Army can execute, to include what we saw just this week in Somalia -- it's probably lost on a few people that the helicopters that pulled those hostages out of that camp were Army helicopters -- so across the full spectrum of operations to include a very important role that the Army is going to assume in regional engagement when they come out of Afghanistan. 

            So I'm big on the Army right now.  They've got an important role in the strategy. 

            DOUG WILSON, ASSISTANT SECRETARY OF DEFENSE FOR PUBLIC AFFAIRS:  Ken, you had a follow-up? 

            Q:  So you don't think there's a problem of retention with some people who might be mid-grade officers who might really want to, you know, ask themselves why they should stay? 

            ADM. WINNEFELD:  We've got terrific leadership in the Army.  They have a terrific mission.  And I don't think we're going to have any trouble keeping those people at all. 

            Q:  Sir, can you talk a little bit about the future of the Global Hawk program?  A defense industry consultant put out a briefing the other day implying that the program has been canceled, terminated, will be mothballed.  And yet I look at your material here -- you're basically truncating the buy of the third generation model called the Block 30. 

            And for Admiral Winnefeld, what Army helicopters were used, Black Hawks or Chinooks? 

            MR. CARTER:  OK.  For -- let me start with the Global Hawk Block 30.  

            Q:  Yeah. 

            MR. CARTER:  I'm sorry this is a little tedious, but the -- because there are several different versions of the Block 30. 

            Q:  (Off mic.) 

            MR. CARTER:  But it's a good example and actually we highlighted it in the white paper because it's an example of the way that we need to pay attention to cost performance with a budget like the one we have.  Block 30 was supposed to replace the U-2 for taking pictures from the air, and that was the idea, to do it with a UAV. 

            There are other forms of Global Hawk, three other kinds, for those of you who know -- the Block 40; BAMS, which is a Navy version; and Allied Ground Surveillance, which is a version for the allies. They're -- those are not affected by this.  But the Block 30 priced itself out of the niche of -for - taking pictures in the air. 

            So we will continue to use the U-2.  That's a disappointment to us.  We had hoped to replace the U-2 with the Global Hawk, but the Global Hawk became expensive.  And that's the fate of things that become too expensive in a resource-constrained environment. 

            Q:  But you're not cancelling Global Hawk, though.  You're still using -- 

            MR. CARTER:  No.  This variant -- this one of the four, the Block 30, is cancelled. 

            Q:  (Off mic.) 

            ADM. WINNEFELD:  First, I would just say that Admiral Bill McRaven, the commander of SOCOM, is a very, very good friend of mine, but he's also a tough guy, and I don't think I want to get at cross- purposes with him by revealing capabilities of his units.  What I will say is that was a really impressive operation.  That was a joint operation.  We had Air Force aircraft, Army aircraft, Navy SEALs, and it was very, very well executed. 

            Q:  Just a question on sequestration.  I know nobody likes to talk about it, but I'm curious.  Has the department done any war- gaming, if you will, on what it would do to this strategy if Congress does not change the current -- (inaudible)?  I mean, it would seem to me, as good stewards of the taxpayers' dollars, it would make sense to at least think about it, given that the political environment in this country is one in which people are doubtful that Congress will agree to do anything  this year. 

            MR. CARTER:  I'll just make a couple of comments on that.  This budget is based upon the fiscal guidance that we got from the Office of Management and Budget.  The work of the supercommittee failed sometime in mid-November.  We were well on the way to putting this budget together at that time.  We said repeatedly -- the secretary said it, the chairman's said it -- that both in the manner that sequestration would occur and the magnitude of the cuts, that would be disastrous for us.  The strategy we gave you two, three weeks ago, we'd have to start over again with sequestration. 

            So the secretary said it all right at the end of his sentence, which is that Congress needs to do its work here.  Sequestration is no way to do business. 

            Q:  Just to follow up -- 

            ADM. WINNEFELD:  If I can add -- if I can add just a moment to that, we've just been through a very healthy process in this department of developing this budget.  It's something that I've never seen before in my 33 1/2 years in doing this sort of work.  And we did strategy, and then we allowed strategy to guide budget decisions -- very refreshing. 

            If we get into a sequestration position, that turns that entire process on its ear.  It basically takes a chainsaw to a budget that's developed, and out of the ashes of that budget, we're going to have to write a new strategy.  And that's not the way we want to do business. 

            MR. CARTER:  Yes. 

            Q:  Mr. Secretary, some of the programs in -- on the list are being delayed or reduced in quantities.  We're always told that when you do that, the unit cost goes up.  So are you creating further problems down the line when you won't be able to afford these programs? 

            MR. CARTER:  We're very attentive to that.  In some cases, that will occur, but the managers of those programs are trying to mitigate exactly that effect if you're -- when you're both slipping and reducing the size of the buy. 

            Q:  Could I ask a question about regional missile defense, the reduction in deployable regional missile defense?  Where do you expect that to have the most effect?  And how much capacity do the regional allies have to absorb what you're saying, more responsibility on their shoulders? 

            MR. CARTER:  Well, I'm just suggesting -- 

            ADM. WINNEFELD:  I would -- I would say, first of all, we're -- we remain very committed to the European phased adaptive approach. That's on track, and we intend to keep it on track. 

