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Comptroller Michael J. McCord and Vice Adm. Ron Boxall Hold a News Briefing on President Biden's Fiscal 2023 Defense Budget

STAFF:  Good afternoon, everyone.  Thank you for coming.  I'm Christopher Sherwood, OSD Public Affairs.  I would like to remind everyone that today's briefing is on the department's fiscal year 2023 budget request.  Speaking with you today are Undersecretary of Defense, Comptroller/Chief Financial Officer Michael J. McCord and Director Force Structure, Resources and Assessment with the Joint Staff Vice Admiral Ron Boxall.

We have 25 minutes scheduled for the budget overview presentation, followed by 15 minutes of questions.  Attribution is on the record.  Prior to asking your questions, please state your name and your affiliation.  I ask that you limit your questions to one and one follow-up so that everyone has an opportunity in the room and on the phone to ask a question.  I will let you know when we have about five minutes left for one last question.

And with that, it's my pleasure to introduce the Honorable Mike McCord and Vice Admiral Ron Boxall.

COMPTROLLER MICHAEL J. MCCORD:  Good afternoon, everyone.  Thank you, Chris, and thank you all for being here today.  Vice Admiral Boxall and I will give an overview of the budget request, and then we will take questions after the presentation.

On the first slide, the '23 budget is directly informed by the new National Defense Strategy, which was delivered to Congress this morning, which in turn, builds on the secretary's message to the force and outlines our defense priority.  The strategy focuses on the need to sustain and strengthen the U.S. deterrence with China as our pacing challenge.  As we've all seen, Russia remains an acute threat, but China and its ambitions remain our -- our number-one challenge.

The budget supports a strategy that directs DOD to continue modernizing our forces, our global posture and our operational concepts to ensure that our military's capable of deterring and defending against aggression, particularly in the Indo-Pacific and in Europe.  In this budget, we'll make progress all across the board, from the health of our force and our industrial base to the capabilities we need for the joint war fight.

We prioritized in this budget investments in foundational capabilities that address our challenges from both China and Russia, first and foremost, our resilience in space and the modernization of our nuclear triad, but also in cyber capability, our use of artificial intelligence, the health of our force, the health of our supply chain and industrial base, and this is a theme I'll come back to, is -- is many things are not either Russia or China in this budget.

On the next slide, let me show you the numbers.  The budget request for the Department of Defense is $773 billion, an increase of $30.7 billion, or 4.1 percent from the '22 enacted level and $58 billion or eight percent from the F.Y. '22 request.  This request ensures the department can sustain and strengthen integrative deterrence and investments that build enduring advantages including supporting our servicemembers and their families, strengthening our alliances and partnerships and preserving our technological edge.

This request reflects the resources to -- that match our current priorities.  Specifically, our focus on China required additional investments for both the Navy and the Air Force.  The Army's budget increased more modestly, which reflects -- reflects both our strategic priorities and the sense of -- and the end of the mission in Afghanistan, and I think this table gives you a sense that the budget is not just always one third/one third/one third, as some -- some folks would believe.

So with that, let me -- let me show you just real quickly where the history has been -- I think all of you are probably familiar with this -- starting from the 9/11 attack and that kind of post-9/11 era through the Budget Control Act decade that followed it.  You'll see the growth in the base budget, the growth in the so-called GWAT or OCO budget in red that has now wound down as we've exited Afghanistan.  Again, most of this -- most of this should be familiar to all of you, but just a little scene-setter from where we've been.

Now, to turn to the budget before you, and let me take a little time on this slide.  This slide shows the difference between the administration's first defense budget, which was presented a year ago, and -- and the current budget, which we're submitting today.  That difference is over $40 billion per year in additional resources being requested for the Defense Department in this plan compared to last year's plan for the same fiscal years.  This is based on a regular strategy-based review that all of us participated in led by Deputy Secretary Hicks and -- and the vice chairman.  We looked at the missions -- looked at things mission-by-mission, portfolio-by-portfolio, made recommendations to the secretary.  The secretary took those to the president as what he said we needed.  Those represents -- those are represented by the red solid bars on top of the blue bars.  That's about, again, $20 billion minimum per year in additional programmatic content.

On top of that, we also reprice things to reflect the inflationary pressures that we saw last year both in terms of the goods and services we buy from our industrial base and the -- the pay and compensation, which you just discussed with the deputy secretary and the vice chairman.  So about $14 billion a year in -- in the hatched lighter red bars on top of the program growth represents that goods and services inflation increase in our buying power that the -- that we also requested from the White House.

