Subject: FY2000 Budget Briefing. Also participating in the briefing was Bill Lynn, Under Secretary of Defense, Comptroller
Secretary Cohen: Good afternoon.
The central aim of the fiscal 2000 budget is to preserve America's military strength. That was our focus in meetings with President Clinton and in the budget formulation.
Our military is the best in the world. Around the globe, our forces continue to excel in all of their missions. From DESERT STORM to DESERT FOX, our forces have performed with skill and precision in the vital Persian Gulf region. In Korea, our troops continue to maintain their relentless vigil against aggression from the North. In Bosnia our forces are adeptly accomplishing the military tasks needed to foster a permanent peace in that troubled area. In humanitarian crises, from Rwanda to Central America, our military has delivered relief, whatever the obstacles.
On chart one, if I can have that. The budget includes the first sustained increase in defense spending since the end of the Cold War. This morning the President announced that he is proposing an increase of $112 billion in DoD resources for fiscal 2000 to 2005. And as shown, the addition consists of $84 billion increase in the budget top line [and] $28 billion in savings from inflation and lower fuel prices and other economic adjustments -- savings the President has directed the Department to retain and to allocate to pressing needs.
If I could have the next chart.
This chart shows that the six year budget addition supports the strategy that we laid out two years ago in the Quadrennial Defense Review.
The first element of that strategy is that the United States must shape the international security environment in ways that are favorable to its interests. Especially key is the forward deployment of U.S. forces and of our CINC engagement strategy.
The budget will also increase funding for our cooperative threat reduction program to a total of $2.9 billion over the years 2000 through 2005.
The second element of the QDR strategy is that the United States must respond to a full spectrum of threats. Our new budget supports this element especially with its increased funding for readiness and a substantial hike in pay and retirement benefits. Our forces are fully capable of executing this strategy, but the intensity of the operations has strained them. It's getting harder to recruit and harder to retain quality people in this very strong economy. Some later deploying forces are less ready than we would like. So these concerns require extra measures to ensure sufficient readiness.
The fiscal 2000 budget funds the services' most pressing requirements, those that could put that readiness seriously at risk.
The third element of the strategy is that the United States must prepare now for future challenges. Especially key is the funding for the deployment of a national missile defense system if the President decides that that deployment should go forward.
Total NMD funding for fiscal '99 through 2005 is $10.5 billion, nearly triple the previous level that was set.
New budget proposals also include this preparing aspect of our budget by keeping the weapons modernization on target.
If you could have the next chart, please.
The new budget puts people first. Our first four proposals deal with military compensation. Here, of course, the budget would restore the retirement benefits from 40 percent to 50 percent [for] those retiring after 20 years.
Secondly, we have a pay increase which will be the largest since 1982. It will go to 4.4 percent, and then in the out years to 3.9 percent. This will help to close the pay gap that currently exists and to help send the right signal to our men and women who are serving us that we have listened to their concerns and are responding in a very positive way.
We also, as I've indicated before, are reforming the so-called pay tables so that we can reward performance. We start to give added incentive and compensation to those who are truly performing and moving up the scale as such in terms of their responsibility and their performance.
We also provided increased pay for specialty pays and bonuses to improve recruiting and retention. So the combination of these four factors, we believe, will go a very long way in dealing with the issue of recruitment and retention.
If I could have the next chart.
And I wanted to come back to the issue of weapons modernization. We will meet our QDR recommendation to increase procurement funding to $60 billion a year by fiscal 2001. For this coming year, procurement is up $4 billion from fiscal '99. We are roughly a billion under what I had projected we would be. I'd projected we'd be at $54 billion for 2000, and we'll be at approximately $53. That difference of $1 billion will be used to go for the pay and the other compensation that we think will address the readiness issues that are more critical. But in the year 2001, we will be above the $60 billion by almost $2 billion. So we are definitely on track and moving in the right direction, and in real terms, fiscal 2000 procurement is nearly seven percent higher than in '99. It's going to grow 15 percent higher in the year 2001.
If I can have the next chart.
I'd like to say just a few words about the Defense Reform Initiative, the so-called DRI.
We have made significant progress during the first year in terms of streamlining and reforming our support activities. We are reengineering the business practices. We are moving toward utility privatization and paperless processing. We are streamlining our organizations and headquarters. We have nearly completed the one-third reduction in personnel for the Office of Secretary of Defense. We are achieving a 20 percent cut in defense agencies.
We're doing much more public/private competition for various support activities and functions. Approximately 229,000 positions will have been competed by the year 2005, and the projected savings [will be] about $11 billion by that year.
We are eliminating excess infrastructure, notably through the Base Realignment and Closure process or BRAC, and our greatest need right now is for congressional approval of two additional rounds in the years 2001 and 2005 which would save us an additional $3 billion a year.
With respect to future reform, the $112 billion that's been added by the President is not going to diminish our commitment to shrink that portion of the budget that is consumed by infrastructure, so the streamlining effort is imperative to help free up the funds necessary to complete our modernization effort.
In closing, I'd like to assure the American people that our nation's military is ready for the new century. We continue to see a flawless execution of the military operations by our armed forces. Our military's warfighting professionalism is undiminished ten years after the end of the Cold War. We continue to have strong forces in Europe and Asia and throughout the world to shape the global security environment and respond to the full spectrum of crises. We have an unrivaled human and technological foundation in which to prepare for future challenges.
