[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 111-108]
RESOURCING THE NATIONAL DEFENSE
STRATEGY: IMPLICATIONS OF LONG
TERM DEFENSE BUDGET TRENDS
__________
HEARING
BEFORE THE
FULL COMMITTEE
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
NOVEMBER 18, 2009
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HOUSE COMMITTEE ON ARMED SERVICES
One Hundred Eleventh Congress
IKE SKELTON, Missouri, Chairman
JOHN SPRATT, South Carolina HOWARD P. ``BUCK'' McKEON,
SOLOMON P. ORTIZ, Texas California
GENE TAYLOR, Mississippi ROSCOE G. BARTLETT, Maryland
NEIL ABERCROMBIE, Hawaii MAC THORNBERRY, Texas
SILVESTRE REYES, Texas WALTER B. JONES, North Carolina
VIC SNYDER, Arkansas W. TODD AKIN, Missouri
ADAM SMITH, Washington J. RANDY FORBES, Virginia
LORETTA SANCHEZ, California JEFF MILLER, Florida
MIKE McINTYRE, North Carolina JOE WILSON, South Carolina
ROBERT A. BRADY, Pennsylvania FRANK A. LoBIONDO, New Jersey
ROBERT ANDREWS, New Jersey ROB BISHOP, Utah
SUSAN A. DAVIS, California MICHAEL TURNER, Ohio
JAMES R. LANGEVIN, Rhode Island JOHN KLINE, Minnesota
RICK LARSEN, Washington MIKE ROGERS, Alabama
JIM COOPER, Tennessee TRENT FRANKS, Arizona
JIM MARSHALL, Georgia BILL SHUSTER, Pennsylvania
MADELEINE Z. BORDALLO, Guam CATHY McMORRIS RODGERS, Washington
BRAD ELLSWORTH, Indiana K. MICHAEL CONAWAY, Texas
PATRICK J. MURPHY, Pennsylvania DOUG LAMBORN, Colorado
HANK JOHNSON, Georgia ROB WITTMAN, Virginia
CAROL SHEA-PORTER, New Hampshire MARY FALLIN, Oklahoma
JOE COURTNEY, Connecticut DUNCAN HUNTER, California
DAVID LOEBSACK, Iowa JOHN C. FLEMING, Louisiana
JOE SESTAK, Pennsylvania MIKE COFFMAN, Colorado
GABRIELLE GIFFORDS, Arizona THOMAS J. ROONEY, Florida
NIKI TSONGAS, Massachusetts TODD RUSSELL PLATTS, Pennsylvania
GLENN NYE, Virginia
CHELLIE PINGREE, Maine
LARRY KISSELL, North Carolina
MARTIN HEINRICH, New Mexico
FRANK M. KRATOVIL, Jr., Maryland
ERIC J.J. MASSA, New York
BOBBY BRIGHT, Alabama
SCOTT MURPHY, New York
DAN BOREN, Oklahoma
Erin C. Conaton, Staff Director
Andrew Hunter, Professional Staff Member
Jenness Simler, Professional Staff Member
Caterina Dutto, Staff Assistant
C O N T E N T S
----------
CHRONOLOGICAL LIST OF HEARINGS
2009
Page
Hearing:
Wednesday, November 18, 2009, Resourcing the National Defense
Strategy: Implications of Long Term Defense Budget Trends...... 1
Appendix:
Wednesday, November 18, 2009..................................... 37
----------
WEDNESDAY, NOVEMBER 18, 2009
RESOURCING THE NATIONAL DEFENSE STRATEGY: IMPLICATIONS OF LONG TERM
DEFENSE BUDGET TRENDS
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
McKeon, Hon. Howard P. ``Buck,'' a Representative from
California, Ranking Member, Committee on Armed Services........ 2
Skelton, Hon. Ike, a Representative from Missouri, Chairman,
Committee on Armed Services.................................... 1
WITNESSES
Berteau, David J., Director, Defense Industrial Initiatives
Group, Center for Strategic and International Studies.......... 6
Daggett, Stephen, Specialist in Defense Policy and Budgets,
Congressional Research Service................................. 5
Donnelly, Thomas, Director, Center for Defense Studies, American
Enterprise Institute........................................... 8
Goldberg, Dr. Matthew, Deputy Assistant Director, Congressional
Budget Office.................................................. 3
APPENDIX
Prepared Statements:
Berteau, David J............................................. 93
Daggett, Stephen............................................. 65
Donnelly, Thomas............................................. 101
Goldberg, Dr. Matthew........................................ 41
Documents Submitted for the Record:
Dr. Matthew Goldberg's Letter to the Hon. John Spratt
Regarding the Annual Incremental Costs for Deploying Troops
to Afghanistan and Iraq.................................... 111
Witness Responses to Questions Asked During the Hearing:
[There were no Questions submitted during the hearing.]
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
RESOURCING THE NATIONAL DEFENSE STRATEGY: IMPLICATIONS OF LONG TERM
DEFENSE BUDGET TRENDS
----------
House of Representatives,
Committee on Armed Services,
Washington, DC, Wednesday, November 18, 2009.
The committee met, pursuant to call, at 10:07 a.m., in room
HVC-210, Capitol Visitor Center, Hon. Ike Skelton (chairman of
the committee) presiding.
OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE FROM
MISSOURI, CHAIRMAN, COMMITTEE ON ARMED SERVICES
The Chairman. The hearing will come to order. Ladies and
gentlemen, welcome to today's hearing. Resourcing the National
Defense Strategy: Implications of Long Term Defense Budget
Trends is the subject today.
In the first week of February 2010, the Department of
Defense (DOD) will deliver two critical documents to our
committee. One is the Quadrennial Defense Review, known as the
QDR, which will outline the National Defense Strategy and some
of the major policy changes required.
The second will be the President's budget request for
fiscal year 2011, the first true budget of the Obama
Administration and one of the primary mechanisms for adopting
the QDR's recommendations. These documents along with the two
ongoing wars are likely to dominate the discussions on our
committee for the next year.
The QDR is by design a process that is not supposed to be
constrained by the budget. However, the fiscal year 2011 budget
request is of necessity so constrained, though also deeply
shaped by the QDR. So while the QDR will not and should not be
limited by the budget, we in this committee will be required to
confront budget limitations simultaneous to our review of the
QDR. It is critical that we understand the budget constraints
that are likely to shape the fiscal year 2011 budget, both in
that specific fiscal year and over the Future Years Defense
Program (FYDP) that will accompany it.