And finally, on top of that, about another -- another $6 billion a year, the very top of each bar is in -- is in the pay and compensation side, and that's military pay raise, civilian pay raise that are higher than was planned last year, increases in BAH, the housing allowance, increases in BAS, the subsistence allowance, increases in these -- the $15 minimum wage that the president directed by executive order, which took effect this January.  Those increases are all rolled in there.  So combining those things -- program growth, inflation in -- in the goods and services side and higher compensation costs -- the secretary took those three elements to the president and got his support for all of that, and that represents the increase from this year to last year.

So we really -- we really value the -- these -- the partnership that we had with both OMB and -- and the White House to work through these issues in this way and get the additional resources we believe we need.

On on the next slide, just a little drill-down, a little bit more on F.Y. '22 to F.Y. '23.  We had a $715 billion request, as you know.  That sat there for a long time, was not finally dealt with by Congress until about two, three weeks ago.  Congress did end up adding funds.  That was not known to us at the time that we finished our budget, what they would do or not do.

In the preceding months, we had and you'll see an orange part there a variety of supplemental funding requests to help our Afghan refugee partners, Operation Allies Welcome.  That was about $6.5 billion.  And another $6.5 billion recently enacted in the omnibus funding bill for Ukraine, assistance to Ukraine, as well as our own more robust posture in Europe right now.

So there was some one-time things that may or may not be repeated in '23 that were in '22, but again, you can see the growth here a substantial growth from what was requested for the base budget from the one year to the next year, and even a substantial request from what was funded last year to what was -- to what was enacted this year.

Pivoting now quickly to end strength, I don't want to dwell on this necessarily, be -- I know the services briefs are going to follow us -- Army, Navy, Air Force -- and they'll be able to talk in more detail about this.  Many of you have probably heard that the Army end strength is coming off of the 485,000 figure for the active force that they have been shooting out for a couple years.

Given a variety of factors, including the very low unemployment rate right now and the declining propensity to serve that I think several services are seeing, the Army felt it was not productive to try and chase that number.  They've redirected those resources toward their Reserve component mobilization, in particular, and the overall health of the Army.

There's a slight decrease in the Navy also, with retirement of some ships that we can discuss later, but overall, you're seeing a very flat picture by the -- for the most part of where we expect to end this year to where we expect to end this year, less than a 5,000 person change across the force.

And my message here is that the increase in the resources that was described on the last slide, big picture wise and will be discussed in more detail going forward, is not about making the force bigger.  That is not what we've -- what we -- what our review concluded that we needed to do.  We're looking at making the force more capable.

All right, so now, to turn to our Secretary's priorities -- and again, these are reflected both in our budget and in the National Defense Strategy, which was -- which was briefed to Congress and I believe delivered to Congress in classified form this morning.

We have four missions here, which I think you all can read here -- to defend the homeland, to deter strategic attacks, to prevail in conflict and build a resilient defense ecosystem to support the force.

The Deputy Secretary just discussed the three ways that we're going to do that.  Those three -- those three ways are methods that are going to be then reflected in the next part of our briefing, as Admiral Boxall talks about the integrated deterrence, different portions by different mission set of that.  We'll come back then on campaigning and on -- on enduring advantage.

To just briefly explain those again -- integrated deterrence, very much exemplified by what -- what NATO is doing today, is using all the tools in the department, as well as working with interagency, working with partner to achieve the effects that you want.

Campaigning refers to being intentional about the actions you take in your presence, in your posture, all of the things that you do on a more day-to-day basis, especially in the combatant commands, to achieve your strategic ends.

Building enduring advantage, which again, I know the Vice Chairman just discussed, talks about the health of our force, first and foremost those who serve but also our industrial base, our partners, the whole system that allows us to do what we do.

So with that, let me turn it over to the Vice Admiral Boxall to start talking about some of the pillars of integrated deterrence.

VICE ADMIRAL RON BOXALL:  Thank you, Mr. McCord. Good afternoon.  The FY '23 president budget request of 276 billion in procurement, research, and development is the largest in the history of the department.  We invest over $56 billion to develop and field lethal air forces.

We continue to field a mix of fourth, fifth-generation aircraft that enable the joint force to establish air superiority when and where the nation needs.  Our request to procure 61 new F-35s, and 21 F-15EX fighters.

