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DoD News Briefing on Fiscal Year 2007 Budget

Presenters: Secretary of Defense Donald H. Rumsfeld, Undersecretary Of Defense (Comptroller) Tina Jonas, and Chairman of the Joint Chiefs of Staff Gen. Peter Pace
February 06, 2006

DoD News Briefing on Fiscal Year 2007 Budget

To view the slides used in this briefing click here.

 

            SEC. RUMSFELD:  Good afternoon, folks.  We -- General Pace and I and some of the senior people from the department just spent a good session with the senior leaders in Congress, the chairman and ranking members of the Armed Services Committee in the House and Senate and the chairman and ranking members of the Appropriations Committees -- Subcommittees, I should say -- and most of them were there.  I think one of them couldn't make it.  But we have been discussing the Quadrennial Defense Review and the budget with them and look forward to the hearings tomorrow. 

 

            I just returned from the annual conference on security and policy in Munich, Germany -- the Werkunde Conference.  I should say that many of those gathered positively discussed the need for close cooperation as we wage the global war on terror against extremists who pose such a serious threat to our free systems.  In Munich, I know that the -- that this challenge requires us to -- all of us really -- to try to recalibrate our strategies and re-examine our defense budgets and our funding priorities, and perhaps further rearrange capabilities for an era of asymmetric, irregular threats. 

 

            The president's budget request for the Department of Defense represents an increase over last year.  It reflects what we should -- believe should be the country's national security priorities -- namely to help defend the United States of America and the American people and their interests, to give flexibility to commanders, to prepare for both conventional and unconventional or irregular warfare, and importantly, to work closely with partner nations to help them develop the capabilities needed to defeat terrorists within their borders, and to cooperate with us and other countries with respect to this global threat. 

 

            The budget will also fund some of the decisions drawn from this year's Quadrennial Defense Review, although that's not what it's designed to do.  The bulk of what comes out of the Quadrennial Defense Review will be taken into account as the budget build starts now to be presented next February. And all that has been done are to take the things that were -- became readily apparent some months ago when there was still time to incorporate them into the budget, which I would not want people to think represented a major portion of the vectors and direction that came out of the Quadrennial Defense Review.   

 

            I know there's a temptation in Washington to view everything in terms of winners and losers and zero-sum games.  I should say that the QDR and our budget request for 2007 and thereafter should not be measured in terms of programs or winners and losers, I don't think. These are not stand-alone documents, but rather calibrations in our direction as we continue transforming to meet the new challenges. 

 

            I've asked Tina Jonas, the comptroller of the department, to be here along with her team and experts in various aspects of this budget to be able to make a presentation and then respond to your questions. I understand there are then some breakout groups on specific subjects that will be available for all of you to get the kind of next-level detail.  The QDR, of course, has already been made available. 

 

            And with that, I'll ask General Pace to make some remarks and then we'll turn you over to Tina and her team and others.  Pete?   

 

            Q      Mr. Secretary? 

 

            SEC. RUMSFELD:  Pete's going to make some remarks. 

 

            Q      One question of you, if you don't mind, just one question. 

 

            SEC. RUMSFELD:  Do you want to wait till Pete talks? 

 

            Q      Yes, sir. 

 

            SEC. RUMSFELD:  Good. 

 

            Q      That's fine. 

 

            GEN. PACE:  Thanks, Charlie. 

 

            SEC. RUMSFELD:  You want just one for you, or one for each person in the room.  (Laughter.) 

 

            (Cross-talk and laughter.) 

 

            SEC. RUMSFELD:  General Pace.  

 

            GEN. PACE:  Thank you, sir. 

 

            I just returned from a visit to South Korea where this past Friday I participated in a change of command where General Leon LaPorte, who relinquished command of the U.N. Command, the ROK/U.S. Combined Forces Command and U.S. Forces Korea to General B.B. Bell. General LaPorte wraps up four outstanding years of service to our country and to Korea, and General Bell is coming out of command of U.S. Army Forces in Europe and will build, I'm sure, on all that General LaPorte has done for the last four years. 

 

            While there, I also had the chance to visit some of our troops training on a tank range, 2nd Division troops, and 29 of those soldiers reenlisted.  I had the great privilege of reenlisting them in a platoon formation, some for their first reenlistment, some for their third.  And they were voting with their lives to say that they know that their service to this country is valuable and valued. 

