DEFENSE SECRETARY ROBERT GATES:  Thank you, Mr. Chairman.  And thanks for the kind words.  One correction is 12:30.  (Laughter.)  And it’s in a good cause.  I’m meeting with the director of OMB on the FY 2012 budget.  So wish me luck.  (Laughter.)

 

Mr. Chairman, members of the committee, I appreciate the opportunity to discuss the president’s budget request for fiscal year 2012; as noted, my last budget testimony before this or any other congressional committee ever.  This time I mean it.  (Laughter.)

 

The budget request for the Department of Defense being presented today includes a base budget request of $553 billion and an overseas contingency operations request of $117.8 billion.  My submitted statement includes many more details of this request.

 

But I would like to take this opportunity to address several issues that I know have been a subject of debate and concern in recent weeks and months:  First, the planned future reductions in the size of the ground forces; second, the proposed reforms and savings to the Tricare program for working-age retirees; and third, the budget and the strategy choices required to meet the savings targets recently laid out by President Obama.  Nearly four and a half years ago, one of my first acts as defense secretary was to increase the permanent end strength of our ground forces – the Army by 65,000 for a total of 547,000, and the Marine Corps by 27,000 to 202,000.

 

At the time, the increase was needed to relieve the severe stress on the force from the Iraq war as the surge was getting under way.  To support the later plus-up of troops in Afghanistan, I subsequently authorized a temporary further increase in the Army of some 22,000, an increase always planned to end in FY 2013.

 

The objective was to reduce stress on the force, limit and eventually end the practice of stop loss, and to increase troops’ home-station dwell time.   This has worked.  And I can tell you that those stop lossed in the Army is now over.  There are no Army soldiers stop lossed.

 

As we end the U.S. troop presence in Iraq this year, according to our agreement with the Iraqi government, the overall deployment demands on our force are decreasing significantly.  That is why we believe that, beginning in 2015, the U.S. can, with minimal risk, begin reducing Army active-duty end strength by 27,000 and the Marine Corps by somewhere between 15 (thousand) and 20,000.

 

These projections assume that the number of troops in Afghanistan will be significantly reduced by the end of 2014 in accordance with the president’s and NATO’s strategy.  If our assumptions prove incorrect, there’s plenty of time to adjust the size and schedule of this change.

 

    These reductions are supported by both the Army and Marine Corps leadership.  However, I believe no further reductions should be considered without an honest and thorough assessment of the risks involved, to include the missions we may need to shed in the future.

 

Let me turn to another issue relating to the department’s personnel costs, the proposed reforms to the Tricare program.  As you know, sharply rising health care costs are consuming an ever larger share of this department’s budget, growing from $19 billion in 2001 to $52.5 billion in this request.

 

Among other reforms, this FY `12 budget includes modest increases to Tricare enrollment fees, later indexed to the national health expenditures, for working-age retirees, most of whom are employed while receiving pensions.  All six members of the Joint Chiefs of Staff have strongly endorsed these and other cost-saving Tricare reforms in a letter to the Congress.

 

Let me be clear.  The current Tricare arrangement, one in which fees have not increased for 15 years, is simply unsustainable.  And if allowed to continue, the Department of Defense risks the fate of other corporate and government bureaucracies that were ultimately crippled by personnel costs, and in particular their retiree benefit packages.

 

The House approved most of our proposed changes in its version of the FY `12 authorization bill.  I strongly urge the Senate to endorse all of our proposals, which brings me to the third and last point – the difficult budget choices ahead for the department.

 

Last spring we launched a comprehensive effort to reduce the department’s overhead expenditures.  The goal was and is to sustain the U.S. military’s size and strength over the long term by reinvesting efficiency savings in force structure and other key combat capabilities.

 

The results of these efforts, frankly, were mixed.  While the services leaned forward and found nearly $100 billion in efficiency savings, efforts to trim overhead costs of DOD components outside the military services were not as successful.

 

I believe there are more savings to be found by culling more overhead and better accounting for, and thus better managing, the funds and people we have.  But one thing is quite clear.  The efficiencies efforts the department has undertaken will not come close to meeting the $400 billion in savings laid out by the president.  To realize the projected savings targets will require real cuts, given the escalating costs of so many parts of the defense budget, and, as a result, real choices.  Here I would leave you with a word of caution.  We must not repeat the mistakes of the past, where budget targets were met mostly by taking a percentage off the top of everything, the simplest and most politically expedient approach, both inside the Pentagon and outside of it.

 

That kind of salami-slicing approach preserves overhead and maintains force structure on paper, but results in a hollowing out of the force from a lack of proper training, maintenance and equipment, and manpower.  And that’s what happened in the 1970s, a disastrous period for our military, and to a lesser extent during the late 1990s.

 

That is why I launched a comprehensive review to be completed by the end of this summer to ensure that future spending decisions are focused on priorities, strategy and risks and are not simply a math and accounting exercise.

 

In the end, this process must be about identifying options for the president and for you, the Congress, to ensure that the nation consciously acknowledges and accepts additional risk in exchange for reduced investment in the military.

 

Above all, if we are to avoid a hollowing effect, this process must address force structure, with the overarching goal to preserve a U.S. military capable of meeting crucial national-security priorities even if fiscal pressure requires reductions in that force’s size.

 

I’ve said repeatedly I’d rather have a smaller, superbly capable military than a larger, hollow, less capable one.  However, we need to be honest with the president, with you, with the American people, and indeed with ourselves, about what the consequences are.  A smaller military, no matter how superb, will be able to go fewer places and be able to do fewer things.

 

As we embark on this debate about the future size and composition of the American military, it would be well to remember that we still live in a very dangerous and often unstable world.  

 

    Our military must remain strong and agile enough to face a diverse range of threats – from non-state actors attempting to acquire and use weapons of mass destruction and sophisticated missiles, to the more traditional threats of other states both building up their conventional forces and developing new capabilities that target our traditional strategies. 

 

Today, I ask your support for a leaner, more efficient Pentagon and continued sustainable, robust investments in our troops and future capabilities.  Our troops have done more than their part; now it’s time for us in Washington to do ours.

 

In conclusion, I want to thank this committee for all you have done to support our troops as well as their families.  From my earliest days as secretary of defense, I have made a point of reminding officers – from midshipmen and cadets to admirals and generals – that Congress is a co-equal branch of government that under the Constitution raises armies and provides for navies and now air forces.  Members of both parties serving in Congress have long been strong supporters of our military and are owed honesty and candor from the military and from the department.

 

I’ve just returned from my 12th and last visit to Afghanistan as secretary of defense.  The progress we have made there since President Obama announced his new strategy has been impressive.  The sacrifices our troops are willing to endure to protect this country is nothing short of amazing.  And all they ask in return is that the country support them in their efforts through to success. 

 

It has been the greatest privilege of my life to lead this great military for the past four-and-a-half years.  Every day, I’ve considered it my responsibility to get our troops everything they need to be successful in their mission and to come home safely.  In my visits to the combat theaters, military hospitals, and in bases and posts at home and around the world, I continue to be amazed by their decency, their resilience and their courage.  Through the support of the Congress and our nation, these young men and women will prevail in the current conflicts and be prepared to confront the threats that they, their children, and our nation may face in the future.

 

Thank you, Mr. Chairman.

 

SEN. INOUYE:  Mr. Secretary, I thank you very much.  And may I now call upon the chairman of the Joint Chiefs of Staff, Admiral Mullen.

 

ADMIRAL MIKE MULLEN:  Mr. Chairman, Senator Cochran, and distinguished members of this committee, I’m honored to appear before you today to discuss the president’s fiscal year 2012 defense budget. As the secretary laid out, this budget combined with the efficiencies effort that he led provides for the well-being of our troops and families, fully funds current operations in Afghanistan and Iraq and helps balance the global risk through streamlined organizations, smarter acquisitions and prudent modernization.

 

The Army, for instance, will cancel procurement of the surface-to-air missile and the non-line-of-sight launch system.  But it will continue production of the joint light tactical vehicle and spearhead the development of a whole new family of armored vehicles.

 

The Navy will give up its 2nd Fleet headquarters, reduce its manpower ashore, and increase its use of multi-year procurement for ships and aircraft, allowing it to continue development of the next-generation ballistic missile submarine, purchase 40 new F/A-18s, four littoral combat ships and another LPD-17.

 

The Marines will cancel the expeditionary fighting vehicle and, like the Army, reduce their end strength starting in 2015.  But they will re-invest these savings to sustain and modernize the amphibious assault vehicle and the light armored vehicle, even as they advance a new concept of operations, and restore much of their naval expeditionary skills.