Additionally, the department invests $1.7 billion to develop next-generation air dominance, and -- that outpaces our competitors in the high-end consulate.  Also, we continue the recapitalization of our tanker fleet by procuring 15 new KC-46 tankers.  This budget invests $28 billion for shipbuilding to procure nine battle force ships to include two destroyer, one frigate, and two Virginia class submarines.

We also invest over $6 billion to develop future expeditionary marine force.  And with Congressional support, we continue the revitalization of the Sealift Fleet by purchasing two used vessels.  Public shipyards a vital component of our strategy and we are making a once-in-a-generation investment of $1.7 billion in public shipyard infrastructure.

This is more than double the FY 2022 public shipyard investment.  The '23 budget also invests $750 million to enhance our submarine industrial base in support of Columbia and Virginia class programs.  We invest over $12 billion to provide our soldiers with improved firepower, maneuver, and commanding control.

The department's fielding three long-range hypersonic batteries and four mid-range capability batteries over the next five years.  And we are investing in upgraded Apache and Black Hawk helicopters, and counter small unmanned aerial systems to support Army and Joint solutions.

This budget also invests in artificial intelligence and machine learning enable battle management systems to improve soldier lethality through man-machined teaming.  Our investments in multi-demand platforms, resilient communication systems, and ground, air, and maritime delivered fires will increase the lethality of our joint force, and enhance our ability to deter threats in all domains.

Nuclear weapons continue to provide foundational strategic deterrent effects that no other element of U.S. military power can replace.  Strategic deterrence is foundational to every mission the U.S., our allies, and partners execute.  A safe, secure, effective, and credible nuclear deterrent is the ultimate backstop to protect the American homeland and our allies.

Today's nuclear enterprise is safe, secure, effective, and credible.  However, in order for the United States to sustain this level of nuclear deterrence capability, we must continue to -- the modernization of key systems that are beyond their original design lives.

This budget builds on previous modernization gains and invests over $34 billion to simultaneously upgrade all three legs of the nuclear triad, and vital elements of the nuclear command, control, and communications system.

The budget continues Columbia class ballistic missile submarine production and targeted scheduled risk reduction activities that enable a 2028 delivery.  It funds the ground-based strategic deterrent for fielding in 2029, and it fields to be 21 to replace aging bombers in the mid-20s.

The three legs of the nuclear triad provide mutually supporting capabilities and our investment to modernize the triad will help ensure these -- that nuclear weapons continue to deter aggression and protect our allies and partners.  Our top defense priorities to defend the homeland, unfortunately, our adversaries are fielding new capabilities that increase the risk of missile attack on the United States.

And we must invest today to counter these threats.  The budget invests over $24 billion enhancements to U.S. missile defense capabilities to defend the homeland, deploy forces, allies, and partners against an increasingly complex adversarial missile threat.  The budget develops the next-generation interceptor for homeland defense.

It also supports the existing ground-based interceptors, upgrades and expands the network of land, sea, and space bases sensors, and invests in advanced technology programs to address complex missile threats.

Our budget invests $892 million for the defense of Guam, including improved missile defense, command, and control capabilities, radar capacity, and new construction.  The budget also includes $133 million in base defense enhancements throughout the Indo-Pacific region.

Additionally, the budget will continue to strengthen regional missile defense by fielding an eighth Terminal High Altitude Area Defense, THAAD battery, and integrating this interceptor capability into the Army's Integrated Air Missile Defense Battle Command System, IBCS.

This budget also fields improved patriot missiles, and additional U.S. short-range air defense battalions.  The '23 budget includes over $7 billion to procure the proper mix of highly lethal precision weapons from subsonic to hypersonic that will enable U.S. forces to hold their adversaries at risk from operationally relevant ranges.

This includes the fielding of hypersonics in land, air, and sea platforms.  The Army will field the long-range hypersonic weapon from land batteries in 2023, and in 2025 the Navy will field the Conventional Prompt Strike, CPS hypersonic weapon onboard the DDG-1000 class warship.

This budget completes prototyping of the Air Force Air-Launched Rapid Response Weapon, ARRW, and field the hypersonic air launched cruise missile, HACM on the F-15 in 2027.  In addition to hypersonic weapons, the '23 budget procures more than 3,500 lethal subsonic missiles over the next five years.

Our mix of hypersonic and subsonic offensive fires will enable the joint force to hold adversary forces at risk and achieve maximum deterrent effect against a peer adversary.  Space capabilities are a critical component of U.S. military power.  China and Russia continue to field weapons to deny or destroy our space capabilities.