 

            This budget that is being rolled out today and the Quadrennial Defense Review that was released last week culminate an extraordinary year of collaboration and cooperation between the senior civilian leadership and military leaders in this department.  And together, they certainly make sure that we will be able to prosecute the war on terror, that we'll be able to enhance our joint warfighting capabilities, that we will be able to accelerate transformation, and that we'll be able to provide proper quality of life for our service members and their families.  And I'm glad today that Vice Admiral Marty Chanik will be assisting Secretary Jonas in answering your questions. 

 

            Thanks. 

 

            SEC. RUMSFELD:  We really are planning to not take questions, but I guess it's unanimous, everyone wants Charlie's question to represent the views of the 55, 60 people, hundred people in the room? 

 

            (Cross talk.) 

 

            SEC. RUMSFELD:  Wait.  Wait.  Charlie, you have the floor. 

 

            Charlie, you have the floor. 

 

            Q      This budget represents major investment, increased investments in the area of the Army, Special Forces, intel, mobility -- the ability to confront problems of unconventional warfare and terrorism.  And yet, there are those who say that in an area of -- at a time of very austere domestic spending, cuts in many domestic programs, you haven't made difficult choices to perhaps make cuts in major Cold War-type programs, very expensive programs such as the F- 22.  How would you answer that, sir? 

 

            SEC. RUMSFELD:  Well, very simply, that the senior -- as General Pace said, the senior military leadership and civilian leadership of this department spent the better part of a year assessing the period ahead -- 5, 10, 15, 20 years out -- looking at the kinds of challenges that our country is likely to face.  We recognized, as I mentioned in my remarks, the need to see that we had capabilities to defend the American people here at home.  We recognize the reality that the -- we have been very successful in deterring the threat from large armies, navies and air forces.  On the other hand, those threats haven't disappeared, and the kinds of capabilities that are necessary to continue to see that they are deterred and dissuaded require investments, and they are not something that you can turn the switch on and off and have those capabilities.  They take years to develop, to plan, to develop, to initiate, and, finally, to manufacture, produce, deploy, train and outfit units capable of using those capabilities. 

 

            You're quite correct, we also are faced with a variety of challenges that are considered to be asymmetric or irregular.  And we, simply, as an institution, have to not stop doing what we were doing and start doing something new, we have to look out at the world and say that the single-most precious thing we have here that protects our freedom and the prosperity of the American people is their security, and that -- that does require investment.  The investment is large; it's small as a percentage of gross domestic product at 3.7 or [3.]8 percent. When I first came to Washington in the Eisenhower-Kennedy era, we were spending 10 percent of GDP on defense. 

 

            When I was here 30 years ago as the secretary of Defense, we were spending, I think, 5 percent.  Today it's 3.67 or [3.6]8 percent.  So it is a relatively modest portion of every dollar, but it is something that does underpin the freedom and the opportunity and the prosperity that exists for the American people. 

 

            (Cross talk.) 

 

            Q      You mentioned in your opening remarks that this budget would allow the U.S. to accelerate the transformation of the Army. But some critics are saying that the growth in the Army, particularly in the Guard and Reserve, is not as much as it could be with more resources.  Can you just comment on that? 

 

            GEN. PACE:  Oh, I think the Army's done a terrific job of balancing the active Guard and Reserve in a way that truly represents a single United States Army for the United States of America, and -- in taking 33 active brigades and growing them to 42 and taking 15 somewhat capable National Guard brigades and growing them to 28 and sustaining a total of 106 National Guard brigades and a total of 56 Reserve brigades.  So the Army has paid enormous attention to the capacity that they need across the force, and they are devoting not only in this budget but in the outyears, $21 billion specifically earmarked combined in proper equipment and providing the proper training to the Guard and Reserve. 

 

            Q      General Pace -- 

 

            SEC. RUMSFELD:  General Pace and I are going to be responding to questions most of tomorrow and most of Wednesday.  This is a budget day.  It's a good afternoon. 

 

            Q      He's just back from South Korea, Mr. Secretary.  We need to find out some things about the war. 

 

            SEC. RUMSFELD:  Tina Jonas, you have the floor. 

 

            MS. JONAS:  Thank you.  Thank you, Mr. Secretary. 

 

            Good afternoon.  Thank you very much for being here.  I'm here with Admiral Marty Chanik from the Joint Staff, who has worked very closely with us over the year in developing the budget that we're going to talk to today. 

 

            So, as the secretary and the chairman have just said, the world has changed dramatically since the end of the last century, and the department is changing along with it and we are refocusing our forces and capabilities for the future.  Since 2001, we have shifted our strategic balance away from the static Cold War construct of the past to the speed, power, precision and agility required for the challenges that our nation faces today and will continue to face in the future. So consequently, we are looking very closely at our strategic priorities. 