 

And the Air Force will be able to continue development of the next-generation tanker, a new bomber, and modernize its aging fleet of F-15 fighters, all the while finding savings of more than $33 billion through reorganization, consolidation and reduced facilities requirements.

 

None of this balancing will come on the backs of our deployed troops.  We are asking for more than $84 billion for readiness and training, nearly $5 billion for increased ISR capabilities and more than $10 billion to recapitalize our rotary aircraft fleet.

 

These funds, plus those we are requesting to help build our partnership capacity in places like Afghanistan and Pakistan, Iraq and Yemen, all speak to the emphasis we are placing on giving our troops and their partners in the field everything they need to do the difficult jobs we’ve asked of them.  We must also give them and their families everything they need to cope with the stress and the strain of almost 10 years at war.  

 

That’s why I’m so pleased with the funds devoted in this proposal:  almost three-quarters as much as the $200 billion budgeted for operations and maintenance to personnel, housing and health care issues.    As you may know, the chiefs and I penned a rare 24-star letter to Congress expressing our unqualified support for the military health care program changes included in this budget.  We sought equity across all health care programs, with beneficiaries and health care delivery providers having the same benefits and equivalent payment systems regardless of where they live or work.  That in turn led us to propose increases in TRICARE enrollment fees for working-age retirees.  These increases are modest and manageable, and leave fees well below the inflation-adjusted out-of-pocket cost set in 1995, when the current fees were established.  We sincerely hope you will see fit to pass it. It is clearly eating us alive.

 

Please know that we will continue to invest in critical-care areas, to include research, diagnosis and treatment of mental health issues and traumatic brain injury, enhanced access to health services and new battlefield technologies.  We understand that changes to health care benefits will cause concern among people we serve and the communities from which we receive care.  But we also understand and hold sacred our obligation to care completely for those who have borne the brunt of these wars, as well as those for whom the war never ends.

 

I remain convinced that we haven’t begun to understand completely the toll that war extracts from our people.  Just as the grandchildren of World War II vets still struggle to comprehend the full scope of the horror those men conceal, so too will our grandchildren have to come to grips with the wounds unseen from these wars, unless we get it right.

 

I believe the investments we are making in wounded care and family readiness will pay off in that regard.  But it will take time and patience and money, three things we rarely seem to possess.  That brings me back to this particular budget request.

 

With limited resources and two wars in progress, three if you count our – if you count our support to NATO operations in Libya, we should be prudent in defining our priorities, in controlling our costs and in slaking our thirst for more and better systems.  We should also be clear about what the joint force can and cannot do, just as we should be clear about what we expect from our interagency and international partners.  

 

Our global commitments have not shrunk.  If anything, they continue to grow.  And the world is a lot less predictable now than we could have ever imagined.  You need look no further than the events across the Middle East and North Africa to see the truth in that.

 

In fact, I just returned from a trip to Egypt, and a week before that I was in Pakistan with Secretary Clinton as we tried to find ways to move forward our relationship with that nation in the wake of Osama bin Laden’s killing.  The challenges in both Egypt and Pakistan are distinct, to be sure.  But at each stop and, in fact, in just about every country I visit, I’ve been struck by the degree to which    civilian and military leaders alike desire to keep our military partnerships strong.  

 

This desire isn’t rooted in the fear of revolt or recrimination, but rather a shared understanding of the external threats to their security and ours which still plague the region.  Therefore, changes to these relationships in either aid or assistance ought to be considered only with an abundance of caution and a thorough appreciation for the long view, rather than the flush of public passion and the urgency to save a dollar.  

 

The support we provide many of these militaries has helped them become the capable professional forces they are and, in that regard, has been of inestimable value.

 

Of equal or greater value is increased appropriations for the State Department and our request in this budget for something called the Global Security Contingency Fund, a three-year pooled fund between the Pentagon and the State Department that will be used to build partnership capacity, prevent conflicts and prepare for emerging threats.  The request is modest, an initial $50 million appropriation, along with a request for authority to reprogram an additional 450 million (dollars) if needed.

 

But what it will buy us is an agile and cost-effective way to better respond to unforeseen needs and take advantage of emerging opportunities for partners to secure their own territories and regions.  We must get more efficient, absolutely, but we must get more pragmatic about the world we live in.  We can no longer afford bloated programs or unnecessary organizations without sacrificing fighting power.  And we can no longer afford to put off investments in future capabilities or relationships that preserve that power across the spectrum of conflict.

 

    As you know, the president announced his framework for addressing our nation’s long-term fiscal challenges, setting a goal of reducing Defense spending by $400 billion.

 

This will be hard work and will require difficult choices about matching strategy to resources.  Those choices will be painful, even unnatural for the services, for the department, and for the Congress, but they are absolutely necessary.

 

The president also directed that before making specific budget decisions the Department of Defense will assess their impact by conducting a fundamental review of America’s military missions capabilities and roles in a changing world.  Secretary Gates and I have begun this review and will work with the service chiefs to ensure we can meet our national security priorities, even in the face of fiscal pressure.

 

Our review will be based on strategy and risks, not simply budgetary math, and our goal will be to ensure that we do not repeat the mistakes of the past, nor at the end of this endeavor find ourselves with a hollow force, a force that retains an organizational structure, but lacks the people, the training and equipment necessary to perform the tasks we expect from it.

 

In my view, then, this proposed budget gives us a good start.  It builds on the balance we started to achieve last year and represents the best of both fiscal responsibility and sound national security.  I would be remiss indeed if I did not close by praising the incredible efforts of our troops overseas and their families, as they finish one war in Iraq, begin to turn corners in Afghanistan, and help save innocents lives in Libya.

 

I know you share my pride in them and that you will keep them foremost in mind as you consider the elements of this proposal.  I, too, would like to thank you for your longstanding support of our military, of our families.  You have set a standard in many ways that those of us who are fortunate enough to interact with you appreciate, and I know our troops and our families appreciate as well.  Thank you, Mr. Chairman.

 

SEN. INOUYE:  Admiral Mullen, thank you very much.  I’m pleased to note the extraordinary attendance of members of the committee. However, as a result, I will have to limit the Q&A to four minutes. Secretary Gates, you have made a couple of public statements on how to achieve our president’s $400 billion reduction over the next 12 years.   Instead of gutting the modernization programs, I know that you would prefer to see additional organizational reductions in addition to changes in military pay, retirement and healthcare systems.  Do you wish to elaborate more on these ideas and any other areas that you might be reduced?

 

SEC. GATES:  Mr. Chairman, the four areas that we’re looking at in terms of how we would come up with $400 billion in reductions.  Our first, as I indicated in my remarks, looking for additional efficiencies and changes in bureaucratic expenditures and the way we go about our business and the way we do business on a day-to-day basis. 

 

We think there is still more money to be extracted out of overhead, but also in negotiating contracts on acquisitions and so on. So the first category is more cuts in overhead.  

 

The second category is looking for marginal missions and marginal capabilities that can be eliminated.  This would be in situations where perhaps two services have comparable capabilities, and we can get by, by having that capability in just one service, or there may be missions that we can set aside.    

 

The third category is the hardest, and it’s the one that Admiral Mullen and I both talked about in our remarks, and that is the comprehensive review to look at what are the options that are available in terms of making reductions in force structure, and what is the impact of that on the capabilities of our forces and our ability to carry out our strategies.

 

And how do we adjust our strategies and how do we evaluate added risk by reduced investment in defense?  One example of this, just to give you the flavor of what we’re talking about, for many years we have had a strategy of being able to wage two fairly major regional conflicts simultaneously.  

 

If you tell yourself you’re willing to accept the risk that won’t happen, that two conflicts of that magnitude would not take place at the same time but might be sequential, if you had to take on two others, then that has real impact for force structure.  I would just note that in terms of assessing risk, between 2007 and 2009 we, in fact, had two major regional conflicts going on simultaneously, so this is not – this is not far-fetched in terms of risk.  

 

The fourth category, then, are the issues that frankly are politically challenging and that have been very difficult for us and for the Congress to take on.  Working age retiree healthcare – and I want to make clear none of us are talking about any impact on healthcare for the active force;  this is about working age retirees – compensation and particularly I would say in respect retirement, and whether the time has come to look at retirement.    I think we have two challenges on the retirement side.  One is about 70 (percent) to 80 percent of our force does not stay in the service long enough to retire, but they leave with nothing.  So if you serve five years or 10 years or a dozen years, you walk out the door with nothing.  That doesn’t make any sense.  The private sector is well ahead of us in that respect. 