And before I turn the podium over to Bill Lynn to answer any specific questions you might have pertaining to the budget, I'd be happy to entertain just a few questions about other subjects that may be on your mind.
Q: Mr. Secretary, I wonder if I might ask, do you and the military leaders in this building favor or support sending U.S. ground troops into Kosovo? And do you feel, as many in Europe do, that a peacekeeping mission in Kosovo would be a failure unless U.S. ground troops were included?
Secretary Cohen: These are precisely the questions that we are now discussing, certainly with the services. The Chairman and the Vice Chairman [and] all the Service Chiefs are examining exactly what might be involved in the event that there is a peace settlement in Kosovo.
We had a preliminary meeting this morning, preliminary in the sense that we presented a number of issues to President Clinton dealing with progress reports on the contact group, NAC action, and what talks have been undertaken to reach a political settlement.
He was briefed on the initial consultations with our allies and with several Members of Congress on a range of issues including whether U.S. troops should participate in a peacekeeping force in Kosovo.
He has made no decision at this point. We are going to consult very closely with Members of Congress in the next several days and try to make a determination of what would be involved. The mission would be--what other nations are prepared to participate in [in] terms of that mission, and the President will take all that into account before making a decision.
Q: You were adamantly opposed, if I may follow up, to putting ground troops into Bosnia, and they're still there with no chance of coming home any time very soon.
Philosophically, do you think, are you opposed to putting troops into Kosovo? Do you think it will be the same kind of "quagmire?"
Secretary Cohen: First of all, with respect to Bosnia, we have made substantial progress in reducing the size of our presence in Bosnia. We started off at a level of approximately 20,000 American troops, and we're now down to a level of 6,900, and with another ten percent coming [out], it will be roughly 6,200 forces there.
We expect to have another review within a five-or-six month period in which I would expect we'd have even more significant reductions coming in the future. So I think we've made great progress in Bosnia, and I believe that many who had apprehensions, including myself, about the nature of the commitment and what could be accomplished have been satisfied that real progress has been made.
Kosovo is, of course, a different matter. Kosovo involves perhaps a more difficult engagement policy given the fact that there is a continuation of the battle, as such, between those seeking independence and the Serbs who are seeking to repress that. So I think we have a very complicated situation which we are going to try to address in consultation with our allies.
My personal view is that our European allies must bear a substantial burden in terms of dealing with Kosovo, and that any participation by the United States should be as small as we can, as it could be, given the requirements, military requirements for adequate protection. But that's something that has yet to be decided.
Again, the President was briefed for the first time. Contrary to reports over the weekend that he's made a decision, this is the first time the President was briefed by his national security team this morning, and he is going to consider what options are available depending on what takes place.
I would not favor, under any circumstances, nor do I believe anyone else would support putting American troops into Kosovo in an intrusive or non-permissive environment. There would have to be--at a minimum--there would have to be a political agreement on the part of all the parties concerned before that would be a consideration that I would recommend.
Q: One of the other very difficult issues that Congress has a lot to say about is the issue of who will lead or command American forces should they be put in a position of going into Kosovo. What is your feeling about having American forces commanded by a non-American general?
Secretary Cohen: The last time I checked SACEUR was still an American general and would still be in charge. We have had American forces under the command of non-American individuals in a NATO arrangement, but I would assume that we would still continue to function within the NATO environment and would still be under, SACEUR would be the head individual involved in that force should there be one.
Q: That of course sort of evades the question of an American general that would be in charge of the troops specifically, not someone who is far up the chain of command. Is it all right with you, do you feel it is adequate protection for American forces to be commanded by another NATO general, not an American?
Secretary Cohen: Much would depend upon what force, what size, what mission, what areas. There's a lot to be considered before I'd reach a judgment on that. Generally speaking, I'd prefer to have an American in charge. As to whether or not there could be an arrangement whereby there could be someone other than a NATO commander under the supervision of the Supreme Allied Commander is still a question that has to be resolved.
Q: What would you say to those who say the United States is already doing, has done heavy lifting in the Balkans, and that there should be no more commitment of American ground troops when we do the sea, the air, and the diplomatic?
Secretary Cohen: Again, the question really at this point is what role the Europeans are prepared to play, what forces if any they're prepared to commit, how many, what would be required? All of that is now under examination. Nothing will be decided until such time as we work in consultation with key Members of Congress to raise these issues and discuss and debate them before the President considers this.
Q:...but why no role? Why not...
Secretary Cohen: There is a situation in Kosovo, which if it goes unchecked, does in fact run the risk of being a burning fuse that could spread throughout the Balkan area that might at a later time require the United States to play a much larger role than some kind of a small contribution at this point would make. So I think we should not prejudge it. It may be that we contribute no forces to the region. But we have to look at the nature of the threat that is posed right now by the warring factions, whether or not there can be an agreement.
First of all, there may not be able to be a political agreement between Mr. Milosevic and the Kosovars who are seeking independence. Absent an agreement, I think it's very clear it would not be wise to intervene in such a situation.