The picture frankly is not a pretty one. We owe a debt to
our colleague John Spratt, who held a hearing on the Budget
Committee on October 14th to review the questions featuring two
of the witnesses we have before us: Dr. Matthew Goldberg of the
Congressional Budget Office (CBO), Stephen Daggett of the
Congressional Research Service (CRS). These two gentlemen
shared testimony with the Budget Committee about the need for
continuing steep increases in defense spending to carry out the
current programs of the Department, increases that may not
materialize unless the Obama Administration is able to add
funding to the defense budget projections left to them by the
Bush Administration at a time of exploding deficits.
These witnesses are joined today by David Berteau of the
Center for Strategic and International Studies (CSIS) and Tom
Donnelly now of the American Enterprise Institute (AEI) and
formerly of the House Armed Services Committee staff. After
hearing from them we will have a deeper understanding of the
implications which rising costs in the area of operations, war
spending, health care, personnel, acquisition, and major weapon
systems have for the Department of Defense's future and a
better appreciation for the challenges that go into building
the fiscal year 2011 budget.
I now turn to my friend, the gentleman from California,
Buck McKeon, for his opening remarks.
STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A REPRESENTATIVE
FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES
Mr. McKeon. Thank you, Mr. Chairman. Today the committee
meets to receive testimony on Resourcing the National Defense
Strategy: Implications of Long Term Defense Budget Trends. I
would like to thank Chairman Skelton for agreeing to hold this
hearing on this subject, and I would also like to thank our
witnesses for being here. Your testimony this morning gives our
members an opportunity to understand the impact of Secretary
Gates' April 2009 decision to terminate several major defense
programs, as well as to help the committee prepare for the
upcoming defense budget and the 2010 Quadrennial Defense
Review.
In May Secretary Gates testified before the House Armed
Services Committee on his 2010 budget proposal and on his April
2009 program cuts and emphasized the need to balance the
Department and focus on the conflicts in Iraq and Afghanistan.
Our concern then and what remains our concern today is the
tradeoff that came along with the April 6th announcement.
Secretary Gates assured the Congress that his program decisions
were the product of holistic assessment of capabilities,
requirements, risks, and needs for the purpose of shifting the
Department in a different direction.
Today's hearing will help the committee understand the true
impact of these cuts and whether the April decisions have
indeed taken the Department in the right direction. Many in the
Congress have a different perspective of the defense budget and
believe it is not headed in the right direction. In my view,
the Secretary's plan for balancing the Department has come at
too high a cost.
As Stephen Daggett's testimony lays out, the Department's
QDR assumes that the base defense budget, not including the
war-related funding, will be essentially flat for the next five
years, with growth sufficient only to cover inflation. In other
words, zero real growth. It is in an environment of fiscal
restraint that the Department will pay for the cost of
Secretary Gates' balance by moving $60 billion over the next
five years from within the Department to pay for programs
supporting current operations.
Equally alarming is that as the defense budget remains
flat, military personnel costs and operation and maintenance
costs will consume an increasingly larger share of the budget.
This does not include the cost of other big ticket items that
will command more defense dollars, such as the war supplemental
costs that will migrate to the base budget or the price of
resetting the force as our forces return home from theater.
The pressures on the defense budget that I have just
described warrant in my view, a higher top line. When one
considers the current threat environment and some alarming gaps
in our capability, the need for more dollars going to defense
becomes critical. As we saw with the April cuts, a leaner
budget resulted in changes to longstanding assumptions about
the capabilities needed to hedge against the risks we face.
Thank you. I yield back.
The Chairman. I thank the gentleman. We have Dr. Matthew
Goldberg, please.
STATEMENT OF DR. MATTHEW GOLDBERG, DEPUTY ASSISTANT DIRECTOR,
CONGRESSIONAL BUDGET OFFICE
Dr. Goldberg. Thank you, Mr. Chairman, Mr. McKeon, and
other distinguished members of the panel. It is my pleasure to
be here today to talk about CBO's analysis of the 2010 defense
budget. As you probably know, over the past seven years we have
taken a look at the defense budget, and ordinarily we have
access to the FYDP, the Future Years Defense Program, which
goes out another five years, and we form a projection, which is
to say if all the programs and all the funding and all the
force structure implications in the budget in the FYDP were to
be fully funded and implemented over that six-year period, what
we would project out is for another roughly 12 years. Based on
that momentum of those programs and plans and policies how much
would it take to sustain them, sustain those decisions in the
current budget and FYDP.
Of course this year we did not have the FYDP. We were
working off the 2010 budget and related materials, Secretary
Gates' various announcements which we studied, as I am sure you
did, Mr. Chairman.
The 2010 request, putting aside for a moment the overseas
contingency operations, the 2010 request was for $534 billion
in total obligational authority. We have projected that to
sustain the programs of record that are reflected in that
request it would actually cost $567 billion on average between
2011 and 2028. In other words, there would be a ramp-up just
due to the momentum of sustaining the programs that are in the
2010 budget.
There are various reasons for this. One is the continued
growth in pay and benefits for both military and civilian
personnel. Even the pay raises that are indexed to the
employment cost index, the ECI, represent a real increase in
pay relative to inflation. In other words, the real pay raises
are built into the budget and we expect those to continue.
In addition, we have observed that systems as they age have
higher costs of operations and maintenance, and we are also
expecting that the newer systems that replace them will
probably have costs at least as high for operations and
maintenance.
So all these factors contribute to the increase that we
foresee.
In addition, of course there is the overseas contingency
operations (OCOs). The Department requested $130 billion for
2010. We have not done any analysis beyond that point of what
would happen in light of the proposed increases in troop levels
in Afghanistan. But what we have is sort of a steady state
number. If U.S. military presence worldwide were to decline to
30,000 in 2013, the case we looked at, not specifying whether
those troops would be in Iraq or Afghanistan, being agnostic
about the locations, but declining to 30,000 would require $20
billion in 2010 dollars every year to sustain that level of
forces overseas.
We also looked at other reasons why the costs could be
higher, higher than they are in our base projections. I already
indicated medical inflation has been higher in the Department
of Defense than both the Department and analysts have
anticipated. If that continues, if pay raises above the
employment cost index continue for another five years, and if
the cost of procuring weapons systems continues to grow as they
have in the past, then we have a higher estimate, including
what we called unbudgeted costs, costs that are not reflected
in the budget, but that may be realized for all of these
reasons. Costs might be as high as $624 billion on average
through 2028 if all those things come to pass, or some 17
percent higher than what was in the 2010 request.