            For the other regions, I wouldn't -- you know, we're not going to decrease anything that we've done so far.  It may just grow as much --  many other things in this budget are going to find themselves in a situation that it's going to grow a little bit slower.  And so we're going to have to work a little closely with our partners to ask them to invest in some of this capability as we invest in it as well. 

            So I think in several regions of the world is where you'll see that phenomenon occur, but we're still committed to working closely with our partners to defend them against missile attacks from rogue nations. 

            Q:  So reduced spending doesn't mean -- it just means slowing growth in spending.    

            ADM. WINNEFELD:  Yeah. 

            Q:  Secretary Carter -- (inaudible) -- to retire some of the older C-5s in the Air Force fleet.  That would put the Air Force below the strategic airlift floor that Congress has set for that capability. Have you -- has the department discussed with Congress moving that floor even lower than it was -- (inaudible)? 

            MR. CARTER:  We will be obviously discussing that and all the other changes that we're proposing, because after all, it is the president's budget proposed to the Congress.  With the Congress, I'll just say, for the airlift, this is capacity that is excess to need, and in this budget environment, we can't justify retaining capacity that is excess to need. 

            Q:  Thank you, Mr. Secretary.  Could you please elaborate the reasons to emphasize the Asia-Pacific?  What will be the biggest challenge and threat for the United States in this region?  And secondly, the Philippines today is negotiating with the U.S. to allow more U.S. military presence in the Philippines.  What will be the implication for U.S.-China relations in the context of South China Sea dispute? 

            MR. CARTER:  Well, I mean, the fundamental answer to your question is, this is a -- this is a very dynamic region.  It's going to be a central region to the world going forward.  The United States has played a pivotal role in the Asia-Pacific region for decades. It's that peace and prosperity, in part brought by the American pivotal military role there, that has allowed the prosperity of all countries there, to include China -- you mentioned China.  And that is -- that pivotal role is something we intend to maintain and sustain. So that's fundamentally the reason for being there. 

            There are a number of issues and areas.  And it's a very vast region, and we intend to keep our pivotal role there.  

            You mentioned the Philippines.  We have a good relation with --relationship with the Philippines, including a good security relationship, and we intend and wish to build on that in the future. 

            MR. WILSON:  We have time for -- 

            Q:  (Off mic) -- (Mr. ?) Secretary -- (off mic) --  

            MR. WILSON:  We have time for two more questions. 

            Q:  (Inaudible) -- follow, Mr. Secretary, please? 

            MR. WILSON:  Two more questions. 

            ADM. WINNEFELD:  OK, this gentleman --

            Q:  Will the combat operations bear some of the risks that Secretary Panetta mentioned, the risks that come with a smaller force? 

            ADM. WINNEFELD:  I would say that we are constantly -- we are cognizant of that, and we do not plan on loading any of the risk in this strategy on our forces that are currently in combat.  We're very committed to taking care of those troopers and making sure that they have the resources that they need to get the job done.   

            So the short answer to your question is that no, we are not putting a risk on current combat operations.   

            Q:  Mr. Secretary, on the Ohio class replacement, how is the delayed schedule more predictable?  How are you doing on cost control? And how concerned are you that that program will basically eat the entire shipbuilding account in the future? 

            MR. CARTER:  OK, well the third -- the second and third are related. 

            With respect to the schedule, the schedule as it was, was an aggressive one, maybe even verging on optimistic.  So I -- all I'm saying is this is a safer schedule; we're sure we can make this schedule.  So it's a little more secure; so, from a managerial point of view, a better place to be.   

            In terms of cost control, you know that on the Ohio class replacement, the initial cost estimates for the Ohio class replacement came in quite high, unacceptably high, so high that they did have precisely -- they did present exactly the concern that you've mentioned, namely that they would, in the decade 2020 to 2030, consume a disproportionate share of the Navy shipbuilding budget. 

            For that reason, the Navy worked very aggressively on the requirements. 

            And I should mention, by the way, that Admiral Winnefeld is doing that as a more general rule in the requirements process here in the building.  We worked very hard on the requirements, saying, do we really need this; do we really need that, and to get the design -- to amend the design, look at the drivers of cost in the design and manage the cost down.  And that was done from a figure well in excess of 6 billion [dollars] per boat to the neighborhood of 5 billion [dollars] per boat.  That's the goal. 

            And by the way, that's something we're going to need to do with all of our programs going forward.  We're going to have to ask ourselves, in this kind of budgetary environment, how much is good enough?  Is the 80 percent solution sufficient?  And that's what was done with the Ohio class replacement.  And that, I think, is going to be successful, and that's the reason why it will be affordable. 

            And with that, I thank you. 

            MR. WILSON:  Mr. Secretary and Mr. Vice Chairman, we thank you. 

            Just for our friends in the press, if you have any additional questions regarding context of particular decisions that have been taken, please do connect with our press operations, [Capt.] Jane Campbell, [Lt. Col.] Beth Robbins and others.  We do have a team of folks who have been involved in these decisions standing by to be able to respond to more of your questions. 

            Thank you very much.