Q: Mr. Secretary, exactly what pressure can the U.S. military bring to bear on the KLA to get them one, to go to the peace talks; two, to sign up to some sort of limited...
Secretary Cohen: As we indicated in the past, they have an opportunity to have... They have a chance during a period of time, should they agree to it, to have a life that is not marked by slaughter on either side, to rebuild that community and to pursue a peaceful existence.
We have indicated in the past we're not going to serve as their air force. That still is our position. We are not going to be seen as advocating the Kosovar position over that of the Serbs, and vice versa. Any role that we would play in this would be designed to say that both sides have to abide by this. If they don't, then I don't foresee the United States playing a role in this.
Q: But other than to tell them this is your best chance, what kind of pressure is there...
Secretary Cohen: The pressure... If the fighting doesn't stop then they of course run the risk of having the kind of activity undertaken by the Serbs which will put at risk tens of thousands of innocent people. So the pressure...
Q: Which NATO would then permit because the...
Secretary Cohen: NATO is not going... In my judgment, at least, and other members of NATO may have a different opinion, but I think it's only wise for NATO to consider putting forces in that region if there is a peaceful agreement. Not to make a peace, but to help enforce one.
Q: Is there then, aside from the question of peacekeeping and a possible eventual political settlement, how do you assess the likelihood that NATO airstrikes would actually force both sides to the negotiating table?
Secretary Cohen: I think Mr. Milosevic indicated in the past when he was confronted with the possibility, the very real possibility of having airstrikes, that Mr. Holbrooke was able to reach an understanding with Milosevic. That possibility of airstrikes remains very much on the table right now. The ACTORD remains in effect, and I believe the Secretary General of NATO has indicated that that's a very real possibility in the event that he doesn't agree.
Q: Secretary Cohen, may I ask you a question about the budget? (Laughter)
Secretary Cohen: Great.
Q: The Republicans in Congress have consistently over the years accused the Clinton Administration of underfunding defense and they say that this year's budget, even with its additions, is inadequate. They got some support from the Joint Chiefs of Staff who testified on the Hill that while this met the critical needs, all the Service Chiefs said they needed more money.
What do you say to congressional critics who say that this budget is not adequate?
Secretary Cohen: What I say is that the budget has been cut over the years. Starting in 1985 there has been a gradual decline, a rather substantial decline in defense spending. We have seen procurement come down between 66, almost 70 percent during that time. We have seen a reduction of almost 40 percent of the budget itself. What you see in this budget is, for the first time we're seeing a major increase.
Is it all the Chiefs have asked for? The answer is no. Clearly there is a difference of some billions of dollars between what will be necessary to fix everything that needs to be fixed, but this will deal with the most pressing needs.
I might point out that a $112 billion increase over the six-year period is no small amount, and the Chiefs believe this is a major step forward to dealing with the deficiencies that currently exist. Those that are not addressed with this budget, of course, involve putting up some of the infrastructure upkeep, perhaps not producing some of the new systems that we will be producing at as high a rate as they would like. But this goes a very long way to addressing the shortages that currently exist, and it's the first real increase since '85.
Q: As soon as you mentioned the word BRAC you could sort of hear the Capitol dome creak. That's never been a very popular thing on the Hill...
Secretary Cohen: I know. (Laughter)
Q: Do you think there's going to be any more potential this year for being a player? If not, do you have a fall back?
Secretary Cohen: Well, really, what I've tried to indicate to my former colleagues is they have an opportunity to save some $20 billion total through additional rounds, plus an additional $3 billion every year. And they will have to make a decision, I would hope this year, but they will have to make that decision as to whether they would rather keep facilities we no longer need or take the savings and put them into the hands of the men and women who we ask to defend us. They can delay that or decide that they don't want to deal with it, but at some point in time they're going to be faced with a real critical choice. We won't be able to produce as many of the F-22s or the Joint Strike Fighters or the new ships that are required because we're still carrying infrastructure we don't need.
Now that's a choice I don't think that many Members would like to make, to say that we've got new challenges, new threats, we need new equipment, but we're still carrying old buildings and infrastructure we no longer need because of the political will lacking to deal with that issue.
It's a tough issue for any Member. What I've tried to do in the last couple of years is go around and point out there is life after BRAC. Even though it's hard for communities, especially in rural areas where I came from, in dealing with an issue of how does a community adjust to the loss of revenue coming in from that facility. So it takes a real commitment on the part of the federal government to work with local communities. It takes strong leadership to develop alternative uses, and we're seeing in a great many of the communities they're actually, their economy is improving by using the private sector over that base facility.
So it takes time, it takes effort, but I am convinced that over a period of time they will pay great dividends. I think that we have a greater chance this year than last year. It failed to come out of the committee by a tie vote in the Senate, and I'm hopeful that with the leadership of Senator Warner we'll be able to get it to the committee and get it to the floor.
Q: Secretary Cohen, what specific threat necessitates such a large continued investment in Cold War era defense weapon systems?
Secretary Cohen: First of all, they're not Cold War era weapon systems. I would not call the aircraft that are flying over Saddam Hussein's territory in the no-fly zones right now Cold War relics. This is the kind of equipment that's going to be necessary to be used in a threat environment which is likely to increase, so it's not the Cold War, it's a different type of threat that these pilots and other men and women are going to be facing in the coming years.