There is a shifting of funds. There is more money in the
operation and maintenance and military personnel accounts. We
see continued growth there because of the pay raises and
because of the cost to continue supporting weapon systems. But
there have been declines in the procurement and the Research,
Development, Test, and Evaluation (RDT&E) accounts, mostly in
the procurement accounts, in light of various changes that
Secretary Gates announced in April. For example, the
cancellation of the Future Combat Systems (FCS), cancellation
of the second airborne laser, the cancellation of the
Presidential helicopter, the Air Force combat, search and
rescue helicopter, and the Multiple Kill Vehicle (MKV). And
with those with other changes we are projecting that the need
for procurement funds could actually--by 2020 would be about
$20 billion less in our current projections than what we were
projecting last year at this time based on the 2009 FYDP.
So in other words, we see long-term implications where if
all of the changes that Secretary Gates proposed in April were
made, were carried through, that the procurement budget
required would be lowered by some $20 billion per year by 2020.
That is probably an overestimate in that some programs have
been removed and other programs, successive programs, have not
yet been formulated which would be put in their place. So in
reality 2020 is probably an upper bound, but we expect to see
that if current plans will continue that the amount of funds
required for procurement would probably be less and there would
be migration into the operation and maintenance and military
personnel accounts.
I think I am out of time, Mr. Chairman. So I would be happy
to take your questions when we come around.
[The prepared statement of Dr. Goldberg can be found in the
Appendix on page 41.]
The Chairman. Stephen Daggett, welcome.
STATEMENT OF STEPHEN DAGGETT, SPECIALIST IN DEFENSE POLICY AND
BUDGETS, CONGRESSIONAL RESEARCH SERVICE
Mr. Daggett. Mr. Chairman, Mr. McKeon, members of the
committee, thanks very much for inviting me to testify this
morning. Mr. Skelton, it is particularly good to see you. It
has been some time since we had a chance to talk in your
office. I look forward to doing that sometime again.
My testimony really focuses on four issues. First of all,
by most accounts the defense budget is relatively robust right
now. It is about, if you include war-related funding, it is
about 20 percent higher than the peak of spending in the 1980s,
which in turn was the peak of spending in the post-Cold War
world except for the very highest level of spending during the
Korean War.
At the same time many of the leaders in the military
services are warning about the need to make very difficult
tradeoffs within the budget. So the question I addressed is why
the discrepancy? Why on the one hand by most historical
standards does the budget seem so high and yet we face these
difficult choices? And I provided a number of answers to it.
The basic answer is that the cost of defense has climbed
even more rapidly than the budget itself, and there are six
factors I have identified that have increased the cost of
defense.
First is the increase in cost in military personnel. By my
account, an average service member is 45 percent more expensive
in 2009 than in fiscal year 1998. That is above inflation,
after adjusting for inflation.
Second is the trend in operations and maintenance cost.
Operation and maintenance per active duty troop continues to
grow at a rate between two and three percent per year above
base inflation, which is a trend, by the way, that is starkly
at odds with cost of doing business in the civilian sector of
the economy and which most companies have reined in costs have
lower costs of operation rather than higher.
A third factor is apparently accelerating increases in cost
from one generation of new weapons to another. We always expect
that the next generation of weapons will cost somewhat more
than earlier generations, but at a certain point there has to
be a limit to how far you can go in that direction. You can't
afford to buy weapons and replace the force on a one-for-one
basis with a new system. Many new weapon systems appear to be
dramatically more expensive than their predecessors.
Fourth factor, and I identify it as an independent factor
driving up the cost of acquisition, is we tend to
systematically underestimate the cost of new programs,
resulting in unplanned cost growth and scheduled delays. Forty-
four percent of new weapons programs, according to Government
Accountability Office, have had a 25 percent or larger increase
in estimated costs above initial projections. So we are not
doing very well at estimating costs of major programs.
Total cost growth in most of the major defense acquisition
programs in 2007 amounted to about $300 billion across the
board, which a full year and a half worth of weapons
procurement.
A fifth factor is we have increased demands on ground
forces. We have increased the size of the Navy and Marine Corps
by 92,000 troops at a cost of $12 to $15 billion per year. In
addition, we have new equipment requirements that are the
result of war for transportation equipment, for communications
equipment, for force protection equipment.
And finally we are preparing for a much broader range of
challenges in the international security environment, ranging
from traditional to disruptive to catastrophic threats to the
homeland to irregular warfare, and we are trying to figure out
ways to adjust to all of these.
Second major point is in April Secretary Gates announced a
number of changes in major weapons programs. How will that
affect this disconnect between the growing cost of programs and
the budget? And my answer is it will help to a certain degree.
It would help to a larger degree to the extent that these
changes represent changes in policy that will last over quite a
long period of time. We seem to have turned away from
maximizing the capabilities of systems from multi-role missions
and toward systems that will cost less because they are aimed
at a narrower range of missions. We seem to have also turned in
the direction in the acquisition phase, in the development
phase of insisting that at milestone review processes we are
sure that the technology that we are integrating into new
systems will actually be available at cost and on the kind of
schedule that is planned initially.
Fourth point that I addressed, and I will just skip over it
very briefly but we can talk about it more in Q and A, is the
deficit situation that we face now one is one in the past that
has led to constraints on the defense budget over the long
term. If the defense budget were not to grow over the next 10
years and we had the kind of growth we had in military
personnel and Operations and Maintenance (O&M) accounts in
recent years, that would squeeze out funding for acquisitions
so there would not be enough money left by the end of the
decade to support a very robust modernization program at all.
Finally, this QDR it seems to me is likely to come up with
a number of new requirements for major systems. A number of
those changes could end up being quite expensive. I gave one
example of anti-access strategies, which could lead to
requirements for different kinds of delivery vehicles to
deliver power ashore from forces offshore. And the effort to
cope with these kinds of new challenges it seems to me it is
not necessarily a sidebar to the budget. It could be a
significant budget driver in future years.
With that, I will be glad to leave it to questions and
answers. Thanks.
[The prepared statement of Mr. Daggett can be found in the
Appendix on page 65.]
The Chairman. Thank you very much, Mr. Daggett.
Mr. Berteau.
STATEMENT OF DAVID J. BERTEAU, DIRECTOR, DEFENSE INDUSTRIAL
INITIATIVES GROUP, CENTER FOR STRATEGIC AND INTERNATIONAL
STUDIES
Mr. Berteau. Thank you, Mr. Chairman. I had to find the
button here.