 

            This budget was developed in conjunction with the Quadrennial Defense Review.  The Quadrennial Defense Review was the first conducted in the era of global terrorism.  And we continue -- this QDR continues the shift in emphasis by identifying key strategic priorities.  

 

            The fiscal year 2007 president's budget request for defense is $439.3 billion, a 7 percent increase over what was enacted by Congress last year.  And the budget invests in capabilities and forces necessary in these key strategic priority areas:  First, to prevail in irregular warfare operations, including wars of long duration like the global war on terror; to defend the homeland, especially against catastrophic terrorism and other advanced threats; and to maintain, as the secretary said, our U.S. superiority against threats from other nation states.  And, of course, underpinning all of our activity, we continue our strong support for the men and women in uniform in the quality of life. 

 

            I'd like to ask Admiral Chanik to talk a little bit about the capabilities that we're pursing in this budget. 

 

            ADM. CHANIK:  Thank you, Tina. 

 

            These priorities that see you up on the slide in the supporting capabilities are the product of continuous assessment.  As many of you are aware, and as the secretary mentioned in his opening comments, we began constructing this budget over a year ago.  Services work hard in January-February, throughout the summer months, and in September submit that to the comptroller; and from September through December, the comptroller and services work very closely together to provide the product that you'll see today in just a few moments. 

 

            At the same time, in this last year we also had a parallel process ongoing at a slightly different time line, and that was the Quadrennial Defense Review.  The Quadrennial Defense Review, while the output of that actually occurred after some of the budget was well along on its path, did allow us to get some leading-edge investments and indicators in the fiscal year '07 budget.  And you'll see that in a just a few moments, and as the secretary mentioned.  The Quadrennial Defense Review took our National Military Strategy and operationalized that strategy, and it did it through the lens of the force-planning construct and of the four focus areas.  

 

            Those four focus areas were defeating terrorist networks, defending the homeland, combating weapons of mass destruction, and shaping the choices of countries at the crossroads. 

 

            As the department assessed these capabilities needed to succeed in the four focus areas, capability sets emerged, and those capabilities include but are not limited to the following types of investments: 

 

            Investments in joint mobility, in intelligence, surveillance and reconnaissance assets, in methods to combat weapons of mass destruction, in increasing the sizes of our Special Operation Forces; and accelerating the Army's efforts to create a more modular deployable force; and building joint maritime forces for near-shore and in-shore operations; in orienting joint air capabilities to increase the range and persistence to larger and more flexible payloads; and the ability to penetrate and operate in denied areas, and advancing joint command and control with the requisite netcentricity. 

 

            This group of capabilities are core elements in meeting the department's priorities that you see on this slide: 

 

            Winning the war on terrorism. 

 

            Defending the homeland. 

 

            Accelerating transformation. 

 

            Strengthening joint war fighting. 

 

            And taking care of our people. 

 

            So as you look at this budget, as you'll see in a moment when Ms. Jonas brings up the subsequent slides, you'll see that we are capturing vectors in the QDR and making initial investments this year. It's a budget that gives warfighters the tools needed to sustain our traditional war fighting while we enhance irregular warfare capabilities against the asymmetric threats like we face in the global war on terror. 

 

            Tina. 

 

            MS. JONAS:  Okay.  So in the area of investment, prevailing in irregular warfare operations and to improve our reconnaissance and maritime special operations capability, the fiscal year '07 budget substantially increases the size and capability of these Special Operations Forces.  We fund an additional 14,000 Special Operations Forces, growing from 50,000 in fiscal year '06 to 64,000 in fiscal year 2011.  We grow 4,000 in this current budget. 

 

            We increase our Special Operations Forces' combat battalions by 33 percent.  We fund the recently established Marine Corps Special Operations Command.  We fund the Special Operations' unmanned aerial vehicle squadron, and we also increase our Navy SEAL commando teams. 

 

            The budget includes $5.1 billion.  This is a significant increase over last year, a billion dollars over the enacted level.  As a frame of reference, it's double what we had invested in the year 2001. 

 

            Additionally, to prepare for irregular warfare, we're investing in language skills.  To equip our forces with language and cultural skills that they will need for 21st century missions, the budget expands language and cultural awareness training.  The budget provides the resources to increase language competency of general forces and in languages like Arabic and others, expands the language training for Special Operations and intelligence units, increases pay and recruitment of native speakers to serve as translators and interpreters for operational forces. 