We have a superior Air Force and Navy and Army today, and Marine Corps. And we're going to keep it that way. So we have to invest in the kind of technology that will anticipate changes that are taking place. The proliferation of missile technology, high tech equipment, is now proceeding across geographical boundaries at a more rapid pace. So all of our men and women are going to be facing these types of threats in the future that are likely to increase. This is not Cold War technology; this is new age threats that we'll have to face with this new technology.
Q: Secretary Cohen, are you considering creating a Commander in Chief for Defense of the Homeland? And what do you say to critics who are concerned something like that would be a threat to civil liberties?
Secretary Cohen: First of all, we're very concerned about civil liberties. One thing the Defense Department doesn't want to do is in any way compromise or intrude upon civil liberties.
Last April the President called a group of us together, members of his cabinet, to try to get organized to deal with what we see as an emerging threat, and that is the emergence of chemical and biological weapons. So we had a long, nearly full day meeting and were asked to start planning.
How do you deal with a situation where you may have multiple chemical or biological attacks throughout the United States? So he wanted us to become part of a planning process, working with the Department of Justice, with FEMA, with other federal agencies, and subordinate to them. This is not something that the United States military, would take any kind of a leadership role on, but rather how do we support the existing structures to deal with this.
As you know, we take great pride in the amount of planning that the Pentagon does, and [we] are very good at it. So we think this is going to require a lot of planning in terms of how, if you had a mass casualty situation in several cities all at once with demands being placed upon the country to deliver cots, to deliver equipment, to deliver other types of necessities to deal with the situation, planning has to take place.
So what this contemplates, for me at least, is having a task force put together to see what kind of plans could we make that would help deliver and respond to an emergency crisis that would be under the jurisdiction of the Director of Military Support or DOMS, and also working under the Justice Department and under FEMA. So we have no desire to undertake any additional responsibilities, but the fact remains that one of the greatest threats we're going to face in the future would be chemical and biological attacks, and likely to take place nearly simultaneously at multiple places. So a good deal of planning has to be undertaken.
Q: You supported the legislation on military compensation that the SASC reported out last week. In connection with national missile defense, two weeks ago you told us you anticipate the country will face an NMD related threat.
Do you now support Senator Cochran's legislation?
Secretary Cohen: We're working with Senator Cochran and others to see if there isn't a common approach that we can take on this. What I've indicated before is that next June the President will make a decision as to whether or not we should deploy an NMD system. At that time the primary consideration will be the technical feasibility, affordability of such a system. We think we've put sufficient funds in to take care of that, but we'll make that decision next June , primarily based upon technology. There are other factors involved in that determination, but principally that will be it. I'm hoping that we can work with Senator Cochran and others to come up with a common approach so this doesn't end up in any way being politicized. We think we are on a track.
We're also going to deal with the ABM Treaty. That's a major issue that will be part of the debate. I know we've started discussions with the Russians indicating that we think that the threat is emerging and one that will require a response, and we are undertaking initial discussions with them to see what changes will be necessary, might be necessary, to accommodate such a system.
So I think we're trying to achieve a similar goal and we'll see whether we can work together to do that.
Q: Pay raise...
Secretary Cohen: Pay raise... I have looked only on a preliminary basis on the proposal coming out of the Senate, but as I looked at it, the numbers would total up about $7 billion over and above what we have included in this budget. That may be subject to change, or maybe I haven't really had enough time to calculate what it would cost, but I think it's in the neighborhood of $7 billion.
The problem right now with proceeding with this... We'd always want to have as much money as we can get for pay for our men and women in uniform. What I am concerned about is that this amount that they would recommend would be paid for, that we not raise expectations and not be able to pay for it, number one. But number two, that it not be taken out of the rest of the budget.
In other words, we have put together a balanced program, so we need to have the money allocated for modernization. We need the money allocated for other readiness concerns as far as spare parts and other types of commitments. That if you would simply add another $7 billion on top of what we proposed, number one, don't take it out of the rest of the budget and thereby have another readiness deficiency or some other problem; and please pay for it. And be sure that we have the congressional support for it.
One concern that I might have, and that I do have, is that we not raise expectations so high and then not be able to produce, so that this significant pay raise that we are in fact proposing in conjunction with the Redux change and the pay table reform be somehow seen as not being enough. We think this has had a very positive reaction to date. If we find ourselves with expectations being raised much higher and then not delivered, this will not have the kind of impact that we're hoping it will have.
Those are some of the dangers I think involved in it. Again, we're never going to say don't pay more, but please pay for it and don't take it out of the rest of the budget; and be sure that you can get a majority in both houses to approve it.
Q: Can you comment on how the budget reflects military medicine?
Secretary Cohen: I'm sorry, how it will affect military medicine?
Q: Affect military medicine.
Secretary Cohen: I don't know exactly what you mean. We have fully funded the medical program in this budget so that where shortfalls last year were identified, we have corrected those so we have full funding for the defense health care plan.
We do have a Tri-Care system which has been implemented, and some of the problems with that system, namely dealing with waiting lines and doctors not being reimbursed for lengths of time, we think we are addressing now. So we think the health care system is starting to perform as we had hoped.