Lasers, electronic warfare, grappling systems, and direct action projectiles are a few technologies that our adversaries have fielded or are developing to blind, jam, or destroy U.S. space systems.

The budget invests over $27 billion to accelerate the transition of the U.S. space capabilities toward resilient space architectures that are able to defeat adversary attacks and provide continuous warfighting capabilities supporting key missions.

Our budget improves missile warning capabilities that detect advanced threats by investing $4.7 billion to develop a multi-layer space-based missile warning and tracking architecture along with a resilient next-generation ground control segment.

We also invest $1.8 billion for two GPS follow on satellites, and systems that harden position navigation, and timing signals to naval operations in a GPS degraded environment.  Finally, the department invests $1.6 billion to develop secure, survivable, and jam-resistant satellite communication capabilities and fund six space launch vehicles to assure -- to provide assured access into space.

In the cyber domain, our prosperity and military success depend on defending our networks from malicious action from adversaries and non-state actors.  The budget invests over $11 billion to continue modernization of our network defense capabilities resulting in more secure and resilient DOD information network, and defense industrial base.

Our investments improved the cyber technology that will protect our next-generation weapon systems from intrusion and attack.  We will -- are also embedding zero-trust architectures into defense networks for more selective user credential verification.

We are improving cyber security within the defense industrial base through information sharing, enhanced cyber security certifications, and the expansion of DOD-initiated cyber security pilot services.  Our cyberspace investments will fund five additional Cyber Mission Force teams to hold targets at risk and defend against malicious actors.

We're also investing to improve readiness of the nation's cyber force by funding cyber ranges to enable training and exercises in the cyber domain.  Finally, this budget lays the foundation for USCYBERCOM to have ownership of the mission and resources of the cyber mission -- Cyber Mission Force beginning in FY '24 as directed in the '22 NDAA.

MR. MCCORD:  OK, turning now to that second pillar that we -- that we talked about a minute ago of campaigning second pillar of the strategy.  We have in this budget, I'm going to call them frameworks, frameworks not funds that are familiar to you by now, I expect: the Pacific Deterrence Initiative framework, the European Deterrence Initiative framework.  We continue with both of those this year.  We have over $6 billion for the Pacific Deterrence Initiative in particular, some of which we've discussed in particular already.  The defense of Guam is a big one; also, investments in integrated fires.  Many of these areas overlap -- integrated fires, hypersonics are central to Pacific strategy, as well as the defense of Guam is.

On the European side, we continue to recognize Russia as an acute threat.  We continue to work with our partners in NATO on posture, on investments that support both the broader NATO alliance, as well -- as well as Ukraine.  We have over $500 -- $5 billion to bolster interoperability activities in Europe and in -- we continue the Ukraine Security Assistance Initiative in this budget at $300 million.  But we also have significant security cooperation activities in the -- in the European region.

You will see also, I think, fairly soon from the PACOM commander, INDOPACOM commander, his 1242 report, which will track very closely with everything we're talking about here.

On the next slide, readiness; campaigning not really possible without an active ready force.  It's -- we -- we invest substantial resources and readiness this year, as the deputy secretary said, about $135 billion.  We have a strong readiness posture across the Joint Force in this budget on both the operating side, steaming hours, flying hours, ground op tempo, as well as the depot maintenance side that underwrites that.  We believe we have a strong picture on both -- on both fronts to have a ready, adaptable force.

Another important priority of the secretary, now moving to the third category, building enduring advantage.  Again, this is paying attention to the institution, our institution, the Defense Industrial Base institution -- all the things that give us the capability that we draw on every day.  First and foremost, the force itself, as the vice chairman was describing; health of the force, number-one issue, probably in the last year or two on this front has been -- has been sexual assault and harassment prevention -- big initiative in the NDA to finally come to grips with that issue over many years of debate.  We were unable to move out as quickly as we would have liked to in F.Y. '22 because we were under a continuing resolution for months and months and months, unable to undertake new activities, but we're going to move out strongly in the F.Y. '23 budget now that we have funding and authority in place from Congress to get started in F.Y. '22 on this -- on this front.  This is hiring new people, reforming the whole paradigm, hiring additional people across the -- both the counseling space, the -- the military justice side.  In addition, we continue to focus on the diversity/equity/inclusion to make sure that everybody is serving to their full potential in this force; both important priorities of the secretary.

Equally important is paying attention to the workforce we need, growing our talent, building a resilient force.  We have economic security of the force, as I know was discussed just before we came out here.  We are taking advantage of that new authority in the Defense Authorization Bill for the most vulnerable portion of our force to address economic insecurity with the new basic needs allowance; largest pay raise in 20 years for both the military and civilian force, 4.6 percent.