 

The second problem is we get a lieutenant colonel or a sergeant first class with 20 years of service, they are at their peak, we are at their – they are at their prime, and we make it financially silly for them not to retire at 20 years.  How do you incentivize them to give us another five years of service?  I don’t pretend to have the answers to these questions but they are issues that I think we need to address, both in terms of what’s good for the force but also in areas where we could save some money.

 

So those four areas, Mr. Chairman, are the areas that we are looking at in terms of how we can find this $400 billion.

 

SEN. INOUYE:  I thank you very much.  Senator Cochran.

 

SENATOM TOM HARKIN (D-IA)(?):  Mr. Chairman, could I just make two brief comments?

 

SEN. INOUYE:  Please.

 

SEN. HARKIN (?):  First of all, not unlike the government itself, where the Defense Department has roughly half of the discretionary spending.  Inside our budget, a little less than – a little more than half is discretionary.  And so while we look at reductions in the future in where we would take the funds, there are obligations that we have that we just fundamentally have to fund as we transition to whatever this new budget environment is going to be for us.

 

And then secondly, if we don’t come to grips with some of the most difficult issues, it is as clear as anything to me that the only answer is we’re going to get a lot smaller with a chance we could go hollow.  We will give us force structure to sustain these benefits, to do all those things, and that I think is very dangerous in the world that we’re living in, to meet the growing national security requirements that I see.

 

SEN. INOUYE:  Thank you very much.  Senator Cochran.  

 

SENATOR THAD COCHRAN (R-MS):  Mr. Chairman, Mr. Secretary, let me ask in view of the situation in Libya, are we learning something about the ability of our allies, who volunteer to try to take up the slack in situations where we’re not moving forward and trying to dominate and run a military operation?  What are we learning from their capabilities or inadequacies that give you the most concern?

 

SEC. GATES:  Well, I addressed this last week in Brussels in my usual subtle form.  (Laughter.)  The reality is that as they cut their    defense budgets, and have been – and have not been investing in their defense capabilities for a number of years – by default the additional burden falls on the United States.  So I think that there is a genuine worry that our allies have looked to us to pick up the slack as they cut their defense budgets.

 

And the message that I had for them in Europe last week was that because of our financial problems, and frankly a growing number of members of Congress for whom the Cold War and our connection to Europe and to NATO are not in their genes, as they are for me, are going to be unwilling to pick up 75 percent of the defense burden of the NATO alliance.

 

    So I think this is a serious problem.  It’s been a problem for some years, but I think our own financial difficulties and what we’re now going to face in looking at the American defense budget brings this issue to center stage in a way that it really has not been in the past.

 

SEN. COCHRAN:  Admiral Mullen, on the same subject:  What affect does that specifically have on our ability to project power to other regions of the world – the Far East, for example – areas where we have been involved in actual combat operations – Vietnam era and what that brought in terms of expense of operations and training of our forces?

 

Can you give us an assessment of the direct impact on the U.S. Navy in your budget request?

 

ADM. MULLEN:  Well, I share the secretary’s concerns and views with respect to the investment or the dramatically decreased investment in our NATO partners or by our NATO partners.

 

The affect – one of the affects that it’s had is certainly, they don’t have the depth, the resources in some cases, to do what their political leadership has directed them to do.  Although, I also would say that both in Afghanistan and in Libya, NATO is more together than I’ve seen in terms of commitment over the course of the last 10 or 15 years.  And while they do get criticized, they also stood this operation up in incredibly quick fashion.  We hadn’t operated an air – had an air operation like this in a long time.  And from my perspective, they have executed that well.  

 

The resources to do it is something we’re all – we’re watching very carefully. And they are, in some ways, dependent on us.

 

The other thing is for countries who recently did their own strategic review, they found themselves getting rid of capabilities that now that they’re in a combat environment that they’re giving second thought to that.  Combat has a way of bringing that kind of reality to them, which just argues for me that we and others have to be very careful in our review – given the world that we’re living in – about what capabilities we decide to either get rid of or trim back.

 

Where we are right now – and in particular, I mean, as you talk about the Western Pacific, Senator Cochran – we’ve got tremendous    relationships with the Japanese, with the Republic of Korea military, we have had with our Australian friends – as well as growing relationships with the ASEAN countries.  So I’m actually pretty comfortable with where we are right now.  

 

We’ve got overseas home-ported forces, as you know, both Marines and Navy in fairly significant numbers in that part of the world.  And that makes a lot of difference in terms of stability.  The pressure over time, though – it gets back to what I said – is if we get into this force structure part of us in terms of the defense review and have to reduce our force structure, there will be pressure there, which in the long run I think will start to undermine stability in a place like that.

 

SEN. INOUYE:  Thank you.

 

Senator Shelby.

 

SEN. COCHRANE:  Thank you, Mr. Chairman.

 

SENATOR RICHARD SHELBY (R-AL):  Thank you, Mr. Chairman.

 

Mr. Secretary and Admiral Mullen, thank you for your service.

 

Mr. Chairman, I’d like for my opening statement to be made part of the record.

 

SEN. INOUYE:  Without objection.

 

SEN. SHELBY:  Mr. Secretary, last year you transferred about $6 billion of your budget authority to the Department of Energy to pay for nuclear-weapons modernization programs, because as I understood it, you’re concerned about the neglect that had befallen the U.S. nuclear deterrent.

 

How concerned are you now that the House is considering appropriations legislation that we would cut the program by almost 10 percent from what the president requested and what you’ve already paid for out of your own very tight budget?  And what are the implications to failing to fund the modernization program here?

 

SEC. GATES:  Well, I’m very concerned.  And as I recall, the actions taken by the House cut about $1 billion from this modernization program.

 

This modernization program was very carefully worked out between ourselves and the Department of Energy.  And frankly, where we came out on that also, I think, played a fairly significant role in the willingness of the Senate to ratify the new START agreement.

 

So the risks are to our own program in terms of being able to extend the life our weapons systems, to modernize them not in the sense of capability, but in terms of security and reliability.  And    this requires new construction.  We have a lot of buildings at Los Alamos that date from the Manhattan Project.  And so this modernization project is, in my view, both from a security and a political standpoint really important.

 

SEN. SHELBY:  Mr. Secretary, in my short time:  missile defense.

 

I understand that the Defense Science Board has compiled a report on the concept of what we call the early intercept for missile defense.  And the report’s unclassified conclusion is that MDA’s plans to achieve an early intercept capability as part of the phase-adaptive approach are simply not credible.

 

This is disturbing to some of us, since the MDA’s promised to develop by 2020 an early intercept capability for the SM-3 Block IIB was the central justification – as I understood it – to cancel the third site in Europe and to kill the KEI boost phase defense program. Now it looks like the nation may be left without an inadequate – with an inadequate defense in Europe and no boost phase intercept capability.  

 

Is the department re-examining the phase-adaptive approach in light of the Defense Science Board?  And should the department be looking at ways to use programmed currently for the SM-3 Block IIB to improve the GMD system or to evolve more rapidly?  

 

What’s your thoughts on that?

 

SEC. GATES:  We have resources in the ‘12 budget to do both –

 

SEN. SHELBY:  That’s good.

 

SEC. GATES:  – to fund the phased adaptive approach and to strengthen the ground-based interceptor program.  The ‘12 budget buys 52 GBIs both for deployment and for test purposes.  It makes investments in upgrades to long-range radars in Greenland and the U.S. and Canada.

 

We also have money for developmental work in terms of other kinds of interception of ballistic missiles.  But I believe that the balance between the ground-based interceptor system and the money we are investing in that, plus the money that we are investing in the phased adaptive approach – first of all, the latter will give us a missile-defense capability several years earlier than would have been the case with the third site in Europe.

 

And let’s be blunt:  The third site in Europe was not going to happen, because the Czech government wouldn’t approve the radar.

 

SEN. SHELBY:  Sure.

 

SEC. GATES:  And so if it was going to happen at all, it would’ve taken years longer and we still hadn’t negotiated the required agreements with the Poles in terms of the interceptors.  So I think that the balanced approach between the GBIs, the phased-adaptive approach and the developmental work we have under way – plus the additional half-billion-dollars we’ve added to the budget for FY ‘12 – puts us in a pretty good place on missile defense.

 

SEN. SHELBY:  Admiral Mullen?