Q: Mr. Secretary, can I just go back on NMD for a second? There was some talk about the Administration plan to take approximately 25 percent out of the FY99 supplemental for ballistic missile defense to implement the Wye peace agreement. I just wondered if you can get us up to date with what's been going on with that.
Secretary Cohen: There has been some talk about it. There has been no action taken on it yet. There are some discussions underway in terms of how would Wye be paid for, and those are still ongoing.
Q: Can I take you back to Kosovo for a minute, because I'm still confused. You talked about NATO and the United States wanting to be even-handed, but the notion of airstrikes clearly seems to be addressed against the Serbs. I'm kind of curious what do airstrikes really do to get the KLA to the table? And are there any KLA military targets, or is the notion of military action really solely against the Serbs?
Secretary Cohen: You may recall that last fall when we talked about airstrikes against Mr. Milosevic and the Serbs at that time, we had several hundred thousand people up in the hills who were running the risk of freezing or starving to death, and his forces were not pulled back at that time, and we said unless you pull back and allow these people to get out of the hills and get to shelter, you run the very real risk of being hit.
It was under those circumstances we had threatened and were prepared to carry out airstrikes against his forces who were then using heavy armor and shelling villages, and cutting down innocent civilians.
We have also tried to indicate to the Kosovars that we are not going to be supporting their effort to gain independence. We believe they should have greater autonomy, but if they are counting on the United States or the NATO allies to simply serve as their air force, they are miscalculating. I think they are going to want to have to come to the table to agree to a peace agreement or else it's not going to be successful. They will continue to run the risk of Serbs reacting as they have with heavy artillery and the kind of slaughter that's taken place.
Q: Are you satisfied that there's an organized group of Kosovar Albanians that can represent that population and actually engage in peace discussions?
Secretary Cohen: That's something that Ambassador Hill and Richard Holbrooke and others are actively involved in, engaged in right now to see if we can't find such a group that can speak for others. It's not exactly a united front that they're present, and you have different positions taken within the separate groups, so we're hoping that we can by sending the signal that NATO is prepared to help implement a peace agreement, that that will be a sufficient inducement for them to say let's stop the killing and see if we can't have peace as opposed to continuing this guerrilla effort against the Serbs who will then react in the fashion they've reacted in the past.
Q: Sir, Saddam Hussein has put a price on the head of U.S. pilots. The price is something like $2,500. I think the tires on the F-15 cost about $2,600. Are you concerned by this bounty hunting? And should U.S. pilots be somewhat insulted by the... (Laughter)
Secretary Cohen: I'll let the pilots speak for themselves. I think it reflects just another example of Saddam Hussein flailing out. He has been greatly disappointed in the reaction coming from his neighbors. He has been hit harder than he expected to be hit and with more severe damage done to his military than he anticipated. I think he has been greatly disappointed he hasn't seen an outpouring of sympathy for himself as opposed to the Iraqi people. So he's looking for any way he can to try to strike out against the United States and Britain.
I don't put much stock in it.
Q: Can I ask a procurement question? The procurement ramp up to get to $75 billion by '05. A number of your critics will say that the Clinton administration is kind of pushing it all out until after Clinton leaves office.
Is your reading of the tea leaves such that no matter what administration is in office there's a consensus generally that the ramp up should continue?
Secretary Cohen: If you look at that ramp up, it's actually a much more modest one compared to what could have been done and has been done in the past. Namely, I could have pushed all of the real modernization money out beyond 2005. What I have tried to show in this chart, if I can put it back up... Rather than creating that huge bow wave way out, decided to have it on this... I need the other... (Pause)
As you can see, this is where we're coming down. What I've tried to do is have a more gradual growth in this beginning in '97, '98, throughout. If you push it beyond '05 it would have been a much higher ramp up there, and you'd say well, gee, you're just pushing it way off. We are putting substantial funds in this FYDP between 2000 and 2005 to take us a long way toward dealing with that. So it's a much more gradual buildup here rather than pushing it out beyond '05 on the top of that curve.
Q: No matter who's in office after Clinton leaves, you feel that's going to stay...
Secretary Cohen: I think that's basically where we have to be on that program level, and I think whoever is in office will have to deal with the issue of keeping our forces as modern and sophisticated as we need to [to] stay ahead of the threats that we are going to be facing. So I think it's a very realistic goal.
The problem has always been, when I tried to deal with this in the QDR, is everyone kept saying well you need to get to $60 [billion], and we just kept pushing it off next year, next year, next year. You can see in the last year and a half that we have been on the incline. So even though it was down around $44 two years ago, it's now up to $53 and we expect to be at that $61.8 by 2001. So I think it's a pretty steady climb. We are trying to balance, again, modernization needs with readiness. That's why I was a billion short this year, putting it into readiness so it's always that kind of a balance, but I think we're on the right track now.
Q: Defense wasn't much of an issue in the last two presidential elections. Do you think it will be in this coming election?
Secretary Cohen: Defense being an issue? I hope it's not a partisan issue because there should be only one view about the need for a strong national defense. One of the reasons--I would daresay the primary reason the President asked me to serve in this capacity was to build a bipartisan consensus for a strong national defense, and I think I have been successful to date in building that consensus on the Hill and I think also in the country. I believe the country will be united in supporting the need for a strong national defense.