 

            The budget includes $181 million.  This is a substantial increase of $149 million more than we had last year.  It's the $760 million investment over the program. 

 

            Increasing combat power will also meet the needs of irregular warfare operations.  I think General Pace mentioned the investment in the Army.  And we invest substantially in Army combat power. 

 

            To increase Army combat power, the budget provides funding to increase the number of brigade combat teams from 48 to 70.  The conversion of regular brigades to modular brigade combat teams will make the Army more flexible, effective and deployable against a wide variety of adversaries and importantly will increase the Army's rotational pool and reduce the frequency of deployments and provide greater stability for soldiers and their families.  The budget includes 6.6 billion [dollars] for these conversions and includes 40.6 billion [dollars] over the program. 

 

            I should note we had 5 billion [dollars] in the supplemental last year for this initiative.  This has gone into the baseline budget this year. 

 

            The budget provides funding for ground force modernization as well, and the Army's Future Combat System is a key element of that modernization.  To continue the modernization of -- and integration of ground forces, to produce a swifter, smarter and more potent and deployable force, the budget provides continued funding for the Future Combat System, and you can see the three major areas' investment.  The primary purpose of these are to improve our lethality and situational awareness.  And the admiral can talk to some of those capabilities, if you're interested in that, in a moment. 

 

            The budget includes $3.7 billion for the Future Combat System. This is an increase of 600 million [dollars] over the prior year. 

 

            Additionally, to increase U.S. intelligence-gathering capabilities and enable persistent surveillance 24 hours a day, seven days a week, the budget procures 322 unmanned aerial vehicles, which includes our available missions by -- increases our available missions by 75 percent and expands our persistent surveillance capability.  We also provide research and development funds for future unmanned aerial vehicles.  The budget includes a billion-seven [dollars] for these capabilities and 11.6 billion [dollars over the program. 

 

            Q      Excuse me. 

 

            MS. JONAS:  Yeah? 

 

            Q      The 322 is not just one year.   

 

            That's over the whole-- 

 

            MS. JONAS:  Yes, sir, that's right.  Eleven billion is the investment over the program. 

 

            Additionally, the budget addresses defending the homeland against a variety of 21st century threats.  To counter the threat of catastrophic weapons such as advanced biological and nuclear weapons, the budget provides a billion-seven in '07 and 9.3 billion over the program as far as additional acquisition of improved detection systems, additional new-generation vaccines and invests in the capabilities to neutralize potential nuclear threats. 

 

            In addition to these capabilities, we continue to develop and deploy a national missile defense system, and the budget improves our missile defense capabilities by including $10.4 billion in fiscal year '07.  This includes our theater intercontinental and theater ballistic missile capabilities to expand coverage in critical areas and enhance our early warning capability. 

 

            In addition, we want to maximize our homeland capability, and it's vital that we expand our global communications.  We improve our global communications by investing 900 million in fiscal year '07 and 9.3 billion over the program plan to expand satellite capabilities to deploy troops around the globe and substantially increase the speed and amount of data that the military can now transmit and receive. 

 

            In addition to defending the homeland against advanced threats and refocusing our forces to prevent irregular warfare operations around the world, as the secretary said, the United States remains committed to maintaining its conventional military superiority.  And in that area, we are improving our joint air support capabilities. The budget includes substantial investments in aviation, particularly the Apache, the Chinook and Black Hawk helicopters, as well as the Osprey V-22s.  We include 113 of these aircraft in this budget and 798 of these aircraft over the program plan, very substantial. 

 

            In addition, our joint air capabilities to improve joint air dominance and global strike, which permits for freedom of maneuver for air, land and sea forces -- the budget provides $10.5 billion.  We include the F-22 Raptor, the F-18 and the Joint Strike Fighter, which is just coming online this year in the budget. 

 

            In addition, we are also investing in our joint maritime capabilities to improve our maritime support to Joint Forces.  We invest in multi-mission ships, including two DD(X) Destroyers, two littoral combat ships, one Virginia-class submarine, one amphibious assault ship and one logistics ship, or TAKE.  Our fleet will expand from its current 285 to 304 by the end of the program, and the budget provides $11.2 billion for this fleet. 