It is a great privilege to appear before you today, and I
appreciate the opportunity. My statement actually doesn't have
the same level of precision of data as the two colleagues who
preceded me here today, because I knew that theirs would, and I
basically used the CBO data and the CRS data for much of our
analysis at CSIS anyway. So we took advantage of that.
What my statement does is look at some of the key issues
and at the process, and I would like to summarize it now and
ask the full statement be submitted in the record.
The Pentagon's biggest problem today is that they are
facing probably the most significant set of challenges in at
least the last 20 years, perhaps a good bit longer than that,
and yet they are not recognizing that that is the situation
that they are in. We have had more money than we have had ever
over the last 10 years, and yet our shortfalls are actually
bigger than they have ever been as well, or at least in
relevant memory. I think the Korean War probably is an
exception, but it goes back too far to be relevant today.
And I think the saddest thing and the most difficult thing
for this committee to wrestle with is they have quit keeping
score. There is no longer a process, a rigorous process, inside
the Pentagon that tries to capture what its requirements are
and what its shortfalls are.
Mr. Goldberg mentioned the absence of a FYDP with the
fiscal year 2010 budget, and that is actually true, and quite
disgraceful. But the reality is there has not been a fiscally
disciplined FYDP put together by the Pentagon since before
September 11, 2001. The existence of supplementals has made it
way too easy to fix a problem by putting it into the
supplementals and funding it there. And so there hasn't been a
disciplined attempt to figure out what the real defense program
is what it would cost, what the shortfalls are, how do you
prioritize across the shortfalls, how do you make the tradeoffs
necessary, and then how you defend them to the Congress so the
Congress either accepts them or makes the adjustments necessary
that you all would seem to be in place.
It seems to me the Pentagon should be teeing up these
issues today and laying out those options, and they are not
doing that. So the challenge this committee has is how do you
assess the options and determine the priorities without the
data that you would get from a physically disciplined FYDP,
without the information on acquisitions systems necessary from
the selected acquisition reports.
Well, maybe the QDR will fix this. That is kind of the
idea, that is why we do a QDR. The impact of the non-disclosure
agreements of course has made it more difficult for those of us
who think we like to watch what the Pentagon is doing and make
intelligent commentary on it. It has been a little more
difficult for us because we don't actually get much visibility
than what is going on. There is nothing wrong with that as long
as we had some comfort and assurance that what is going on is
going to produce a QDR that will answer the kind of questions
that we raise here this morning. But I am afraid that much of
what we have seen indicates a lack of a willingness to wrestle
with those questions at the broad level. So I think those who
believe that the QDR will have all the answers may end up being
sorely disappointed.
There are a lot of unspoken risks as well that we are
addressing today, I suspect we will come back to them during
our questions, in addition to the issues facing DOD, there are
of course a number of significant issues facing the industrial
base as well, and I would be happy to touch on those as we go
through the questions.
I will yield back the balance of my time, Mr. Chairman, and
look forward to your questions.
[The prepared statement of Mr. Berteau can be found in the
Appendix on page 93.]
The Chairman. Thank you very much.
Tom Donnelly.
STATEMENT OF THOMAS DONNELLY, DIRECTOR, CENTER FOR DEFENSE
STUDIES, AMERICAN ENTERPRISE INSTITUTE
Mr. Donnelly. Thank you, Mr. Chairman, Mr. McKeon, and
members of the committee. Mr. Skeleton, you mentioned that I
used to work for this committee. That still remains the high
point of my resume. So I am very pleased to come back and talk
to my old bosses.
I have three questions that I would like to pose and offer
at least the sketch of an answer to in talking about long-term
budget trends. I want to talk not only about defense budget
trends per se, but I also think it is essential to talk about
trends in Federal budgeting and spending overall, because if
there is one thing that really constrains our defense choices
going forward, and I would certainly agree with David that we
are at a crossroads that we haven't been at in a long time, it
is not so much the growth of the debt or the deficit per se,
although because that has mushroomed that is a larger factor
than it has been in the past. But it is other forms of
particularly mandatory spending that are depriving the Defense
Department of the money it needs to fund its programs.
Finally, we have to ask the question that the QDR is
supposed to answer, and that is how much is enough to meet the
strategy, which is also the title of this hearing. And before I
begin one more, I very much want to commend the committee for
insisting upon setting up at least a partially independent
panel to review the QDR's work. The Congress has an
institutional responsibility. Those of us who were on the
committee staff were constantly pounded by Article 1, Section 8
of the Constitution, so I applaud the committee for making that
happen and hope that process turns out to be a fruitful one.
To turn to my questions, I also need to use a slightly
different set of metrics in order to measure things across
time. I think that using the measurement of percentages of
gross domestic product are by far the best way to measure the
amount of sacrifice or the opportunity costs, if you will, to
the economy of defense spending over the time. And actually if
you look at the numbers through those lenses, you see exactly
the opposite picture from what my colleagues have portrayed.
Just very quickly to summarize and to distinguish, as we
have learned to do in recent years between the baseline defense
budget, the cost of raising, training and equipping the forces,
and the wartime costs that we paid through supplementals; that
is, the cost of actually employing the force, you get again
quite a different picture. And in that regard, the costs of our
defense have really gone down significantly over the post-World
War II period. That would be the period where the United States
has been the primary guarantor of the international security
system.
In the 1950s our baseline posture cost us about nine
percentage gross domestic product (GDP). That fell in the 1960s
to seven and a half percent, and fell even in the 1980s, even
allowing for the Reagan buildup, to about five or six percent.
And in the 1990s it fell even further to an average of between
three and a half and four percent. And if we look at the
Administration's budget plans going forward, it is going very
quickly to fall to three percent and remain there through the
projected 10 years of the budget plan that the Administration
put out earlier this year.
It is true also that the cost of our wars has gone down.
Korea cost about an extra three percent of GDP to fight,
Vietnam about two percent, and our total combined global war on
terror or long war, whatever term of art you want to use to
capture the Iraq and Afghanistan experience, has cost on
average about one percent of GDP rising very slightly to about
one point two percent in recent years in part because of slower
economic growth and the surge in Iraq. And if we project that
forward, we will wait and see what the Afghanistan decision is.
So overall the burden to the American economy of military--
of both raising the force and deploying the force has fallen
significantly over the course of the last 60 years.
What has happened inside the pie of the budget? Well, my
colleagues have talked a lot about the growth in personnel
costs and health care costs in particular. So I won't linger on
those, but I just want to put that in--take three snapshots of
how that has changed things.