We also are implementing the $15 minimum wage executive order from the president for both our -- our workforce ourself, which has a relatively small number of people affected inside our workforce, and the larger number that would be affected in our contractor workforce.  And as also was discussed by the deputy, investing in childcare, fee assistance, things to help address that need, something I know that was -- a lot of families felt with the disruption of COVID placed a particular stress on that segment of -- of our workforce and that segment of our -- of our needs -- of our benefits package.

Now, moving to the next area, sort of, we'll -- pivoting from the people side to the -- to the technology side, innovation has been a huge priority of Deputy Secretary Hicks in this budget and in this process and in the way that she runs the organization.  As was described, we have the largest R&D budget ever; within that, a very healthy S&T budget.  We have some areas that we're going to discuss in future slides in areas like microelectronics, also artificial intelligence; not just on the funding side with artificial intelligence; also on the organizational side.  The deputy secretary has pulled together a group of disparate efforts that we had.  Maven effort and the combatant commanders, the Joint Artificial Intelligence Center here, Defense Digital Service, the Advana platform that my organization developed have all been merged together in a Chief Digital and A.I. Office that will allow us to have a better unity of effort in the artificial intelligence space.  We're also continuing to work on the five -- in the 5G area; very important area as we operate around the country, around the world.

And finally, innovation goes hand-in-hand with experimentation.  Experimentation, some of you have heard of the deputy's initiative called the Rapid Defense Experimentation Reserve, or RDER.  It is not a fund.  It's not a line item in the budget, and that's why we don't have a dollar figure there, but it is a process, a tool to help us bring together joint experimentation and accelerate joint experimentation across the services.

Finally, on industrial base, again, we've talked about industrial base being an important part of our whole team here.  We all recognize that.  We don't develop our own weapon systems here.  We rely on our private-sector partners to do that.

The support -- the COVID and supply-chain impacts of the last two years really have -- have really heightened this, I think, in everybody's mind, the importance of the supply chain fragility in some cases.  We paid a special attention to this; microelectronics probably the biggest investment that we make in this budget in this area.  As many of you know, there is also very important legislation pending on Capitol Hill that would -- that would address this -- this area.  But this is a DOD piece, particularly of this on microelectronics.  We have a big investment in the R&D and procurement both in this.  As the deputy mentioned, casting and forging, energy and storage, kinetic capabilities, energetics, and also strategic and critical material investments.

In addition to that, these kind of broader industrial base things that apply to multiple technologies, we've also paid particular attention to the submarine industrial base, which is something that is -- you know, it takes you a long time to build skills if you lose them there.  We're -- we've got investments in the health of that workforce; also continue to work with -- with, you know, tried-and-true -- sorry -- tried-and-true organizations like DARPA.

Finally, on re-prioritization, this is something the department has been asking Congress in different forms, but consistent messaging over the years is there are -- there are some things that are less capable, less responsive to our future needs that we need to start moving away from, and you'll see some of these things in the budget.  On the Navy side, decommissioning some of the LCS ships that have had issues with both their mission packages or with their -- or with their combining here, or both, in some cases; also, some -- some cruisers.

On the Air Force, to begin a path to -- to move away from the A-10 over the next five or six years; also the E-3 and the E-8, and so also some of the older tankers, now that we see the KC-46 getting more capable.  Again, these are things the department has been consistent across the administration, saying we need to move in this direction, and we continue to make that effort in the -- in this budget.

On the climate side, this -- this is something I -- that I think was just discussed when the deputy was out here.  This is something very consistent with our messaging last year.  We're looking at both the installation side, climate resilience of our facilities, which again, is something that, given the repeated more patterns of extreme weather, there we would be foolish not to make sure that we are doing what we can to build that into our consideration when we build or renovate facilities.

And on the operational side, we have and you'll see here in some of the science and technology and operational energy initiatives, these are for things that -- things that move, in particular, you know, both ground vehicles.  We've got some efforts going across to fit up on the air side as well.

The important point I want to make here is that not only will these have benefits perhaps in cost savings in reducing our logistics footprint to the extent that we can be more creative here, we're also being very mindful and we talked about this in our internal processes, of moving in the direction the industries already moving.

So, whether it's things like batteries or the type of vehicles the industry are making, we don't want to be rooted in the past by industries moving on.  We want to be moving with them on that front.  And that's the best part of our -- what we call climate in this area.