 

            Underpinning all of this investment, the success in everything that we do depends on the men and women in uniform and their dedication and skill.  So in order to support our men and women in uniform, we increase pay by 2.2 percent, and provide expanded targeted pay for certain warrant officers and senior enlisted.  We include a billion-nine for bonuses and incentives to recruit and retain highly skilled personnel.  And we maintain our commitment to no out-of-pocket costs for housing, and increasing this area of the budget by 5.9 percent for individuals so that they do not have to spend from their pocket for housing.   

 

            In addition, this budget completes a commitment to eliminate the remaining 49,000 inadequate on-base housing units.  And we provide other quality of life investments, including a billion-five for the construction of new on-base living quarters for unmarried enlisted personnel, new child development centers, and for new educational schools and projects. 

 

            But the quality of life means also looking after the health of each service member and their family.  And to that end, the department provides one of the best healthcare coverage plans in the nation.  Our goal is to continue to provide the highest quality care to our military personnel and their family by placing the program on a fiscally sound foundation for the long term.   

 

            Our budget includes $39 billion in '07, which is an increase of $2 billion over the prior year, to provide health care for retired and active duty military personnel and their families.  The cost of -- by including some changes, we will control the costs of health care, but it's still predicted to rise by 31 percent in this budget. 

 

            I'd just like to explain some of the adjustments that we are going to make to the plan.  Our current TRICARE plan included the cost-sharing feature, which was established by Congress in 1995, and that was an important feature of sustaining the benefit.  In 1995, the department was paying 73 percent of the cost share and beneficiaries paid 27 percent.  Today the cost share for the department has risen to 88 percent and the beneficiary cost share is at 12 percent.  So the department is proposing some changes to help reduce the likelihood of fiscal problems in the future to the health care.  We want to sustain this benefit, and we're going to make some slight changes in the premiums for working-age retirees.  Let me just stress something. These changes that we're proposing in the budget will not affect active-duty members.  But we are going to increase the cost share to less than the 1995 level.  If we were not to take action in this area of the budget, our projected costs by 2011 would be over $50 billion. So we're making some slight changes in that area.  And I have -- Dr. Bill Winkenwerder is here, who is available to answer some questions afterwards.   

 

            Let me just finish up, and then we'll take some questions. 

 

            So what does it look like?  Our budget is $493.3 (sic) [439.3] billion.  This is a $28.5 billion increase -- 7 percent over the enacted level.  And we believe we provide the needed capabilities for future challenges, provide advanced technology for improved operational capability, provide robust pay and incentives for recruitment and retention, and provide a superior healthcare coverage plan for 9.2 million service members and their families. 

 

            Admiral Chanik. 

 

            ADM. CHANIK:  For a quick point of clarification, I think you said 493.  Did you mean that, or did you mean 439? 

 

            MS. JONAS:  Four (hundred) thirty-nine.  Pardon me.  Yeah.  I was wishful thinking on my part. 

 

            ADM. CHANIK:  Good catch, though. 

 

            MS. JONAS:  Just for Owen begun. 

 

            ADM. CHANIK:  From the warfighter's perspective, this is a budget that supports our armed forces across the spectrum of capabilities and threats, and -- while it ensures our service members and their families of the best trained, best equipped and best supported fighting force in the world.  It's aligned with the department's priorities.  It meets the needs of the combatant commanders and the services, and it's been formed by the QDR process.  It manages short and long-term challenges and is what the joint warfighter needs. 

 

            And with that, we're ready to field your questions. 

 

            Q      Ms. Jonas, you've mentioned a number of major increases you've made in the Defense budget.  Have you made any major cuts anywhere from last year? 

 

            MS. JONAS:  Well, I think, actually, I'm glad you raised last year because I think you've covered our department for some time, and you know that we've made some significant changes in previous years. And I think we -- the Army will tell you, for example, it made some reductions over the years to its -- some of its aviation programs to reinvest in various areas of aviation.  We have made some reductions, but I think we've got a pretty healthy budget here.  Our procurement accounts were a good indicator of the health of the budget; $84.2 billion in this budget, up significantly from last year.  So that's an important feature.  Our research and development is up, and we -- our science and technology budget is also significant at $11 billion. 

 

            Q      As you well know, one of the busiest aspects of the newest -- (inaudible) -- are ground forces.  I was just wondering is there a way to quantify if you count the increase in Special Forces, the Marine -- the new Marine units, the expansion, to what extent is there an expansion of the Army?  How many more troops are we actually  talking about that are going to be fielded under this budget than are fielded today in terms of ground forces, Marine and Army -- 

 

            ADM. CHANIK:  Right.  The total numbers of the forces, if you're counting total numbers, will remain approximately the same if you look at end strength.  But the challenge that has been out for both the ground forces -- both the Army and the Marine Corps -- has been how do make -- how to change the tooth-to-tail ratio, if you want to look at it that way.  The other way we say is the operational Army versus the institutional Army.  Army has a goal that they want to get in that operational Army, the two side, 40,000 more folks, and we believe we can do that by the rebalancing of the people we have today in that force structure that exists. 