 

ADM. MULLEN:  Just very quickly – and while I am not exceptionally close to it in this job, I’ve been around missile defense for the last 15 years.  And the whole issue of boost-phase intercept is an extraordinarily difficult technical challenge.  And at least if someone’s broken through on that, I haven’t seen that.  It doesn’t mean we shouldn’t seek it, but I’ve seen an awful lot of efforts go after that and I was very supportive of the program adjustments that we made – particularly with respect to that, because I thought – my view was I thought we were throwing good money after bad.

 

Secondly – and I haven’t seen this report; I’ll take a look at it.  And I certainly – I would not without – push back on it.  The only thing I can say is the path through the standard missile is the most well-developed, robust, reliable path over time with respect to developing missile defense.  And we’re still almost a decade away. And I have confidence that we can continue to pursue that path.  It’s incredibly well-tested system.  The missile you’re talking about I know doesn’t exist yet, but it’s a path –

 

SEN. SHELBY:  But it could exist, couldn’t it?

 

ADM. MULLEN:  Huh?

 

SEN. SHELBY:  It could exist.

 

ADM. MULLEN:  No.  I think – yes, sir.  I think we can get there in that timeframe, based on my understanding.

 

SEN. SHELBY:  Thank you, Mr. Chairman.

 

SEN. INOUYE:  Thank you.

 

Senator Leahy.

 

SENATOR PATRICK LEAHY (D-VT):  Thank you, Mr. Chairman.

 

And I want to join the others and thank you for the extraordinary service you’ve both shown to this country.  You came to your roles at very challenging times.

 

Admiral Mullen, I appreciate also the personal relationship in your trip to Vermont – you and Mrs. Mullen – when you joined Marcelle and myself up there to meet with our troops when they were deploying.  Secretary Gates, I’ve told you before what I’ll say here publicly.  I’ve enjoyed our friendship of – it must be about 30 years now.  

 

And I thought that I would say there’s one issue we did not agree on.  That’s the war in Afghanistan.  I think like most Americans – certainly most Vermonters I talk with, and an increasing number of members of Congress, I think we have to dramatically accelerate our withdrawal of troops from that country.  I supported going into Afghanistan for the purpose of getting Osama bin Laden after 9/11. And the subcommittee and all of us here on the Appropriations Committee have been strongly supportive of that.

 

I did not support the invasion of Iraq, which distracted us from that goal.  Iraq had nothing to do with 9/11.  We’re paying for this cost for years to come.  We borrowed the money to go into that war. It’s an extraordinary thing in a war to borrow the money.  We’ll continue to borrow the money.  Same time, we gave a tax cut for anybody who makes as much as a member of Congress.  So what we said was, we’ll let our children and our grandchildren pay for these two wars.

 

I don’t think we can continue to sacrifice so many lives and spend billions of dollars a week in a war with no end.  I think we have to identify achievable goals in Afghanistan.  I think we have to reduce our military footprint there.

 

And then we look at Pakistan.  Just this morning, we see word that our putative ally arrested five people under the suspicion that they helped the United States to get Osama bin Laden, after publicly saying, of course, they wanted us to get Osama bin Laden.  They arrested people who helped us get him.  

 

Now, we could overlook the problem in Pakistan if the Afghan government were any better.  But we have President Karzai, who can’t seem to make up his mind if he’s on our side or the Taliban.  We support them with tax dollars, but at the same time we say we got to privatize Medicare, eviscerate education funding, shred social safety net here in this country, stop all the money that we might have to make our industries more competitive.

 

It’s not a criticism of our military, who’s – and I’ve visited them there.  They’re performing extraordinarily well under very difficult things.  But how long – how long do we support governments that lie to us?  When do we say enough is enough?  Secretary Gates, I’ll start with you.

 

SEC. GATES:  Well, first of all, I would say based on 27 years in CIA and four-and-a-half years in this job, most governments lie to each other.  That’s the way business gets done.  (Laughter.)  And we –

 

SEN. LEAHY:  Do they also arrest – do they also arrest the people that help us –

 

SEC. GATES:  Sometimes.

 

SEN. LEAHY:  – when they say they’re allies?

 

SEC. GATES:  Sometimes.

 

SEN. LEAHY:  Not often.

 

SEC. GATES:  And sometimes they send people to spy on us, and they’re our close allies.

 

SEN. LEAHY:  And we give aid to them.

 

SEC. GATES:  So – that’s the real world that we deal with.  But I would tell you this.  First of all, this is not a war without end. The Lisbon summit has made clear that the transfer to Afghan security responsibility and leadership will be complete not later than the end of 2014.  Troops will be coming down during that period.  The costs of these wars is coming down dramatically.  The costs of these wars will drop between ‘11 – FY ‘11 and ‘12 by $40 billion and between ‘12 and ‘13 probably by several tens of billions of dollars more.

 

And I asked the question – first of all, I think the prospects of having a more stable Afghanistan in terms of a country that can defend itself – I’m not talking about a Vermont democracy here, but a country that can defend itself –

 

SEN. LEAHY:  Neither am I, Mr. Secretary, and you know that.

 

SEC. GATES:  I know.  But what I’m talking about is, we are not in the business of nation-building.  What we are trying to do is build the Afghan national security forces to the point where they have the ability to defend that country and so that the Taliban and al-Qaida cannot reconstitute themselves in that country.  And I think we are making considerable headway in that respect.

 

So I think that – I know people are frustrated.  The country’s been at war for 10 years.  I know people are tired.  But people also have to think in terms of stability and in terms of the potential for reconstitution.  What’s the cost of failure?

 

SEN. LEAHY:  Do you want to add to that, Admiral Mullen?  ADM. MULLEN:  What I would talk about, I think, in this, Senator Leahy, and you know I’ve talked about this many times, is Pakistan. And we are in the midst, and have been, of trying to, in the middle of this war, with threats that they have in their territory, trying to build a relationship that was badly broken when we left the last time, when we terminated our relationship with them in the late ‘80s and early ‘90s.  And we are back.  And it’s actually my belief that if we – if we were to do that again, it may not be five years or 10 years, but we’ll be back in a much more difficult situation.  And so seeking to support stability in that part of the world to the degree that these two countries can evolve is, I think, a goal that we must continue to pursue – or the danger associated with a country that’s got a nuclear arsenal, that is an – that lives next to a country that they view as an existential threat, it’s just a matter of time before we’re back.

 

So I don’t – I don’t push back on the challenge associated with it.  Some of the criticism is more than warranted.  Nobody’s worked that harder than me, very frankly, with the leadership.  And it’s a – it’s a conscious decision I think that we have to make.  And if we walk away from it, it’s my view it’ll be a much more dangerous place a decade from now, and we’ll be back.

 

SEN. INOUYE:  Thank you very much, Senator.

 

Senator Coats.

 

SENATOR DAN COATS (R-IN):  Thank you, Mr. Chairman.  I can’t speak for other states, but I can speak for the people of Indiana, who are grateful for your lifetime of service – not only commitment to public service, but execution, brilliantly, in your jobs.  You’ve been a model for us.  And I thank you, and I know the people of Indiana thank you.

 

Secondly, I would like to, I guess, just reaffirm that – Secretary Gates, your statements about one of the greatest, if not the greatest, threat to our future security is a runaway debt and a trillion dollars of deficit on an annual basis, and that if that is not addressed, even the difficulty and scale-back of ability to respond to challenges around the world, that won’t go away, are potentially reduced, that’s nothing in comparison to the strains and stresses that will be placed on our ability to do that in the future if we can’t get a hold of this runaway debt and deficit.

 

So that ever-shrinking part of the pie that goes to discretionary and defense spending is going to keep shrinking if we don’t deal with mandatory spending.  And I appreciate you speaking out on that basis.

 

A question that I have goes to where possibly we can get some savings.  I note that the House Appropriations Defense Subcommittee passed out a bill which includes research on a number of health issues:  $223 million cancer research, 125 million (dollars) for    traumatic brain injury, $30 million for orthopedic research, 15 (million dollars) for restoration-of-health research.  I’m just wondering, are there savings – that’s 393 million (dollars); that’s a long way from 400 billion (dollars), but it’s a fairly good chunk of money.  

 

Are there savings possible in that category where there is duplicative research paid for by government or conducted by the private industry, which addresses the very same issues?  In the past, defense has kind of been a go-to place for health research that, in many cases, is duplicated elsewhere.  For instance, orthopedic research.  I mean, our state is the leader in the world in orthopedic research.  Some of the – all the leading technology and so forth comes out of the private sector for that.  I don’t know exactly what the military does in addition to that.  But I guess the question is, are there places like that we can – we can get some – you know, I know it’s the holy grail not to touch anything having to do with health of service members.  I’m not suggesting that.  I’m simply saying there may be some duplications there that we ought to be looking at.