On the facilities side, we have a $12 billion military construction budget.  Very significant investment in our shipyards, which has been -- that Admiral Boxall talked about.  Again, a once in a generate effort to invest significant funds in both -- in this case, both in Portsmouth, Maine and in Pearl Harbor are the big areas in this year's budget.

And something that's been in the news in particular, we also have a very healthy sustainment budget, by the way, across the budget in addition of new construction budget.  Something that's been in the news substantially over the past couple months, the Red Hill fuel storage facility in Hawaii.

You probably saw that in the continued resolution, and again, in the Omnibus Funding Bill, Congress put funding -- significant funding in both -- in both those bills at our request, totaling approximately $1 billion in FY'22.

We request another $1 billion in FY'23 in a flexible fund that would allow us to move in different direction to address the dispersal of fuel, to address where the litigation and the negotiations permit to address -- start addressing remediation, to continue addressing the near-term needs of the families, whether if there's anyone still displaced from their housing, the water filtering, those -- so those are kind of the near-term, the far-term and the remediation.  This funding could involve primarily the Navy but possibly also Defense Logistics Agency.

So, we expect to work with Congress as they work through this budget process to tailor and to maybe shape this fund.  But we have a very, I think, visible commitment.  The secretary's commitment to do the right thing by both our military families and our neighbors in Hawaii represented by this $1 billion investment.

So, in closing here, again the budgets grounded a new strategy.  We have a strong strategy, we have s strong budget.  We have the three ways we're getting there that we've talked about, Integrated Deterrence, campaigning building enduring advantage.

We remain focused on China.  We had not illusions about Putin as anything as an adversary.  But, if you look long-term, big picture, whatever you want to call it, China still has the economic power, the military power to really be our primary challenge.  WE are not taking our eye off that ball in the strategy or in the budget.

But, what we did do and I'll come back to a point I made earlier, we paid the most attention to the things that are foundational like space and cyber and the industrial base that are not a China investment or a Russia investment.  They're an investment in our capability across the board, they're foundational in all the directions we might want to move.  We looked at both the health of our warfighters and health of our ecosystem in this.  Again, this budget is a strong strategy, strong budget and we look forward to taking your questions.

I think we have a link here for further information.  The information should be being posted today.  I think I've described to some of you that the budge materials will be posted today, but some of them will be updated later to include FY'22 information as that becomes available.  But all the FY'23 information that people need is being posted today.

STAFF:  And we'll start with the phone line.  Lita, are you on the line?

Q:  Yes I am.  Good afternoon. I just wanted to ask a question off one of the last things you said about China still being the pacing threat, but also doing investments in more broader things.  You talked a little bit about $5 billion to bolster, I think, the European Initiative.  Could you give some ideas as what some of that is?  You said $4.2 billion to -- to evolving threat and another $900 million for security cooperation.

Is there money in there for bases, for additional troops?  Can you just talk about sort of the European portion of what might be in this specific budget?  And then, address whether or not, do you think at this point the funding for Ukraine and for replenishment is going to have to be readdressed this year in some sort of supplemental or is there any part of this, the Ukraine money with that, that's in this budget.  The $300 million, would that go for some of that?

MR. MCCORD:  OK, sure.  Thank you.  The European Deterrence Initiative in this budget very much continues the trajectory of previous budget.  This budget was finalized before Putin's invasion of Ukraine.  So, there is nothing in this budget that specifically was changed because it was too late to change it if we wanted to, to reflect the specifics of the invasion.

What we have in '22 in the Omnibus Funding -- in the Omnibus Funding Bill at our request, Congress added some funds to address the deployments the secretary had ordered as of, you know, early February, leading up to posture ourselves for what we saw was likely to happen.

And then, in addition in the Omnibus, of course, the other half of the funding sort of related to our forces, our bolstering of NATO's eastern flank.  The other half was the Ukraine related drawdown funds.  We do not project those -- that drawdown effort continuing into the '23 budget again.  The conflict hadn't started when this budget was finalized.  It is possible that there might be an additional need to address that either this year or next year.  But, it's really premature of us to say that.

In the initial phases at least, obviously, we have been running through that drawdown at a fairly high rate.  So, were that to continue, yes, we probably would need to address that again in the future.

But, I think stepping back, the  whole -- the question of what our posture will be both for the U.S. specifically and for NATO as a whole, it's too early to tell given this early state, one month in, as to what the conflict itself will look like and what the NATO response will be in '23 or beyond.  I imagine that will be a NATO discussion.