In the Reagan years, at the height of the Reagan buildup,
and of course we are still sort of living off the investments
of those years, the Pentagon spent about one point four two
dollars in procurement for every dollar it spent on personnel.
During the 1990s after the post-Cold War drawdown and for
reasons that were related to the desire to preserve the old
volunteer force, the situation was almost entirely reversed.
The Clinton Administration say in 1998 spent about one point
five five dollars on personnel for every dollar that it spent
on procurement. So the ratios have been essentially inverted.
And even in recent years and with some of the investments that
the Bush Administration made, that ratio has only been reduced
to one dollar for procurement to one point two two dollars for
personnel. As my colleagues suggested, I think that proportion
is only likely to again rise if current trends continue.
I mentioned that I wanted to talk a bit about the rest of
the picture and in particular talk about the portion of defense
as an element of Federal spending. I have got a lot of
statistics on that in my testimony, but let me just kind of use
the projections of the Administration, take snapshots again
through time to try to suggest the relative balance of these
things.
According to the numbers put out by the Office of
Management and Budget (OMB) earlier this year for 2016, Federal
spending total will be about 22.4 percent of GDP. Of course the
amount of borrowing projected over those years will increase
the total debt to about 70 percent of GDP. So even as
entitlement spending grows, so will debt service, but to the
point where all of those mandatory expenditures will themselves
account for 22 percent of GDP. So before the Congress
authorizes or appropriates a single penny, basically all the
money will be gone. And domestic discretionary programs are
supposed to grow to about four point two percent of GDP and
defense is held to three percent of GDP.
The question I want to leave you with is whether this is
adequate, as you were asking in the title of the hearing and as
I am sure we will get to in the Q and A session, whether this
is sufficient to meet our strategic goals. The United States
remains the guarantor of international security of the
remarkably peaceful and prosperous and liberal international
system that now prevails, although it is under attack and under
threat from many quarters. And the question that I think needs
to be asked of the QDR is not whether the risks are balanced,
you can always balance risk, the question is whether the level
of risk is adequate or is too dangerous or is a threat to the
entire system going forward.
Thank you for your time.
[The prepared statement of Mr. Donnelly can be found in the
Appendix on page 101.]
The Chairman. Thank you, Mr. Donnelly.
Mr. Daggett, get your crystal ball out. Tell us in your
opinion, as succinctly as possible, of what does today's
National Defense Strategy consist and what should the National
Defense Strategy consist of tomorrow?
Not an easy question.
Mr. Daggett. Not an easy question.
The Chairman. You are fully equipped to answer it.
Mr. Daggett. Well, there has been a bit of a shift in
National Defense Strategy in recent years with more of a focus
on preparing for irregular warfare. The big change in strategy
has been that. The increase in size of ground forces in
particular in order to provide a rotation base for deployment
of a pretty substantial number of forces abroad in contingency
operations like that in Iraq and Afghanistan.
Beyond that I see a little bit of a shift in defense
strategy in the direction of maritime forces, and part of that
is the shift in focus away from Europe, which would have been
primarily a ground theater of operations, and to the Pacific,
which is mainly maritime.
The two have created--the fact that we shifted in two
directions, one which has led to a substantial increase in
ground forces and the other which emphasizes and reemphasizes
naval forces and also to a degree long range power projection
forces in the Air Force, means we are really committed to
adding capability in pretty much every dimension in the force.
So it hasn't been simply a matter of making tradeoffs
between one set of priorities and another. We have tried to add
capabilities pretty much across the board, and that is one
reason why I think the budget has been driven up in the
direction it has been driven, why we see shortfalls. We are
trying to meet a much broader range of requirements. And I see
new requirements emerging in the future, particularly to cope
with what is called hybrid warfare, and that is that even
enemies at the lower end of the spectrum of conflict will be
equipped with pretty high-technology weaponry like Hezbollah
and Hamas, including anti-ship cruise missiles and more precise
munitions of other kinds and also a shift in the direction of
what the Administration terms high-end asymmetric warfare, and
that is the notion that future foes of whatever capability will
try to challenge the United States in areas in which we are
relatively weak, and that means to me even potentially attacks
on the homeland, attacks on communication systems, as well as
efforts to drive U.S. power projection forces further offshore.
So all of these to me are driving requirements up, and it
becomes more difficult to make choices between various systems.
You know, I also think that you are correct, that we are going
to have to cope with budget constraints, we are going to have
to figure out how to set priorities in a situation in which
there is not enough money to do all of the above, and as
evidence of that let me just make a final kind of closing
point, and that is that to me the big change that is going on
in the international security environment doesn't have to do
with military forces. It has do with financial power, and the
financial shifts are all away from the United States and toward
Asia. The projection used to be that China would have a larger
economy than the United States in 40 years or so. Now it is
down to about 30 years or so after this last financial crisis,
and that has to affect the dynamic of U.S. planning.
In the past we could assume that we could build up military
capabilities to such a degree that it would dissuade potential
future foes from trying to challenge us in building up military
capabilities. I am not sure how long that is doable given the
shift of financial resources toward the East. So it puts an
emphasis to me in building cooperative relations with potential
future foes to the extent that we can in areas like protecting
the global economy, including maritime, but also cyberspace and
things of that sort.
That is a beginning of an answer to your question.
The Chairman. Thank you very much. A quick follow-up.
In recent days I have heard the phrase used Pax Americana,
and I think aptly so. When in your crystal ball will that begin
to shift away from us, if it ever does?
Mr. Daggett. I think we are in the midst of a shift away
from American military predominance towards something
different. I mean we are still for several years clearly going
to be technologically predominant in military capabilities. How
long we will have the ability to do all of the above, to
project power of every kind--of ground forces, maritime forces,
air forces--I don't know, but it is eroding slowly over time,
and the more we can we can rely, it seems to me, on allies to
do a part of that work for us, the better off we will be in the
long term, and the more we can avoid conflict the better we
will be in the long term.
I don't know if that is a precise answer to your question,
but I think--you know, the days of the American century were
really the last 50 years of the 20th century, and the 21st
century is turning slowly into something different, which is
much more balance in the international security environment.
The U.S. can still shape that, and it is still the main power
shaping what the global environment will look like. So you can
call it a Pax Americana for the foreseeable future just in that
way, but our shaping in the environment has to be in a
direction that I think leads to more cooperation with allies
and an effort to build kind of an agreement with rules of the
road with potential future--what we have regarded in past as
potentially future foes like China.
The Chairman. Thank you. Mr. McKeon.