 

SEC. GATES:  I think, you know, any of these things are worth looking into in detail.  But – and I can’t speak to the – to the cancer piece of it, but I will say this.  I think that we have funded some of the leading research being done in the country on traumatic brain injury, and probably also on prosthetics, and almost certainly on post-traumatic stress.  Congress has given us quite a bit of money in those – in those areas in particular.  

 

And I would argue that in terms of the practical applications of those things, as opposed to pure research, that those funds – I think there would be a strong bias to keeping those in the defense budget, because we have a very direct interest in making sure that there is progress in particularly those three areas, because those are the areas in which our service members are suffering the most in these wars.

 

    SEN. COATS:  I’ll accept that.  I’ve got four seconds left, so a quick yes or no.  Is a hollowed-out NATO worse than no NATO, the reality that NATO just is not stepping up to its responsibilities; we’re going to have to do it all anyway?

 

SEC. GATES:  Well, I would say that a NATO that has reduced capabilities is still better than no NATO at all.  And I would just add one point to the chairman’s comment, to Admiral Mullen’s comment earlier.

 

One of the things that has happened to our allies is that they really have stepped up in Afghanistan, but the result of that has been that the cost of their participation in Afghanistan has brought further pressure on the modernization budgets of those European countries.  And so it’s contributed to their overall narrowing of military capability, but partly it’s because of the contribution that they’ve made in Afghanistan.

 

SEN. COATS:  Thank you.

 

Thank you, Mr. Chairman.

 

SEN. INOUYE:  Thank you very much.

 

Senator Mikulski.

 

SENATOR BARBARA MIKULSKI (D-MD):  Mr. Chairman.

 

Secretary Gates, Admiral Mullen, again, like all my colleagues, thank you for your service.  I think the enormous turnout of members, and also the fact that we’re actually staying, staying longer than you, is a tribute, really, to the high regard that we regard your service, and your service, Admiral Mullen.

 

So we want to thank you for it from the incredible job that you’ve done in keeping America safe, your strong support for the military, your many trips to actually get out of Washington and listen to the troops and talk to our allies.

 

And for me, one of the special things was the way – always, always will be the way you’ve responded unflinchingly with the Walter Reed scandal, in the way you took ownership, the way you ensured accountability and responsibility and corrective action.  And I want to just thank you for that.  And I’ve just watched you with the troops, not only in uniform and so on, but in things like the Army-Navy game, where you mingled with them.  And the wounded warriors had such access to you in the way that they felt that they could approach you and talk to you, and the warmth and regard you have.  So I think that’s what a real inspirational leader is, which is the difference in management.

 

But let me tell you, your trips, your farewell trips and speeches you’ve given, have been eyebrow-raising, jaw-dropping, and for me a must-do list, from the Eisenhower Library speech in which you called for major fiscal reform, to the most recent one at NATO.  You’ve dropped more bombs in some of these than the Air Force.  (Laughter.)

 

But let me get to my questions.  I’d like to really follow up on really the questions raised about NATO.  And many of this will have to be done with your successor.  What is NATO?  What are we going to require of NATO members?  What actions should NATO undertake?  When we ask for a coalition of the willing, we’re going to need a coalition of the capable.  Or are we ever going to ask that again?

 

But let me go to something very specific, because those are big policy questions to be sorted out.  I wonder what your thoughts are on an overseas base closing.  And is this the time where we look at the major policy and make sure we don’t have a hollowed-out NATO?  Is it time to have an overseas base closing where we bring a lot of assets home, close assets and so on?  What would be your thought on that? Because I think we spend about – the president’s commission on deficit reduction said we could save about $9 billion in that area.

 

SEC. GATES:  Well, first of all, any overseas base reductions will necessarily – first of all, just the practical thing – overseas base reductions would require milcon here in the United States, so there would be – at least in the beginning it would be more expensive to bring them home than to leave them where they are, because they have facilities already built.  And we do get support from the Germans, the Japanese and the South Koreans in supporting those facilities.

 

SEN. MIKULSKI:  I’m not advocating closing all bases –

 

SEC. GATES:  No, I understand.

 

SEN. MIKULSKI:  – but that kind of scrub we do here.

 

SEC. GATES:  Well, we’ve just been – we’ve just been through that in the Department of Defense, and it’s now working its way through the interagency in terms of an assessment of our global posture and our presence in a lot of these different places.

 

Secretary Clinton and I will meet with the Japanese the first of next week in our periodic two-plus-two meetings to talk about Okinawa and Guam and Japan and the force presence there.  I think that the biggest policy question that I think has to be asked is what kind of a signal do you want to send the rest of the world in terms of America’s role in the world?  And if we, at the same time we’re cutting our defense budget and we cut our State Department budget and State has fewer assets to deploy abroad, we have fewer assets to deploy abroad, and then we begin to close one or another foreign base, are we basically sending the message to the rest of the world, and I would say to China, to Iran, to North Korea, to a variety of other places, the U.S. is closing up shop and going home and we’re headed toward fortress America again?

 

So I think this – as I leave, I think this is a huge question for the country to consider and for you to consider is what kind of a role do you want for the United States in the world?  And frankly, I believe, for example, our presence in Europe – if – one of the benefits it has brought, in addition to the financial benefit of having troops be able to rotate from Germany into Iraq and Afghanistan at actually less cost than from here, but one of the things it has brought is, if anything, it has slowed, I think, this deterioration of the NATO military capabilities.

 

SEN. MIKULSKI:  Because we’re there –

 

SEC. GATES:  Because we’re there –

 

SEN. MIKULSKI:  – they feel we’re glued together?

 

SEC. GATES:  – and we train with them.  We train with them and we work with them.  And they have to have capabilities that match us when we’re doing that.

 

SEN. MIKULSKI:  Mr. Chairman, may Admiral Mullen respond?

 

ADM. MULLEN:  Just very briefly.  And maybe it’s just because of my roots – and I’m a Navy guy – there’s just nothing like being there.  And you can be there a couple of ways.  You can live there or you can rotate there.

 

And what I have found in our relationships – I just came back from Egypt, and we’ve had a long relationship with Egypt.  But the mil-to-mil relationship we have with Egypt is different than the one we have with Japan, because we live with Japan.  We interact with their families.  We know the Japanese people in ways that we just don’t other countries.  The same is true in Germany.  The same is true in the Republic of Korea; extraordinarily strong relationships.  When we are in a crisis, we can use those relationships, I think, to prevent a crisis or prevent escalation.

 

So I don’t know that – I certainly wouldn’t say that it isn’t worth a scrub.  I just think the presence piece of this is so powerful in so many ways, and it’s enduring and it prevents conflicts in ways that sometimes we don’t think about in the short term, when we’re    looking for savings and moves.  It’s not – our investment is significant, I understand that, and worth a scrub.  I just think we really need to be careful.

 

SEN. MIKULSKI:  Mr. –

 

SEN. INOUYE:  (Inaudible.)

 

SEN. MIKULSKI:  Mr. Chairman, I just want to – if I could, if I could submit questions for the record, both in terms of military health care and, quite frankly, in the follow-up in the undersecretary of acquisition technology and logistics.  That’s $400 billion.

 

The House is dragging its feet.  They’re reinvented earmarks. And I’d like to have maybe three to five items out of that area where you think we should definitely stay the course in reducing our expenditures.  And I hope somewhere we get a chance to ask his opinion on the House and earmarks.

 

SEN. INOUYE:  We will discuss that.

 

Senator Kohl.

 

SENATOR HERB KOHL (D-WI):  Thank you, Mr. Chairman.

 

Secretary Gates and Secretary Mullen, we thank you for being here today, and we congratulate both of you on a job well done.  Your leadership has been critical to the progress that we’ve made in Afghanistan, Iraq, and in the global war on terror, most recently the death of Osama bin Laden.

 

In light of this progress, many Americans are hoping that our forces can soon come home from Afghanistan after a decade of war.  I share this desire to begin withdrawing our forces from Afghanistan, beginning with a sizable and sustained reduction in forces this summer.

 

I’d like to ask both of you about the government of Afghanistan and President Karzai.  President Karzai seems increasingly hostile to the American presence in Afghanistan.  And his government, as we know, is plagued by corruption.