And one of the things that heartening to see in this particular situation is how other countries have been stepping up on the drawdown side, on the sanctions side.  It's not just the U.S. doing all the work and I think that that is something you would see factored into whatever the response will be.

STAFF:  And we'll go over to Tony Capaccio.

Q:  I got a couple questions.  One for the Admiral and one for you.  What was the real growth in the budget and the nominal growth from the enacted to the 773?

MR. MCCORD:  The growth -- the nominal growth in the budget, I'll answer this first, was 4 percent from what Congress enacted, 8 percent from what we requested.  And the real growth was about 5.5 percent from what was enacted and about 1.5 percent from -- I'm sorry, about 5.5 percent from what was requested last year, about 1.5 percent from what was enacted.

Of course, we did not know what the enacted numbers would be when we finished the budget, and that wasn't the basis of our metric -- that wasn't our metric in any case was to have a, you know, specific real growth number, but that's the way the math works out.

Q:  So in layman’s language, the 773 budget represents about 1.5 percent real growth in defense spending over the enacted budget?

MR. MCCORD:  Yes.  So you have last year's number.  Inflate it and then add 1.5 percent on top of that.  That's correct.

Q:  So to the admiral.  The F-35 number was supposed to be 94 and the FYDP of a couple years ago.  It's 61 now.  From a joint perspective, why the cut of 33 airplanes?  Is this is a reflection of the services backing off because of sustainment costs projections or we're shifting into other priorities?  I mean, why the reduction?

ADM. BOXALL:  OK, so, I mean, first of all that's -- that number compared where it was, 84 was what we had originally.  We're down to 61 one now, so obviously what we're looking for is where the F-35 fits in that portfolio.  This year we had -- when we look at the F-35 what do we need mostly is the Block IV capability.  There have been delays in F-35, and again, the delays have also delayed that capability that we want.

So we took this opportunity in this budget to kind of shape it in the attack air portfolio.  You do see some additional F15EX adds.  You've also go -- you know, we look across the joint force the attack air portfolio writ large, so there's not just the F-35 but what are you buying in the fourth gen?  You get some capacity and increased integration, et cetera.  And then what do you need to kind of get the next generation air dominance platform?  Which there's a significant RDT&E investment into this portfolio to continue.  And then also you look at the hypersonic investments and all those others things, so those are all things in addition to the Joint All-Domain Command and Control investments that are going to give us the ability to operate that force of any number of aircraft in that environment.

Q:  So that's what I'm asking about.  That money that didn't go into the 84 or 94 F-35s, that's where the money goes to?

ADM. BOXALL:  Well we didn't actually take it from one and put it in the other, but as you look at it collectively, I mean, we focused on investments we needed in this budget.

STAFF: Mike Stone

Q:  (inaudible) this report.  Sorry.  You said A-10 -- just to clarify you said A-10 winding down in five to six years.  Is that the fleet -- section of the fleet that's not being rewinged or is that the entire fleet?  I just want to clarify that.

MR. MCCORD:  We're talking -- I'm sorry.  We're talking about the fleet being retired...

Q:  260 or -- the number is there's 18 -- 218 that are going to get rewinged and there's fourth and (inaudible)  or something like that.  I'm just trying to figure it out.  You said in the five to six years time the A-10 fleet's going to disappear and I'm like -- I want to understand you're not talking about the ones that have been budgeted to be rewinged?

MR. MCCORD:  We're talking about the fleet.

Q:  The whole thing?  OK.  And to go back to Lita's question, is there a number of weeks or months that the conflict in Ukraine to last that you need to go back and ask for more supplemental there?  Do you have a wild ass guess on that?

MR. MCCORD:  Not at -- not at this time.  I mean, the -- one of the problems we had originally is we under a CR -- our budget was depressed already.  So now that we've gotten our funding in place and the specific funding we asked for the mission deployments we've got some breathing room to assess going forward now.

If we have to handle additional cost (inaudible) programming obviously that we're going to have to get to that in the May-June timeframe to assess where we're looking for that.  If additional funds were available, that might -- you know, I don't know that that will be the case.  That might buy us a little more time.  But yes, we'll have to look at this again probably in the summer to be prepared for some of the more difficult options if it looks like that's the case.

STAFF:  We're going to go back to the phone lines.  Tony Bertuca?