Mr. McKeon. Thank you, Mr. Chairman.
In meetings I have had with defense contractors recently
they have had a great concern about our industrial base. Would
you please, each of you, describe what you would see as the
impact on the industrial base as regard to the recent cuts in
the defense budget?
Dr. Goldberg. If you would like me to start, sir. Certainly
the procurement cuts that Secretary Gates has announced and
that are starting to be built into 2010 budget and presumably
the 2011 budget will have an effect on defense contractors.
I should point out a few things, that some of the programs
that have been cut will inevitably be followed by some other
program that has not yet been formulated. For example, the
Presidential helicopter, there will be some sort of platform.
The Future Combat System, the Secretary in his announcement
left open the possibility of reformulating the ground vehicles
program, but in a way different from the program inherited from
the previous Administration.
So it is not as though we are going to zero in on all the
programs that we cut.
I should also point out that the contractor base, as I am
sure you know, is much more than the big 5 or 10 Lockheed
Martin, Northrop Grumman, Boeing, et cetera. I looked up some
numbers in 2008. The Department of Defense contracted a total
of $390 billion. Not only is most of the procurement budget and
much of the RDT&E budget contracted, but much of what goes out
of the operations and maintenance budget is contracted, six
billion a year to Logistics Civil Augmentation Program (LOGCAP)
to support the troops in Iraq and increasingly in Afghanistan.
Many other contractors do base construction, military
construction, support of the bases, provide security on bases
here in the U.S., Information Technology (IT) support. Every
time you walk into a base or Pentagon or visit a base you see
contractors.
So I think taking a broader view, the Department is very
reliant on contractors in a way that is probably more permanent
and sustainable than just looking at the big, big procurement
programs that have been cut in the 2010 budget.
Mr. Daggett. I think I would begin to address the question
by looking at different elements of the industrial base. One is
look at aircraft in general. There are now really only two
major--in the long term there are really two major production
lines for fighter aircraft, F-18s and F-35s. The defense
industry is therefore understandably concerned that they will
lose the capacity to develop new systems, because the kind of
opportunity for design teams to develop new kinds of fighter
aircraft is diminishing. I think that is true in that area. In
other areas it is less true.
I see, given the growth of requirements to deal with high-
end asymmetric threats and things of that sort, increasing
demand for new designs of advanced systems for Command,
Control, Communications, Computers, Intelligence, Surveillance
and Reconnaissance (C4ISR) and lots of other areas to some
degree offsetting those kinds of changes.
On shipbuilding in general it has long been the case that
the U.S. shipbuilding industry depends pretty much strictly on
military production. The changes that Secretary Gates announced
in Navy shipbuilding won't in my view lead to any substantial
decline in the budget for Navy ships; it will lead to it being
focused on a smaller number of ship designs and actually I
think that could lead to some cooperative effort with the
defense industry to improve the efficiency of shipbuilding
production and maybe increase numbers by doing it that way.
In other areas the industrial base is not as robust.
Helicopters, for example, most recent helicopter programs that
we have had have been based on European design helicopter
frames with electronics built by the United States, reflects
the fact that the Europeans have been building more helicopters
for a long time for commercial as well as other purposes.
Electronics and things of that sort, again I see a relatively
high demand, if there is a shift, it will be away from
platforms and towards C4ISR in the military. So that may be a
relatively robust area in the future.
To some degree it depends on the top line. If as I said the
Defense budget is frozen for the next 10 years, then that leads
to a decline in acquisition which I think would make it very
difficult for defense industry to sustain the kind of design
capabilities that we have looked to it for in the past. I don't
necessarily foresee that happening. But, you know, instead we
would look at, if necessary, cuts in the size of the force and
certainly increases in the top line to sustain some level of
defense acquisition, but that is an outside possibility that
there could be simply a decline in the industrial base.
Mr. Berteau. Mr. McKeon, I think there are two parts to
your question, one which is specifically what you asked, which
is what is the impact. The second implied part is what can we
do about it, because ultimately that is the real challenge. The
industrial base has had a lot of money flowing into it in the
last 10 years. Procurement for hardware, procurement and
research and development (R&D) for hardware is up about 60
percent since 2001. Contracts for services, and there is a
whole services industrial base which I think we have to keep
our eyes on as well, has doubled in that period of time.
But the future doesn't look nearly as good, and I think
from the point of view from the hardware side, the procurement
and R&D, all of the testimony this morning is consistent with
our analysis, which is that will be shrinking both potentially
in real terms and certainly in relative terms to the
requirement.
It is also getting harder and harder for defense to use
commercial variants. In theory it would be you would save money
and time by starting with a commercial platform and then
militarizing that platform. The study we did as part of a
defense science board task force that I was on showed that it
is pretty hard to find cases where it did actually save us time
and money. So our ability as a nation to use the power of the
commercial industry, both here and around the world, has been
diminished over time.
There is a question of what do we do about it. Congress has
a clear law in place that says DOD needs to consider the
industrial base impact of decisions on major weapon systems.
Consider, of course, is a very soft word here, and in our study
I think we have yet to find in recent years any single decision
which was changed as a result of the consideration of the
industrial base. In other words, the documentation basically
said we have made the decision, how do we line up the
industrial base impact to be consistent with that decision?
The bigger challenge is it doesn't look at the whole
industrial base; it just looks at the piece necessary for that
particular weapon system. And you can always define the
universe in such a way, you say we will have enough, we will be
able to get what we need, materials, technology, skills, et
cetera. Over the long run, though, nobody has taken a look at
the comprehensive impact and what it will do for the industrial
base as a whole.
Mr. Daggett noted that we are down in many cases to a
single provider for an awful lot of systems and subsystems. And
yet we all know that only when you have good competition do you
not only get better price control and schedule control but you
get better technology development, because that is where the
technology comes from is a competitive environment.
If we are at the point where the only place we can get
competition is by going global, then that raises a whole set of
new issues. And I think DOD still operates under the idea that
95 percent of all good new ideas are being developed in
America. That may be true in the very narrow defense part of
the universe that Defense Advanced Research Projects Agency
(DARPA) looks at, for instance, but I don't think it is true in
terms of where global technology is going at all. I don't think
we have a lock on new technology anymore. And so that delicate
balance of how do you balance competition, domestic protection,
with globalization is one that hasn't been wrestled with.
I think all of those are critical questions.