 

My first question is whether you see President Karzai playing a positive or a negative role in Afghanistan.  But I’d also like to hear from both of you about what comes after Karzai.  Presumably he’ll not be president forever.  What kind of relationships are we building with Afghan leaders from other political parties and ethnic groups, both in power as well as in the opposition?  Mr. Secretary.

 

SEC. GATES:  Well, first of all, I have spent a lot of time with President Karzai over the last four and a half years.

 

    Frankly, I think that we have often not done a very good job of listening to President Karzai.  The problems that he often raises in public are problems that he has often raised with us a year or two years before in private.  

 

I’ll give a perfect example, and that’s private security companies.  This became a crisis in our relationship late last year. We’ve worked our way through it, and he has participated in working his way through – in our working our way through this.  

 

But we knew from Iraq that private security companies are a problem in these countries, and we should have begun this transition to Afghan oversight of these companies a long time ago.  So my point is, yes, he reacts publicly to things that are done and said.  He’s very sensitive to civilian casualties.  This has been a continuing theme.  It’s not a surprising theme.   

 

But I think you would find if you talked to our commanders, if you talked to the people that I talk to, he is – he is somebody who understands the campaign plan, who understands the importance of our role, who wants a long-term U.S. relationship with Afghanistan after he’s president.  He told he me plans to step down in 2014.  

 

I will tell you both our military people and our diplomats are in touch with a very broad range of Afghan leaders and not just in Kabul but all around the country.  

 

And finally, on the governance side, I would just say, at the NATO defense ministers meeting late last week, the NATO senior civilian representative, Ambassador Gass, reported that – he had just gotten back from Afghanistan – 75 percent of deputy district governors now in Afghanistan are chosen on the basis of merit.  And he told the defense ministers further that, as the provincial governors change, the quality steadily improving.  

 

So I think you have the Kabul environment and you have the outside of Kabul environment.  And, frankly, it’s a lot better outside Kabul in terms of what’s going on around the country and in terms of governance than is often reported.  

 

But it’s a – it’s a – it’s a relationship from a – where we’re dealing with a president whose country has been at war, like us, for 10 years.  And he is very sensitive to the fact the Afghans are exhausted with war, too.    And so I find that when I sit down with President Karzai, we have a very productive conversation.  And it’s clear that he buys into what we are trying to do and that we are allies, not occupiers.  And he also does see a post-2014 relationship with the United States going forward.  

 

SEN. KOHL:  Admiral Mullen, any comments?  

 

ADM. MULLEN:  The only thing I’d add is, as the security environment continues to improve – and I’d reemphasize what Secretary Gates said in terms of what we’re seeing on the ground.  In subdistricts and districts and provinces, it’s getting better from a governance standpoint which, between security and governance, gets you to a point where you can start to develop the areas, which is really what the Afghan people care about.  They’re tired of war.  

 

There is this – there is this disparity between Kabul and what we see locally throughout the country, and we have to continue to engage.  This is the elected leader of a country we’re heavily engaged in or with, and we can’t do it without decent governance.  We can get the security pieces necessary, but it’s not sufficient, and we have to continue to push on better governance, the reduction of corruption and the development piece of this.  

 

We’re just getting to point, from my perspective, in the south where security has gotten to a point where those other pieces can really start to kick in.  We’re not there throughout the country, but from an overall proof of concept, if you will, that this approach is having the impact we thought it would, we’re there.  

 

SEC. GATES:  The other – the other one other point I would make is, having talked about the rest of the country being better in some respects that Kabul.  In another respect, Kabul is a model because the Afghans have had the security lead in Kabul for over a year now.  And that’s the transition we’re trying to make throughout the rest of the country on a district-by-district, province-by-province basis.  

 

And at this point, about 25 percent of the Afghan population live in areas that are now under Afghan security lead.  

 

SEN. KOHL:  Thank you. 

 

SEN. INOUYE:  Thank you.  

 

Senator Alexander? 

 

SENATOR LAMAR ALEXANDER (R-TN):  Thank you, Mr. Chairman.  

 

Thank you, Mr. Secretary and Admiral Mullen, for extraordinary public service.    Mr. Secretary, for the historical record for young people who may be planning a career in public service, what’s better preparation for secretary of defense?  President of a big university or director of the CIA?  (Laughter.)  

 

SEC. GATES:  President of a big university.  (Laughter.)  As you well know.  

 

SEN. ALEXANDER:  Yeah.  Mr. Secretary, how many – about how many military men and women do our European allies have?  

 

SEC. GATES:  About 2 million in uniform.  

 

SEN. ALEXANDER:  About how many are available to be deployed in an exercise like Libya or Afghanistan?  

 

ADM. MULLEN:  I would guess, Senator Alexander, it would be in the 10 to 15 to 20 percent in terms of – 

 

SEN. ALEXANDER:  Twenty percent?  

 

ADM. MULLEN:  – any single time.  But that number can be very deceptive because, for all of us, we find out – we have 2.2 million men and women active and reserve, and we have about 250(,000) or almost 300,000 people deployed around the world right now.  And we’re going at a pretty good clip.  

 

SEN. ALEXANDER:  I thought I had heard somewhere that they might only have 25(,000) or 40,000 troops available for – 

 

SEC. GATES:  What you heard was in my speech last week where I said they’d struggled to maintain 25(,000) to 40,000 troops in Afghanistan.  

 

SEN. ALEXANDER:  Mr. Secretary, in the Gulf War, the first Iraq war, if I remember correctly, other countries paid for a large part of that.  How much of that did they pay for?  

 

SEC. GATES:  Virtually all.  

 

SEN. ALEXANDER:  Yeah.  In the Iraq, Afghanistan and Libya war, how much have other countries paid for?  

 

SEC. GATES:  Well, the other countries – the other countries are essentially paying their own way in the sense of they’re paying for their own airplanes, and they’re paying for their own munitions and things like that.  

 

SEN. ALEXANDER:  But the United States is paying for virtually all of Iraq, Afghanistan and Libya.  Is that right?  

 

SEC. GATES:  Well, not Libya, but we certainly have paid the bulk of the money in Iraq and Afghanistan.    SEN. ALEXANDER:  And was your testimony that, in NATO, the United States is supposed to pay what percent of the costs?  And what percent do we actually pay?  

 

SEC. GATES:  Well, the line that I had was that, up until about – well, until the end of the Cold War, we paid about 50 percent of the military costs of the alliance.  Since the Cold War, that has – since 1991, that has risen to about 75 percent of the total military expenditures in NATO.  

 

SEN. ALEXANDER:  Is there a lesson for this president, future presidents, this Congress as we look back at the Gulf War and as we prepare for any future military action that we might keep in mind not just getting approval of other countries for the – agreeing that we ought to take the action or to join with us and take the action but to do as was done in 1991 and ‘92 to actually get their commitment to help pay for it?  

 

SEC. GATES:  Well, I think you need – we can look at that two ways.  One is the answer is absolutely yes.  One of the things that I pointed out last week at the NATO defense ministers meeting is that the trust fund to support the Afghan national security forces going forward is, in terms of the dollars or Euros that have been contributed is a joke because it’s about 350 million Euros at a time when the United States is spending billions of dollars to support the development of those military forces.  

 

So one of the things that I have talked to all of our allies about is the fact that it’s imperative for them to contribute to that trust fund.  On the other hand, the circumstances of the Gulf War were, I think, unique in the sense that the countries we were dealing with that felt the most threatened were Kuwait, Saudi Arabia, the Gulf States and so on.  

 

I will tell you that, sort of looking back, the two people who led the groups – the teams going around to talk to our allies about their contributions were led by Secretary of state Baker and Secretary of Treasury Nick Brady.  And somehow through the luck of the draw, Baker ended up with Saudi Arabia, Kuwait, the Gulf States and so on, and Nick Brady had to go talk to the Japanese, the Germans and others. And let’s just say Nick wasn’t nearly as successful as Jim was.  

 

SEN. ALEXANDER:  Thank you, Mr. Chairman. 

 

SEN. INOUYE:  Thank you very much.  

 

Senator Collins? 

 

SENATOR SUSAN COLLINS (R-ME):  Thank you, Mr. Chairman.  

 

    Mr. Secretary, since this is your last hearing, it seems ungracious to do anything except thank you and heap praise upon you for your service.  But since you’re before a group of senators, of course, while we’ll do that, we’ll also add some questions.  But I do sincerely thank you for a lifetime of public service that has made an extraordinary difference to our country and to our troops in particular.  