 

            Q      So when you -- 

 

            ADM. CHANIK:  The Marine Corps has also done the same thing by adding two infantry battalions into them. 

 

            So the effect is -- with that same number of folks -- is more capability by rebalancing what the forces do inside of that. 

 

            Q      So just to be clear, that 14,000 additional special forces, that is a result of rebalancing the end strength you are working with now. 

 

            ADM. CHANIK:   That is correct. 

 

            Q      Admiral, the QDR says that by FY '11, the Marine Corps end strength will go back down to 175.  Is that because you're assuming that the Marines will be out of Iraq by then?  And given that -- (inaudible), why is end strength going back down instead of going up? 

 

            ADM. CHANIK:  We always -- we will continuously look at end strengths, but we'll wait and look at what the conditions of the world are.  Obviously, we don't know exactly when things may get down to a little bit less intense in terms of number of troops deployed to Iraq/Afghanistan area.  But as that comes down, then we think the end strengths can go very close to what you saw in the QDR report itself. 

 

            Q      I have a QDR long-term question.  In' 08 through '13, you're supposed to see major reflections in the QDR.  When we come here next year and see this, will we see large increases over the future years' defense plan versus this year?  I calculated the top lines between '07 and '11, this year it's, like, $2.38 trillion, basically the same plan from last year.  Is the expectation here that you're going to grow that top line over the next six years by a lot, or make adjustments where they're roughly what you're announcing today? 

 

            MS. JONAS:  I think the assumption is that we -- of course, we don't know what next year will bring, but the assumption is certainly that we would work within our current structure.  I think what the secretary has described to you and what the chairman described is a realigning and reorienting of the current resources that we have. 

 

            Q      One follow-up.  One quick truth-in-advertising question. Last year, for '07 you have projected a $443 billion budget.  This is 439 (billion dollars).  Why the $4 billion?  Why couldn't you fight to get that restored? 

 

            MS. JONAS:  Well, certainly we make our case, and we feel that we have a very healthy budget here.  I will say that the Congress enacted a budget that was a little bit lower, and that certainly -- with some guidance to the administration as to what the Congress might be interested in funding.  But we feel that we have an extremely healthy  budget here.  We are 7 percent over the enacted level.  We've got a lot to work with here. 

 

            Q      So where would that extra $4 billion have gone?  What were the tough choices that had to be made? 

 

            MS. JONAS:  Well, we make a lot of tough choices.  There are certain systems that we did not fully fund.  We adjusted and restructured some programs.  Many of you are familiar with what we do in terms of adjusting programs. 

 

            I mean, you can't do it always on the schedule that you want to do. And with you -- I mean, there will be breakout sessions with the services so they can answer some of those more specifically with you. 

 

            Q      The war in Iraq is being funded primarily through supplementals.  It looks like you're on a pace to spend about $10 billion a month.  Do you see that pace continuing on?  For what period of time?  And also, can you point to any other -- anything else that was built into the budget that primarily is going towards the war in Iraq that also obviously benefits over time -- 

 

            MS. JONAS:  Yeah.  I think our current costs are running about 6.8 billion [dollars], and that's a little bit up from last year.  And the reason is, we have included, as many of you know, costs for resetting the force in these supplementals.  Our equipment is wearing out at a significant pace.  And so we've been actually quite successful in working with Congress to make sure that we procure that. 

 

            But we don't -- I'm not going to make predictions about the future.  We develop our supplementals based on the deployment orders that are out there at the time.  And so we will continue to do so in the future.  I'm not --  

 

            (Cross talk.) 

 

            Q      The 6.8 billion (dollars) -- just to double-check, it's about 120 billion [dollars] if you look at fiscal year '06.  So -- 

 

            MS. JONAS:  I'll tell you what.  Let me take another question, and we'll be glad to clarify numbers with you after the briefing. 

 

            Q      Actually, on that line of questioning, about the supplemental, in the budget process, you don't foresee a time when there wouldn't be supplementals and it would just be one budget.  Some people in Congress say this is a giant shell game to kind of move money that's not listed. 