Mr. Donnelly. I agree with essentially everything that my
colleagues have said, but just to gild the lily a little bit,
it is worth remembering that there was a significant round of
industrial consolidation in the 1990s after the end of the Cold
War, but that actually didn't go as far as some people wanted
to make it go, because people were reluctant to sort of take
apart the arsenal of democracy on the chance that we would need
to use that again. It has been about 15 years since that
happened, and the fundamental imbalance between the structure
of the industry and the amount of work that the industry has to
do is leading us I think to the situation that we see before us
and inevitably another round of industrial consolidation.
We have kept two nuclear submarine shipyards open because
they are regarded as national treasures, but we have never had
enough work to justify those two yards and have come up with
all kinds of Rube Goldbergesque arrangements to keep both--some
work going into both yards.
The further canary in the coal mine here is the question of
the industrial workforce, which has a huge demographic hole in
its middle. You have the people who are now relatively senior
who have spent their careers in the defense industry reaching
the end of their careers and because of the financial
constraints there was essentially a hiring freeze, or close to
it, during those late 1990s or early 2000 years. So what you
have is a very immature workforce, if you will, at the bottom
and a very small, the kind of, you know, ballistic missile
pocket protector generation that is reaching the end of its
career at the top end and very little experienced middle
management in between. And there are bound to be consequences
of that going forward that will probably lead to further snafus
in program management and the inability particularly to
integrate large-scale efforts, even if they involve as many
electronics, as they do, platforms.
Mr. McKeon. Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. McKeon.
We are under the five-minute rule, Mr. Ortiz.
Mr. Ortiz. Thank you, Mr. Chairman. I can remember during
the first Bush I war with Iraq that we were having problems
with our allies because they could not really help us, because
we were so advanced technology-wise that we didn't get much
help from them. Sometimes I wonder whether we are spending a
lot of money on weapons that we don't need to fight a war with.
Maybe I am wrong, this is only my personal belief. But then we
talk about how the benefits to our soldiers and pay has gone
up. But what bothers me is that when you look at the big
picture and you look at the two theaters, war theaters in Iraq
and Afghanistan, when you have got more contractors than you
have troops, that bothers me.
And I know that this has created a problem because some of
the soldiers that we are trying to get out--their time ended,
they spent time and they were getting out and here comes the
backdoor draft and they wanted to come out because they were
going to get a job with the contractors and they were going to
get paid $130,000 or $140,000 a year. For the specialists they
were making $45,000. I don't know. And then we have all this
equipment that has been destroyed. And when you go and you
visit the National Guard units and the reserve units you will
find that most of the equipment that they had before the war
has been left behind in Iraq or Afghanistan. And we have to
realize that they fight or they answer to two masters, the
Federal Government and the states.
So looking at this problem that I have mentioned, the
contractors, the pay increases, the weapons that maybe we don't
need, how can we grasp it and bring it in, rein it in so that
we can reduce some money? I throw these questions to you, and
maybe I am wrong, but I see a lot of things that need to be
done, but how do we rein them in to do what is best for our
troops and for the taxpayer?
And now I leave it in good hands.
Dr. Goldberg. Mr. Ortiz, a very interesting set of problems
that you raise and I have a few comments coming from a couple
of different directions. One argument that we have made at CBO
in terms of contractors may actually be a cheaper solution than
increasing the force structure for a couple of reasons.
One is that many of the contractors who hired in the
theater are either host country nationals, Iraqis, or third
country nationals who get paid a lot less than the American
expatriates, the American veterans, who hired at some of the
high salaries that you mentioned. A lot of the third country
nationals are paid considerably less because they don't have
the options that we have here.
And another thing about contractors is--the advantage of
contractors is they are temporary. When you don't need them,
terminate the contract. Whereas if we wanted to have our U.S.
Army units perform a lot of those functions, we would have to
build presumably permanent end strength and we have to provide
dwell times for each battalion that we deploy to the theater.
We have a battalion or two here in garrison recuperating. So
you multiply the cost of increasing force structure of two or
three when you consider dwell time.
So contractors in many cases can be an effective solution.
You don't have to maintain a garrison here, you don't have to
maintain a rotation base, and when the war is over you just end
the contract and that is it.
As far as the equipment, that is an important concern, the
equipment that is been worn out, and we have done some
estimates early in the year. Equipment reconstitution costs;
that is, replacing, repairing the equipment that was worn out,
damaged, lost, during the war will probably take an extra two
years, even after the conflict in Iraq ends. So we see costs
going out as late as 2013 to get the force, including the
National Guard, their equipment back to the state where they
were again ready to perform all their missions.
Mr. Daggett. I will just make one point echoing that. We
have a couple of reports that have looked at new information
that DOD is providing recently on use of contractors,
specifically in Iraq and in Afghanistan. As Matt said the bulk
of the contractors, particularly in Afghanistan are third
country nationals, neither U.S. nor Afghan, and they perform a
lot of the basic functions.
So use of contractors now appears to be built into the way
in which the U.S. deploys forces abroad for good or real, but a
lot of it is the people who get attention are contractors for
security functions and things of that sort. The bulk of the
contractors are not for those purposes. They are for food
services and transportation and things of that nature, which
otherwise would be more expensive if they were handled by U.S.
military personnel.
Mr. Ortiz. You know, and the numbers I am giving you from
what I understand are not contractors from those countries.
Mr. Daggett. Yes.
Mr. Ortiz. I am talking American contractors who are paid
hundreds of thousands of dollars.
Mr. Daggett. Well, they are contracted by American firms
generally, but the people they hire for most of these
activities, again food services and transportation, very
undramatic kinds of things, are mainly nationals of other
countries. The high-profile contractors really are Blackwater
and things of that sort. They have gotten the bulk of
attention. Those people to tend to be considerably higher paid,
Special Forces, American Special Forces personnel have been
leaving the force to join those kinds of contractors, and that
has presented a problem in retention in Special Forces, yes,
but that is a relatively smaller part of contractor pool.
Mr. Ortiz. My time is up.
The Chairman. I thank the gentleman.
Mr. Bartlett.
Mr. Bartlett. Thank you very much, I have three quick
concerns. Let me express them.
Mr. Daggett, you mentioned the asymmetric warfare that we
are involved in and that we will be attacked where we are weak
and perhaps here in the homeland. I would suggest that one of
our greatest vulnerabilities, not just in the homeland but our
military, is our susceptibility to--our vulnerability to
electromagnetic pulse (EMP). We may avoid that, sir, but what
we may not avoid is a major solar storm of the Carrington
magnitude. A high official in Federal Energy Regulatory
Commission (FERC) told me that if that happened our grid would
come down, cascading bring down some of the major transformers,
it would be perhaps several years before the grid was back up.