 

I’m very concerned about the $400 billion that the president has assigned the Department of Defense for additional cuts.  You have already made a tremendous effort to squeeze out waste and inefficiency and to reduce unnecessary spending.  I’m concerned that we could end up with the kind of hollow force that you’ve warned us against, and that was so devastating to our troops, and our security, potentially, in the ‘70s, and to a lesser extent, two decades later.  Were you consulted by the president or OMB in the size of the target – that $400 billion – that has been assigned to the Department of Defense? 

 

SEC. GATES:  I was informed about it the day before it was announced.    

 

SEN. COLLINS:  My concern, Mr. Chairman, is I believe that military requirements have to drive the budget, and not the other way around. And –

 

SEC. GATES:  I will say this, though, Senator.  When I as informed, I did get immediate agreement that this, before any specific budget decisions were made, this comprehensive review that the chairman and I had been talking about, would be carried out, that we would present options to the president and to the Congress that shows relative levels of risk of different kinds of cuts and changes in the force structure.  So there was agreement immediately to that review before specific decisions were made.  

 

SEN. COLLINS:  Thank you.  It still seems backwards to me, as far as the targets given. You’re going to assess the risk of various scenarios to meet the target, but that, to me, is the opposite of the way we should be proceeding.  

 

Admiral Mullen, let me switch this quickly to Libya and ask you a question.  I personally have a lot of concerns about our involvement in Libya and the transition from it being a humanitarian exercise to the goal of having Colonel Gaddafi leave and relinquish power.  

 

Let’s assume that that does happen, that Colonel Gaddafi does give up power.  The Transitional National Council is made up almost   exclusively of the eastern Libyans, I’m told, and I believe it’s a real question as whether or not that council could effectively govern the country, given the intense regional rivalries and tribal nature of Libyan society.  But also, I’m concerned that we’re not really certain who we’re dealing with.  Do you feel confident that we have a plan for what we would do post-Gaddafi?

 

ADM. MULLEN:  Just having come out of both Egypt and also Europe last week, I’m actually encouraged that there are countries and organizations, NATO being one, that are very specifically looking at what after Gaddafi, because I think we need to do that.  I’m more encouraged, more confident that the more we learn about the TNC – and in fact, I also see them now linking to the west more than they had in the past – that there are, you know, civilian leaders and military leaders who recognize the challenge that you just described.  

 

What I don’t, I just haven’t seen yet, is the kind of comprehensive collective view of how they would run the country.  I think they recognize that internally.  Their focus on this is improving, but I think we’re sort of at the beginning of that, and that there is an awful long way to go.  So I’m more positive than I was a few weeks ago.  There’s an awful lot that’s being brought to the table in terms of international focus on this from our government as well as many governments.  But I still think we’ve got a long way to go. 

 

SEC. GATES:  One of the actions taken by the NATO defense ministers last week was to resolve that – NATO would not be in the lead in any kind of a transition, but also that the secretary general would be in communication with the contact group and the U.N. and tell them that it’s our view, as NATO defense ministers, that the planning for this transition should get underway now, not wait until Gaddafi falls. 

 

SEN. COLLINS:  Thank you.  And thank you both for your service. 

 

SEN. INOUYE:  Thank you very much.  

 

Senator Murkowski. 

 

SENATOR LISA MURKOWSKI (R-AK):  Thank you, Mr. Chairman.  

 

Gentleman, thank you both for your service.  Secretary Gates, I, too, echo the high praise that we all have for you and for your efforts.  

 

Speaking about Afghanistan now, going back from Libya here, as we deal with the reality of a drawdown coming ahead, and the numbers and all the discussion that goes on there, I’m going to make it a little more parochial.  We had several thousand troops with the First Striker Brigade Combat Team of the 25th Infantry up in Fort Wainwright just deploy.  They moved out just this past month.  And the concern that I’m hearing from some of the folks up north is, well, ok, we want to    be in that phase where we are withdrawing and coming out of Afghanistan.  

 

But we’re concerned that our loved ones, who have just now gone in, are going to be on the back end of that withdrawal, so you will have these forces moving out.  You’ve mentioned that between now and 2014, the amount of money that we will see going into Afghanistan will be, sounded pretty dramatically reduced.  What assurances can you give to those who are just now going into Afghanistan, and who will be there through the end of this next year, that their situation is not increasingly riskier? 

 

SEC. GATES:  I would make two points.  First of all, the reduction in cost in Afghanistan, beginning in Fiscal Year ‘13 and beyond – so fall, let’s say, of 2012 – really correlates to the level of troop drawdowns.  And so the amount of money that is saved is associated with the number of troops that we have in country, not by any skimping on the support –

 

SEN. MURKOWSKI:  OK. 

 

SEC. GATES:  – or the enablers that we have there to support the troops we have.  

 

Second, I have had conversations with the president about this, and I will tell you that he and I are both committed that whatever decisions are made, the foremost consideration will be to ensure that whatever steps are taken do not put the troops that are leaving at greater risk, or the troops that are remaining at greater risk. 

 

SEN. MURKOWSKI:  OK.  I appreciate that.  Let me ask you a question about Guam.  In light of where we are with the budget issues, you responded to a question about – to Senator Mikulski, about the overseas bases in Europe.  But in light of what we’re seeing with the tightening budgets, can we expect any significant changes perhaps in the current direction, with regards to the buildup in Guam?  Are we going to meet that 2014 completion date, that target that has been set, given what the cost estimates are at this point in time?

 

SEC. GATES:  Senator, in all honesty, as I mentioned earlier, Senator Clinton and I – Senator Clinton – Secretary Clinton and I will be meeting with the Japanese on Monday and Tuesday, and quite honestly, I’ll have a better answer to your question after we have that meeting. 

 

SEN. MURKOWSKI:  OK.  We look forward to that.  

 

Thank you, Mr. Chairman. 

 

SEN. INOUYE:  Thank you very much.  

 

Senator Murray.   SENATOR PATTY MURRAY (D-WA):  Thank you very much, Mr. Chairman.  

 

Secretary Gates, Admiral Mullen, it’s been a great pleasure to work with both of you, and I want to thank both of you for your tremendous service to this country.  It is very much appreciated at a very challenging time.  

 

And Secretary Gates, I look forward to you coming home to our home state at some point and continuing that relationship.  I know you must be looking forward to that. 

 

SEC. GATES:  Fifteen days. (Laughter.)

 

SEN. MURRAY:  Hopefully the weather’s better when you get there than it has been.  

 

    Secretary Gates, last Friday, I visited the National Naval Medical Center up in Bethesda and had an opportunity to talk with a number of our wounded warriors and their providers and caregivers. And as you well know, many of these service members have sacrificed life and limb in Afghanistan and we, as a country, are going to be taking care of them and their families not just today, not just when they return home, for but a lifetime.  

 

As chairman of the Senate Veterans Affairs Committee, I take this issue very seriously, and I’ve been trying to draw attention to some of the all-too-often unseen costs of war in thinking about how we should consider that as part of our decision in any long-term conflict.  I think you know the major components of this long-term war have had real and significant impacts.  

 

Death from suicides among veterans and service members from the war are now on par with combat deaths.  Many of our warriors are facing difficult challenges with mental health care, as you well know, when they return home.  And a lot of our service members have served now not just two, three or four, but sometimes even five times, and the costs of these are real.  

 

So while we all talk a lot on this committee about rebuilding projects and Afghan aid and military resources and all the costs and components of a defense system, I wanted to ask you today what you and the Pentagon consider to be the biggest costs of this war to our wounded warriors and their families, particularly those costs that we’ll be paying for for a very long term and whether that is ever considered in – those costs are factored in when we are making decisions about drawing down in Afghanistan.  

 

SEC. GATES:  I would – I mean, I think it is self-evident that the costs are exactly as you’ve described them in lives that are shattered, in bodies that are shattered, in minds that are shattered. I would tell you that one of the things that we’ve done over the last two to three years is to ensure that all of the funding that we have gotten in the past in supplementals and overseas contingency operations dealing with family programs and with some of the medical research we were talking about and care for our wounded warriors, that all of that money has been shifted into the base budget knowing that we will deal with this problem for many, many years to come.  

 

So from our part, in addition to VA, we have tried to make sure that the funds for these programs have been protected and will be    protected in the future.  But it – I cannot say that decisions in terms of drawdowns or military strategy are made bearing in mind the cost of the soldiers and sailors, airmen and Marines who suffer.  It is on the minds of everybody who makes those decisions, but by the same token, it is the nature of war and it is, frankly, one of the reasons why, as I told an interviewer a couple of weeks ago, I feel like I’ve become more conservative, more cautious about when we use force because I’ve seen the consequences up front.  