 

            MS. JONAS:  Let me clarify a point.  The administration will be requesting a budget amendment to the '07 budget.  So we will be amending the budget. 

 

            We have included some things in the past, like modularity, in supplementals, which we have talked to you about, is included in the baseline.   

 

            We understand the concerns in Congress, and we're working very carefully with them.  We just briefed, as the secretary said, many of the chairmen and ranking members of our committees of concern.  So we'll just have to keep working. 

 

            Q      Can you talk at all about some of the programs that are going away?  For instance, the Air Force has mentioned that the F-117 Stealth Fighter, which everyone is familiar with, is going to be essentially retired.  I mean, what programs that people know and love today are going to be retired, as far as the budget? 

 

            ADM. CHANIK:  I can talk to some of that.  And again, I think, in the individual breakout sessions, you can get more detail if you'd like.   

 

            F-117 you brought up.  This is a function of modernization on the Air Force's part as they bring on more capable aircraft, in particular, the F-22. 

 

            It allows them to take older aircraft that are getting long in the tooth, that are costing more to maintain, more to fly, and have some of their capabilities starting to reduce, allows them to get out and modernize the force.  So the F-117 is one example of that.  You'll find in there also we talk about phasing out the U-2 as we bring on more assets in terms of Global Hawk and other assets, satellite systems; that's in there.  We look at adjusting some of our other equipment; example, the airborne laser we'll have as a -- more of a demo program now, vice in last year's budget you would have seen several aircraft in that. 

 

            That's some examples of things that have changed in there. 

 

            Q      How about the E-4Bs, are you phasing those out too?  Are you going to retire those? 

 

            ADM. CHANIK:  No.  The E-4B we'll look at -- eventually we will on those.  And there are some thoughts today about what we replace those with, because as you well know, those are very difficult aircraft to maintain.  And we have some ideas and thoughts for how to bring on new assets that will be much more capable and more maintainable. 

 

            MS. JONAS:  You've been very patient over there. 

 

            Q      Despite reasonably strong retention rates, the department foresees potential problems down the road with retention, even obviously with recruiting.  A 2.2 percent across-the-board pay rise is the lowest, I think, since 1994.  I wonder if you could kind of speak to that, and also how these targeted pay raises may kind of address -- (off mike). 

 

            MS. JONAS:  Certainly.  In fact, Admiral Chanik may want to talk to the senior enlisted piece. 

 

            I believe I mentioned this.  We've got a billion-nine in the budget for recruiting and retention.  And the specific targeted increases I think will be very important to the senior enlisted. 

 

            Admiral, do you want to comment? 

 

            ADM. CHANIK:  You bet. 

 

            No, the targeted issues are as we look across the force, we always look for what we call force management tools to make sure that we have the ability to retain those people with special skill sets. And that's what that targeted pay increases are, primarily to the senior enlisted force and to some of our warrant officers -- special skill sets that we want to retain.  Example, Special Operations Forces is a good one; those with particular language skills -- those are the types of folks that we might target for those particular things. 

 

            Q      Given the kind of work that everybody's been doing the last few years and how busy everybody is, it seems counterintuitive maybe to some that 2.2 would be a low pay raise, given -- (inaudible).  Is that off the mark?  Or why 2.2 now? 

 

            ADM. CHANIK:  Right.  I don't know if -- one, I don't think it's off the mark.  I think it's a continuing effort to make sure that we work towards parity, if you will, in pay for our military forces at the equivalent civilian-educated, if you will.  The 2.2 is what we think is about the right amount, and that's really the selection behind it.   

 

            It's based on the economic index for it. 

 

            MS. JONAS:  Just one last point, and then we'll take another question over here. 

 

            The pay is up 29 percent since 2001, so it's an important area for us, and we want to make sure we pay our folks right. 

 

            Yes? 

 

            Q      Can you -- I'm sorry.  Can you break down the supplemental request?  How much of the supplemental is reset equipment, and how much is personnel cost in broad categories? 

 

            MS. JONAS:  Yeah, we will submitting a couple of things with regard to supplementals.  The fiscal year '06 supplemental we expect to be submitted to the Hill in about two weeks.  The details of that have not yet been settled.  The majority of it will continue to fund our operations cause.  I will point to -- I think last year we spent about $16 billion, however, for reset.  I don't -- I'm not going to try to give you the details of what we will be submitting in a couple of weeks until I know the full effect of that, but probably in that area. 