Q:  Hey.  Thank you very much.  Tony Bertuca, InsideDefense.  I wanted to ask more about inflation in terms of the FYDP because looking at the FYDP it looks like there was sort of a hike between '22 and '23 to address inflation, and then it seems like the inflation assumption looks like it levels off.  Can you tell me what sort of -- you know, I understand that Ms. Hicks already said that the fight over inflation is going to continue and you're going to be dealing with it over the summer.  Can you talk a little bit about how the pressures of inflation might change the FYDP?

MR. MCCORD:  Right.  Well saying exactly as the deputy said, inflation is a here and now issue, and it's sort of hard to connect it to the projections for the out years do, as you say, have inflation level off, have pay raises level off to historical norms.  We have multiple chances to revisit those next year and next year and next years as we get closer to those -- to those timeframes.

So what we did was build the inflation that we saw happening now into a sort of a one-time step up of each of the five years of the fit up, but we do not -- we don't have an accelerating assumption that inflation continues at high rates.  That would have to be revisited if that were to be the case, but we're a long way off even from figuring out, you know, from knowing what's going to happen in F.Y. '23, which doesn't start for six months and doesn't end for 18 more months.  I think that's one of the real hard things for everyone is to separate in your mind what happened last month or the month before from saying you know what's going to happen 12 months from now let alone across the FYDP.


STAFF:  We'll go to Travis Tritten.

Q:  Thanks.  Travis Tritten, Military.com.  The budget materials refer to Russia as an acute threat, and I assume that's language straight out of the new national defense strategy, but in the past I believe Russia had been referred to as a near peer adversary.  So I'm wondering if that new language signals a rethinking of the Russian of what -- the priority for Russia and where it rates now.  Is it a higher or a lower priority?  What are we to take from that language?

MR. MCCORD:  Well I think we'd probably want to defer to our policy colleagues to explain the NDS when and if they're able to, and I know that there's some classification issues there, but just as for us what the admiral and I had been saying and I think what the deputy said is we did not -- we did not feel that what is happening today altered the picture that China is the number one issue to keep our eye on.

Obviously  you can draw your own conclusions about Russia's performance on the battlefield and what, you know, but the -- these documents -- again, all these documents were pretty much finalized some time ago, so this is not attempting to be a commentary on what's happening last week or the week before.

ADM. BOXALL:  Yes.  I could actually just add on there.  I mean, we were speaking near peer, you know, not from a strategic NDS perspective but as a capability perspective.  I mean, so the investments we have, you know, against some other, space, cyber, they have significant capabilities in the missile -- air and missile defense realm.  Those are -- those are a lot of things that we're trying to get after, those capabilities as near-peer adversary capabilities.  So you know, defer obviously to policy to describe exactly where that is, but for us, you know, the capabilities and that's why the things that we need are going to be against the higher end -- those, you know, China and Russia would do together have some incredibly capable -- capabilities.

MR. MCCORD:  And just...

Q:  (inaudible) near peer adversary?

MR. MCCORD:  Well I would say just to circle back on...

Q:  Yes.

MR. MCCORD:  ... (inaudible) nuclear deterrence note, no diminution on Russia's capabilities or threats there.  None intended to be messaged by anything.  What we're saying here is that we don't take that seriously.

STAFF:  All right.  Last question.  We'll go back to the phone line.  Paul McLeary.

Q:  Hi, thanks.  Can you give a little more detail about the EDI and the Pacific Deterrence Initiative?  How much is the Pacific Deterrence Initiative funded for and what are some of the -- kind of main lines of effort there?

MR. MCCORD:  Sure.  In both cases, I believe that we'll have budget documentation available shortly if not today that would -- will describe each of those.  In addition to the INDOPACOM command will issue its own report which will speak to his Pacific Deterrence Initiative, a report required by Congress.

So you'll see some granularity both from us and from the PACOM commander on that front.  On the European side we will have a budget book out today but these are -- in the case of Pacific Deterrence this is something that's been worked carefully with the -- between the department and committees trying to get people on the same page in terms of what do you count?

What do you not count?  Investments west of -- of the dateline but not -- but otherwise.  Exercises, military construction but not, you know, not capabilities like submarines that could be applied worldwide.

So I think that we've -- we're coming to closure I think with the committees on what the concepts are there.  Investment in Guam as we discussed earlier was -- is a big part of it in this case.  European deterrence really is pretty similar to what you would have seen over the last couple years.

There's not a fundamental change in that, maybe a little additional security cooperation but not a -- not a definitional change.

Q:  Thank you for your time.

STAFF:  That concludes our brief.

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