There will always be some division. How much is going to be enough? Just as there will be critics on the right saying, well, you didn't get to the $148 in these six years, even though the Chiefs have indicated they needed that amount of money. And there will be others who will say that it's far too much to be going to the Defense Department.
But I think there will be a broad consensus for this type of increase for the future on a bipartisan basis.
Q: Mr. Secretary, are you personally satisfied that the Chiefs have it right in terms of what's needed? Or have they overstated? Or do they have it right, and you're just not able to give them all the money that they...
Secretary Cohen: I think they have it about right in terms of what's needed to go back and deal with some of infrastructure changes and modernizations. For example, we need to do more in housing and barracks and upgrades at the base level. So I think the things that they pointed to, we need to do. The question is what are the most compelling needs right now, and we have addressed those, and I think they're satisfied that we have addressed those.
Can we use more and do we need more to fix the other things they've identified? The answer is yes.
Press: Thank you very much.
Under Secretary Lynn: To your relief, I think I'm not going to go through the briefing again, so let me just take questions.
Q: Is this push comes to shove time for the BRAC? I mean if they don't, if we don't get a BRAC round in '99, can it be put off until 2000?
Under Secretary Lynn: Obviously, we thought, '99, '01 was the original proposal. We think this is the time. As the Secretary pointed out, the budget and the force structure are down to a much greater degree than the base structure. We think that needs to be addressed and it needs to be addressed urgently. The longer-- it takes four or five years, three or four or five years to generate the savings. So the longer you wait, the longer you're delaying. We've tried to match the BRAC savings to the ramp ups in modernization that come just after the FYDP, so a delay would certainly be harmful.
I guess the other point to make is, it would be done now at the beginning of the next two Administrations and that, I think we're again trying to insulate it as I think BRAC has done from the political side.
Q: We're doing quite a bit with recapitalization and procurement of systems. In the R&D area, how is that going to break out between R&D of modernization, electronics, electronic combat systems, that sort of thing? Can you give us a feel for how that kind of funding is, looks over this period of time? We have procurement going up. Is that going to have to wait awhile before it begins to climb again?
Under Secretary Lynn: I don't have the component pieces as to what electronic modernization is doing. I don't have it broken down like that, but let me answer it more generally.
I think what you see over time is a cyclical move in the R&D areas. It moves up as a number of systems move into development: the F-18E/F, the F-22, Comanche, Crusader, V-22. As those systems then transition from development to production, you see a corresponding lowering, not a huge amount, but it drops several percentage points, a few billion dollars, as those systems, as the dollars travel with those systems into production. Then you see it go up again with the next wave.
So I think what you're seeing right now is that shift as several major systems are moving into production.
Q: Is it still on roughly this 11-year cycle? That's what it has tended to be.
Under Secretary Lynn: I don't see any reason to change that, no.
Q: The $7 billion estimate the Secretary just used in terms of what additional [funds] the Senate pay measure would cost if it became law. Is that over the Future Years Defense Budget?
Under Secretary Lynn: I think that's a six-year number, yes. But I think as the Secretary suggested, it's a preliminary number. For example, as I understand Senator Warner's bill, it includes a 4.8 vice 4.4 percent pay raise, but for military only. Does that mean there would be a civilian increase that would go to 4.8 as well? Obviously, that has a budget impact of several billion, because we have half the civilians in the federal workforce. But I don't think that question has been addressed, so I think any issue of the budget estimate there is going to have to be preliminary.
Q: Can I ask a question? The $60 billion goal has been very elusive. It always seems to be in the out years, as we've mentioned before. Even with this biggest increase since the end of the Cold War in 1992, etc., it still seems to be in the out years and you're looking between 2000 and 2001 at an $8 billion increase, where even if you look from '98, '99 to 2000, you don't see that big of an increase.
Is this going to be one more thing where you come next year and find out that it's now in 2003? Why is it so elusive we can't get there?
Under Secretary Lynn: It's hard to hit this. Obviously, one of the driving forces of the QDR was to try and turn around the difficulty we had in the prior years of moving this. I think since the QDR, admittedly it's in the out years, but I think you have to acknowledge that since the QDR, it's been in the same out year. We haven't continually moved it out.
I think we're going to be able to move up that ramp, because as you see in 2001, a fair increase is in, I think that's $15 billion in that range. A good portion of that would go to modernization. So I think we've been moving up I think six, seven, eight percent real the last two years. I think we have the money there to try and hit this in 2001, and as I say, at least our track record has been consistent in terms of maintaining that goal.
Q: Could you explain the change in the way you're accounting for military construction? It almost sounds like you're borrowing against future military construction to pay for readiness today even though eventually you'll have to pay for those construction projects.
Under Secretary Lynn: That's close, but not quite right. We're not borrowing against future military construction. What we have done is split the funding for the '00 military construction budget between the part we have to pay in '00, because it will be executed in '99, and the part that could be deferred to '01. So a portion, $3.1 billion of the FY00 military construction budget, will be paid in '01. We have added -- that's one of the reasons that bumps up like that.