 

But Admiral Mullen has devoted a huge amount of effort to this. He probably ought to say something.  

 

SEN. MURRAY:  Admiral Mullen? 

 

ADM. MULLEN:  Senator, first of all, I just appreciate your leadership on this because it has to – it has to have a voice.  And I actually believe we’re just beginning to understand the costs.  

 

Your units – very specifically, I’ll use Fort Lewis.  I mean, we’re now – we have more soldiers and airmen at Joint Base Lewis-McChord than we’ve ever had, and they’re going to be home for a couple of years.  Many of those units have had only a year between deployments up to now.  Now, they’re going to have two, and I think they’ve been compartmentalizing challenges, and they’re going to start unpacking that.  And it’s going to be pretty tough now that we’re back home and addressing – and the leadership focusing on addressing the challenges that will come with that.  

 

Medically in the PTS-TBI world in particular, the more quickly we get at the problem, the less likely the damage or the damage is reduced significantly, and yet there’s still a great deal on the TBI side that we don’t understand.  

 

SEN. MURRAY:  And it’s changing, by the way.  When soldiers are home after three years, we’re finding the impacts are different three years later.  

 

ADM. MULLEN:  Right.  

 

SEN. MURRAY:  And they’re coming back into the system.  

 

ADM. MULLEN:  Right.  There are time bombs set up that we know are out there; we just don’t know when they’re going to go off.  

 

The relationship that the Pentagon has with the VA and with communities throughout the country has got to get stronger.  And we’ve worked that in ways to try to focus on that.  And where you and Chairman Inouye and others can help is, when we get into budget crunches like this, this incredible amount of money that we put into family programs, into medical research, it’s some of the first money that budget types like to take out historically.    We like airplanes before we would keep our family programs intact, and that’s something of the secretary of defense and I have talked about.  Unless we watch that very carefully, it will not be there when we need it.  And so we have to have it in a way that it is sustained over time because I think these costs are longstanding.  We don’t understand them as well as we should not just for our members but also for our families.  We see that time and time again.  

 

Our families have become almost as much as part of our readiness as anything else.  And it wasn’t that way 10 or 15 years ago.  Always critical, but without them we would be nowhere in these wars.  

 

And so leaders have to continue to focus on what are these costs, and I thought you said it very well.  It is to repay this debt for the rest of their lives.  And we need to stay with them so that we understand what that means.  

 

SEC. GATES:  I would just say that I’ve told the service secretaries and the chiefs to fence two areas in all of these budget exercises that we’re going through.  One is training, and the other is all of our family programs; that I don’t want any money taken out of those.  

 

SEN. MURRAY:  Well, I appreciate that very much.  And I do think we have to really seriously be considering this because it does impact our troops today, but it also impacts our ability in the future for the next big one if we’ve depleted all of our resources and we are not taking care of our folks.  

 

ADM. MULLEN:  The other thing – and I know that you know, Senator Murray – is that we are – we did it in Vietnam, and we are doing it again.  We are generating a homeless generation.  Many more homeless female vets because they’re now – I think a quarter of a million have served in Iraq and Afghanistan incredibly well.  And if we’re not careful, we’ll do the same thing we did last time, and we’ll pay for them long term when an upfront investment would really make a difference right now. 

 

SEN. MURRAY:  We’re about to make some of the same mistakes we made after the Vietnam War.  

 

ADM. MULLEN:  We are. 

 

SEN. MURRAY:  And this country will be paying for it 20 years from now.  

 

Thank you, Mr. Chairman.  

 

SEN. INOUYE:  Thank you.  

 

Senator Hutchison?

 

SENATOR KAY BAILEY HUTCHISON (R-TX):  Well, thank you, Mr. Chairman.    And I will add to what has been said already.  Washington State’s gain is Texas’ loss.  We would take you back in a heartbeat if you would come because you did a great job at Texas A&M and the Bush Library and school.  

 

I want to go back to Senator Mukulski’s line of questioning.  We have had an overseas base closing commission.  And after the last American BRAC, we had the overseas BRAC that was going in the same track, and it was decided to bring 70,000 troops back from certain foreign locations – Germany and Korea especially and then Guam, of course, in question.   

 

And now we are looking, Mr. Secretary, at a Fort Bliss military construction project that that’s just been completed this year that would take one of the BCTs that was designated to come back from Germany – it is prepared and ready for taking that BCT from Germany. But the department changed the previous decision that was going to bring back two BCTs from Germany to just basically say we’re not sure yet.  

 

So you’ve got the MILCON that has been done in America, about $450 million worth, to take one BCT back.  And on the FYDP, the five-year plan for military construction, there is $1 billion to be done in Germany.  Germany contributes 7 percent of the cost of our MILCON as compared with Japan that contributes 40 percent.  

 

So I would just ask you as you are leaving, in your last two weeks, if you can give serious consideration to the fact that we don’t get an effort from Germany – $1 billion of military construction for changing Army headquarters and bases.  Couldn’t that money be saved rather than saving it out of either personnel or health care or weapons systems that would modernize for our troops in America?

 

    Can’t we take $1 billion out of MILCOM that was supposed to be taken care of in a previous administration?  It just seems like there’s a disconnect from what Senator Mikulski was suggesting and what seems to be an opportunity here. 

 

SEC. GATES:  The president’s decision on the posture in Germany was that we would come down from four brigade combat teams to three. So where the uncertainty is, is in the Army, in terms of whether that fourth BCT in 2015-2016 is simply disbanded or whether, in fact, it comes back to the United States.  

 

The only MILCOM that I’m aware of in Germany is the Consolidation of Command Control Communications Computers and Intelligence at Vilshofen.  The original budget for that was $482 million.  Half of that has already been spent.  There is no money for it, as I understand, in the FY12 budget, but then there is about another 150 million (dollars) between ‘13 and ‘16.  

 

So we’ll go back and take another look at that piece of it, but the decision was not make just by the Department of Defense, but by the president, that we would, in fact, come down by one BCT in Germany.

 

SEN. HUTCHISON:  The original proposal was two.

 

SEC. GATES:  Right.

 

SEN. HUTCHISON:  And in the interim time, I think we all believe – I’ll speak for myself and along the lines of what you talked about in Europe last week – that the Germans have fewer than 5,000 troops in Afghanistan, they have rules of engagement that are very restrictive.  And I would just ask you to look at and perhaps work with the incoming secretary to determine if it is in our best interest to have the places ready at Fort Bliss for a BCT, and with the lack of German effort, is it in our best interests to keep three BCTs there, rather than two, which had been the previous decision.

 

And I certainly support having joint efforts and working with our partners, but you yourself have said our partners are not stepping up to the plate as they should, and I agree with you.  So I would just ask if in your last two weeks you could look at this and could work with Secretary Panetta, to determine if it is in our best interests, with the lack of effort that the Germans make in MILCOM.  And the lack of effort, frankly, in our NATO alliance and with the preparation that’s already been made, $450 million in MILCOM here to take the new troops back, I’d just ask if you would look at it one more time.  

 

Mr. Secretary, I still have time, if I could just – if you’re not going to answer that question then I would just ask if we could – if you could elaborate on your view of NATO.  And you’ve said that some NATO is better than no NATO.  Is there something that we could do proactively besides encouraging our allies to be more of a player, an equal player, that would make the NATO alliance more effective?  

 

SEC. GATES:  Well, I think one thing where the Congress could make a contribution is that I know that the Congress has a variety of parliamentary exchanges with European legislatures.  And I think just voicing both in those exchanges but also publicly essentially the message that I delivered last week, that the American people are going to become increasingly skeptical about this alliance if the United States has to bear three-quarters of the burden.

 

SEN. INOUYE:  Thank you.  Mr. Secretary and Admiral Mullen, thank you very much for your candid testimony, but more importantly, for your service to our nation.  Your astute vision and ability to quickly implement your vision through others is a testament to your leadership ability.  And this nation is truly in your debt for turning the tide in Iraq and Afghanistan and setting the stage for our withdrawal.  

 

So on behalf of the committee, we wish you the very best as you transition to the next phase.  And we will have written questions submitted, if we may because of the time limitations we are not able to go through the Q&A set.  So the subcommittee will reconvene on Wednesday, June 22nd at 10:30 a.m. for our last hearing.  And we’ll close our books then.  The subcommittee stands in recess.  (Sounds gavel.)  

 

(END)