 

            Q      In two weeks -- the one you're submitting in two weeks is 70 billion -- 

 

            MS. JONAS:  The -- what OMB announced the other day was that they had in the budget an -- they had estimated approximately 70 billion. The details have not yet been finalized.  I don't know if it'll be exactly 70 billion or more or less.  We're working those details. 

 

            Q      The tricare increases -- I wonder, Admiral, if you can talk to the rationale behind that for retirees and the support for those increases by the Joint Chiefs. 

 

            ADM. CHANIK:  You bet. 

 

            MS. JONAS:  We'll have Dr. Winkenwerder come up, too, if you don't mind.  We'll (inaudible) the good doctor here. 

 

            ADM. CHANIK:  Go ahead, yeah. 

 

            Q      If I could just ask you, Admiral, about the question about the Joint Chiefs and their support for the increase? 

 

            ADM. CHANIK:  Sure.  In fact, the Joint Chiefs do support this particular initiative.  I'd emphasize again, this does not affect active duty.  It affects those between retirement and 65 years of age, and it is an attempt to go back to the share ratio or approach the share ratio that was established in 1995 and hasn't changed -- the amount that individuals pay has not changed since that time.  The ratio has obviously gone down for the individual and up for the Department of Defense.  So all that being said, that's why it has the support of the Joint Chiefs.  And I'll let the doctor talk to this matter. 

 

            DR. WINKENWERDER:  And I'll just add -- and well said -- is that we have a fantastic health -- we have the, I think could be argued, the best health benefit plan of any plan in the country.  We want to sustain that.  That's our objective.  Of course, we know the great job our people have been doing, saving lives, preventing injuries in theater, the operational component of that.  We know one of your community was -- saw the benefit of that recently, the newsman from ABC, Mr. Woodruff and his cameraman.  We want to sustain that really important capability.  We also want to continue to sustain a really great health benefit.   

 

            And I think an important point to note -- two things I'll say to just add on to what's been said -- is we will tier these changes so that those retired officers would pay more than senior enlisted and more in turn than junior enlisted so that the incremental impact would only be for junior enlisted, about 17 cents per person per day for a family of three, rising up to about 86 cents per person per day for a retired officer and his or her family. 

 

            And so these would be stepped in over a couple of years, and then, of course, we would make some adjustments in our pharmacy to incentivize the use of generics and mail order.  But -- 

 

            Q      How do those figures per day compare to what they're paying now? 

 

            ADM. CHANIK:  They are -- just again, an officer, it's about 42 cents per person per day going to, like, $1.28 for a family.  That's per person for an average family of three, retired.  And so again it's an increase, but it -- those changes do not even bring back to the level of sharing that we saw in 1995. 

 

            At the end of the day, what we want to achieve and we will achieve is continue to sustain a health benefit plan that is better than any health benefit plan you would find the private sector. 

 

            Q      Can you talk about funding for the expanded IED Task Force? 

 

            MS. JONAS:  I'll begin to talk to that in terms of the dollars, and I'll let the admiral talk about the IED situation.  The IED Task Force has been at work for several years, and we've spent over $2 billion so far.  We intend to provide another -- this year spend about $3.3 billion for the task force, and that's -- we'll spend as we need to in order to address the threat.  It's a significant one. 

 

            And I'll let the admiral talk to the capabilities we're looking toward there. 

 

            ADM. CHANIK:  The Joint IED Task Force has now changed to the Joint IED Task (sic) [Defeat] Organization.  It's gone from being led by a one-star to being led by a retired four-star.  It's going to increase from approximately 170 people up to about 370 people, so it's a very major effort that we have to work this problem.  This is a problem we're working across the entire spectrum.  Technology is important, but as important if not more important, because we have a sinking adversary out there, are the tactics, the techniques and the procedures. Technology takes time to get into the fight.  We compress that as much as we possibly can, but while it takes time for technology to come in, we can adjust virtually instantaneously our tactics, our techniques, and our procedures. 

 

            So this is a substantial effort.  The -- General Meigs, the four- star, reports directly to the deputy secretary of Defense.  It has nothing but the highest visibility in the efforts of the department to make sure that we are doing all that we can do to combat this particular threat. 

 

Q:     When you say 3.3 billion, do you mean this calendar year?

 

            JONAS:  Let me clarify.  We have spent 2.7 billion in - prior, we've got another billion nine that we just received in the supplemental - the recently passed supplemental - and we will ask for additional funds in the upcoming supplemental.  And I'll give those details when I get them.

 

            MR BRYAN WHITMAN:  We are going to break now so you can get to the breakout sessions and pick up your budget materials on the way out.

 

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