We have added the $3 billion in the '01 column to pay for it. So that is not being paid for by the '01 military construction program. The '01 military construction program remains whole, and on top of that we've added $3 billion that is deferred financing for the '00 program.
Q: There's a $5 million increase for readiness, but more than half of that goes to Bosnia and Southwest Asia. And things like flying hours have gone down rather than up. Where's the money for readiness? What is that going to buy?
Under Secretary Lynn: It's a series of things. As you say, paying for contingencies within the program I think will have a positive impact on readiness itself. The planning that's done out in the field--they were always hedging against the prospect that they might not get that emergency funding and we'd have to pay for it out of the core budget. By putting it in the program you know from the start you don't have to hedge. That in itself will help readiness.
In terms of the specifics of the O&M adds, which is I really think where you're going, it varies by service. The Army, the base operating support level is up several hundred million. The real property maintenance is up a comparable amount. Navy flying hours are up, so they cover the cost. The Air Force depot maintenance is up, I think, more in '01 and the out years because there's a fairly big plus-up in '99 there so you have to adjust for those two years. But it varies by service. Each service has a little bit different problem. In the Marine Corps the problem tends not to be in readiness at all, but in procurement. So we've tried to tailor this increase so that it is addressing the most urgent problems in each of the services.
Q: To follow that, the figures I saw from Navy indicated flying hours were up like two-tenths of an hour. Does that really eat up that much money?
Under Secretary Lynn: No, it's, the flying hours I think are about the same. Two-tenths, that sounds about right. It's the cost per flying hour [that] has been going up. You need to cover that cost otherwise the flying hours themselves come down. So that's where the bulk of the increase went.
Q: I wanted to ask you about the 229,000 jobs...
Under Secretary Lynn: I can't year you.
Q: The 229,000 jobs you want to compete. First of all, where is that figure from? Are they DoD-wide jobs? Do they include the services? How many of those jobs do you expect will be privatized?
Under Secretary Lynn: To answer your first question, that's the entire department. That's all four military services, all three departments.
The point of the competition is not to prejudge it so we don't know what the result is. Each of the services has used a little bit different methodology to project what they anticipate in terms of changes in end strength. But in fact until you've had the competition, you're not going to be absolutely sure of how it's going to come out.
I can tell you historically it has tended to be about a 50/50 split. About 50 percent won by the government unit and about 50 percent by private sector.
Q: I wanted to ask about the $60 billion. Firstly, is that--didn't the planning guidance for the '01 budget basically lock that in as a hard target?
Secondly, did I hear you right in saying that of that $112 billion, you took the proportionately large chunk for '01 to make sure the $60 billion plus is reached?
Under Secretary Lynn: Let me answer the first question first. The planning guidance--I can't really set out a number because it's broken up into all the various components--but I think you've heard the Secretary reinforce his attention to that $60 billion goal enough that it is well understood within the Department, and I think people are committed to try and make it happen, to meet the Secretary's priorities.
The answer to your second question. This is, I think, if you look at it largely as a level increase, there's an additional $3 billion in there to cover that MILCON split funding that I explained. Other than that, I think you see it's between $15 and $18, $19 billion a year, and I think it builds to something over $20 by '05. It's a relatively level increase rather than a backloaded one which people often see in this kind of framework.
Q: Where does this budget plan put you in terms of affording future TACAIR procurement? And is BRAC necessary for affording TACAIR?
Under Secretary Lynn: Within the FYDP, the future TACAIR procurement is paid for. We'll ramp up to 48 F-18s, 36, I think, F-22s, and we paid for the development of the Joint Strike Fighter. So those are all budgeted within these numbers.
In terms of the BRAC, that gets to the out years. The BRAC savings start to come on in serious numbers in the 2006, '07, '08 frame. That is indeed when you want to go to production of the Joint Strike Fighter. At the same time, Comanche is in full rate production at that point, Crusader as well, and there are other needs. So the total procurement of the Department in those years is going to require more money. We think BRAC is a good source of that funding.
So can you connect them? It's, I think, connected to the whole procurement budget. It's not connected to any one particular program or set of programs like TACAIR.
Q: Is there general unhappiness with the ACTD process as evidenced by the cancellation of Dark Stars? And what you're getting at the end of those are products which you can't really use? And that we may see that demonstration money put elsewhere?
Under Secretary Lynn: No, I think we're still moving forward on the ACTD process. There's always a challenge. The benefit of the ACTD process is that you're able to quickly and cleanly get at fast moving technologies and try and develop them into systems that can be deployed into the field. The disadvantage is that you've disconnected from the normal institutional process where it shifts it into production. I think you need to make sure you choose the systems wisely, but we think it's a useful tool if you move that.
Q: The recision list that you're going to bring up, the $1.6 billion -- What does that consist of?
Under Secretary Lynn: It's not a list. It's unspecified. That's intentional.
The point here is that we need to negotiate with Congress over what's acceptable to Congress. I mean Congress has to act on the recision, so just throwing something up that we know isn't going to be accepted was not what we intended.
There are a whole series of ideas. There might be lower priority programs; there are certainly going to be some execution savings. Congress has done this in the past. There was about $500 or $600 million in recisions in this past bill in '99. So this isn't an unprecedented step. [In] nearly every bill there have been recisions and we intend... But the only way to do this is collaboratively, so we're going to do this on an unspecified basis to try and work out a list that's mutually acceptable to everyone.
Q: Can you give us some examples of some things that the Chiefs wanted that you weren't able to give them in that gap between this money and the $148?
Under Secretary Lynn: The Secretary, I can just elaborate on a couple the Secretary mentioned. Real property maintenance. We put some additional funding in that should arrest the backlog. What you'd like to do over time is wipe out the backlog so you'd put money in towards that.
Second, I think he mentioned there were some rate increases. The Marine Corps would like to be able to buy the V-22 at 36 per year vice 30. You get a better price and you get it into the fleet faster. We were able to get to 30 a year earlier. We added three V-22s, but we didn't go to the 36. Those are two.
Q: In terms of R&D, one of the areas that was down was information systems security. Can you tell me what the Department's plan is for critical infrastructure protection in this budget?
Under Secretary Lynn: There's a substantial amount of money, on the order of $1 billion a year for critical infrastructure protection. I don't really have the expertise to get into the details, and I guess I'd ask you to get with the C3I folks. We can get you together with them, and they can... There's a detailed plan that's laid out for that.
Q: Is that budget item classified, the budget item?
A: I think pieces of it are, but not all of it. Individual, some of the pieces that are done at NSA are classified, but I think a lot of it is not.
Q: Is the Department still spending environmental cleanup money for the four rounds of BRAC that we've gone through? Have you budgeted any money for environmental cleanup on those bases that were closed during the first four rounds of BRAC?
Under Secretary Lynn: Yes, and yes. We are still spending on those and we will continue until they're completely cleaned up. It goes at least another two or three years before the cleanup is finished.
Q: For the four...
Under Secretary Lynn: For the four original rounds, yes.
Q: Do you have any idea how much money you have in '00 that goes to that?
Under Secretary Lynn: I don't, but we can get it.
Q: Is that sort of an evolving number as you go through the cleanup process? Or can you actually hang a price tag on that before you go in there?
Under Secretary Lynn: Environmental cleanup, as you know, has always been an evolving number. I think we've gotten quite a bit better. A BRAC base versus another base doesn't really distinguish. I think we have gotten much better. A few years ago our environmental cleanup estimates just rolled up every year regularly. As we've gotten further and further into the site exploration phase and understand what kinds of problems we have, what the magnitude is, where they are, and we started the remediation, I think you've seen the estimates get more and more precise. As it gets down to a project where you can do project by project, the estimates--I'm sure they're not perfect yet, but I think they have been honing in and you have seen much less change, and that goes both for BRAC and non-BRAC.
Q: Secretary Cohen answered a question earlier about looking at NMD for a possible cut to pay for the Wye peace agreement. Can you elaborate on that, or what's being looked at or how much, when, and how?
Under Secretary Lynn: No, I can't really elaborate on that at this point. As he said, it's in discussion.
What I can say is that the national missile defense program that we've proposed hasn't been affected by the financing of the Wye accords.
Q:... for '99.
Under Secretary Lynn: It's money for '99, but there have been some proposals about how to use it. We have added the $6.6 billion; a portion of it comes from the supplemental, a portion of it comes from these new resources.
The national missile defense program, whatever happens to the Wye supplemental, is fully funded as we best understand it at this point.
Q: So the money is not out of the NMD part of the supplemental; it would come out of other parts of the supplemental?
Under Secretary Lynn: No, it's more that it's been replaced. Any money that would be used for Wye we've added back into the national missile defense program.
Q: So NMD won't get cut.
Under Secretary Lynn: NMD won't get cut is the bottom line. That's exactly right.
Q: I just wanted to go back to the 229,000 jobs again. I just wanted to ask you, where did that figure come from? Is that based on 10 percent, 15 percent cut? Is there any specific, I guess, history to that number, QDR?
Under Secretary Lynn: There's both history and specifics. The specifics are it's totalling up the military department plan, so all that does is take all the department plans across the FYDP and add them up. That's just a rollup.
The history has been that it's increased over time. At the time of the QDR that number was 150,000. It's gone up by about 50 percent over the last two years as the military departments have identified additional jobs and functions where competition would be a valuable tool in terms of reducing infrastructure costs and streamlining organizations.
If you go to each military department, you'll be able to get a plan. You have to go to each of the components as well, as the agencies have plans.
Q: Can I just clarify here that the Wye thing again, didn't come out of NMD. Basically, DoD went in and backfilled any money that would have to go there. Well, the DoD budget's pretty much a zero sum game. It had to come out of somewhere.
Under Secretary Lynn: No, because what we're proposing is an increase in the top line. So it...
Q:...Wye being (inaudible) $113 billion. Is that...
Under Secretary Lynn: No. I think if it weren't for Wye it might read $111.8. It was increased because of the Wye proposal. The money was added to the national missile defense to make sure...
Q:...in the future. You didn't make it whole in '99. If you took '99 money, you're adding the money back someplace out there.
Under Secretary Lynn: Right. But that's when it's going to be...
Each year of the national missile defense program is fully funded. There's no year where they're short money, which is the point I'm trying to make.
Q: Thank you.