I asked him the consequences of that. He said probably 80
percent of our population would die. I see no activity on the
part of either the military or the Homeland Security that
addresses this enormous threat to life as we know it.
Secondly, Mr. Berteau, you mentioned unaddressed risks, I
read just recently China developed and is now fielding an anti-
ship missile. If that is a cruise missile, supersonic, we have
no defense against that. We would have to stand off 1,200 miles
from any land where an enemy had that kind of a weapon.
I see no indication that we are addressing that and
reordering our military for the future to that reality, which
is here and will increase.
And thirdly, Mr. Donnelly, you mentioned that our military
expenditure today is less in terms of GDP than it has ever
been. I would suggest there is no shortage of money. What there
is a shortage of is our ability to convince the American people
that we need more money. The American people will support any
level of funding of the military which is necessary to address
our national security interests.
Am I wrong in having these concerns?
Mr. Daggett. On EMP, I know that you have been involved in
a commission that has been studying electromagnetic pulse (EMP)
issues. I have to say I haven't looked at it as thoroughly as I
think I probably should. I have taken a look at some--lots of
different studies of potential future asymmetric threats.
I discussed one----
The Chairman. Would you get just a little closer to the
microphone?
Mr. Daggett. Yeah. I discussed one set of those challenges
in the testimony, which is access denial kinds of challenges,
which I am convinced is an increasing problem for U.S. Naval
forces. But the United States is beginning to address that. The
decision to terminate DDG-1000 and use, instead, DDG-51 as a
basis for blue-water forces reflects, I think, in part a
decision that it is more difficult to maintain a ship of the
size of the DDG-1000 in littoral waters given area denial
strategies by the Chinese and by others than in the past. And
that can include not just antiship cruise missiles, as you
mentioned, but also smart mines, even precision-guided
ballistic missile capabilities and things of that sort, let
alone small boats with suicide bombers on board.
So there are a lot of those kinds of challenges. And EMP is
one of them. But there are a number of other asymmetric
challenges which we are going to have to cope with in the
future. And, as I said, I think they could in the future become
a pretty significant budget driver.
Mr. Berteau. Mr. Bartlett, let me respond to both your
first two points there.
On the vulnerability on the grid, I would urge you as you
are looking at defense next year also to notice that it used to
be, 15 years ago, that much of the defense infrastructure in
the U.S. had its own independent power sources. Today, that is
no longer true. We have now privatized, and DOD is largely
dependent on the commercial grid.
Mr. Bartlett. Sir, we have gone in the wrong direction,
haven't we? The military ought to be able to island itself. We
have a bunch of our electric production which cannot do a black
start; it has got to have electricity to start if it if goes
down. We will now be incapable of that.
And wouldn't it be a good idea if the military could island
itself so it could be a starter for this?
Mr. Berteau. And I suspect there is a third option there
from a technology point of view that ought to be looked at.
From the unaddressed risk things, particularly the one you
raised--and we can't talk about much about it here in an open
session. But I actually think the QDR has done a better job on
these sets of risks than in many other areas, and I suspect
that you will be able to see some of the results of that when
the QDR is released.
Mr. Donnelly. Mr. Bartlett, apropos of your last question,
I agree wholeheartedly. The willingness of the American people
to fund an adequate defense is quite remarkable.
Just to pick a rather--almost unhappy, but I think
illustrative example, the Congress, and even including many
Members who disagreed with President Bush's war policy in Iraq,
fully funded essentially every request to support the forces in
the field that was made, over dozens and dozens of votes.
So if there is strong and articulate leadership on the part
of our politicians, I am quite convinced that Americans will do
what is necessary, particularly when they rightly and properly
understand that the cost isn't nearly as great as some measures
make it appear to be, and that the costs of not doing so are as
dire as they obviously are.
The Chairman. I thank the gentleman.
Mr. Taylor, the gentleman from Mississippi.
Mr. Taylor. Thank you, Mr. Chairman.
And thank you, gentlemen, for being here. Three questions:
How much a month to run the United States effort in Iraq?
How much a month to run the United States effort in
Afghanistan, DOD dollars?
And lastly, I am looking at your report, and if I have read
it correctly, you say that about 20 percent of our budget, DOD
budget, is procurement, 15 is R&D, 35 is O&M, and 25 percent is
military personnel. I am curious how that tracks historically.
If we were to go back 10 years, 20 years, 30 years, is that
about how it has always been, or is one portion of this getting
out of kilter? And I am particularly interested in rate of
return for our R&D money. Are we getting what we are paying for
there?
So I will open that up to the panel. First is the hard
numbers on Iraq and Afghanistan, whoever can provide those.
Dr. Goldberg. Mr. Taylor, I am better prepared to talk
about Iraq. We did a study recently on the President's plan to
draw down from Iraq. I would refer you to that study. And we
are showing that the Administration's plan, which would take
out about three brigades per month, would total 156 billion to
complete the operations in Iraq through----
Mr. Taylor. That wasn't the question, sir.
The question was how much per month DOD money for the
United States effort in Iraq and same question for Afghanistan?
Dr. Goldberg. The monthly burn rate now, we are looking at
about five billion a month.
Mr. Taylor. In Iraq?
Dr. Goldberg. Total Iraq and Afghanistan.
Mr. Taylor. For both?
Dr. Goldberg. For both.
Now, what we have not done yet--because we haven't gotten a
request, Mr. Taylor--is to look specifically at whether the
cost of operations in Afghanistan, how they would differ for
the same troop level, or per troop, from what we see in Iraq. I
suspect it would be more expensive to conduct operations in
Afghanistan because of the terrain and the geography, but I
don't have those numbers. That is something we have not yet
looked at at CBO.
Mr. Taylor. Okay. How about the DOD budget pie and the
percentages that I gave you? How does that track historically
going back 20, 30 years?
Dr. Goldberg. The numbers you gave are indeed our numbers.
And there has been a trend, going back, say, through 1980--I
have the chart, and it is in our testimony; there was a big
bulge in procurement in the early 1980s during the Reagan
years, and much smaller during the 1990s during the Clinton
years. And right now we are at about the percentage or close to
the percentage that we had during the Reagan years when you
include the procurement that was in the supplementals as well
as in the base budget.
Military personnel has been growing, and operations and
maintenance have been growing, particularly since about 2000.
It was in 2000 when a lot of the changes were enacted, the
repeal of the REDUX retirement, in other words making retiring
at 50 percent rather than 40 percent of base pay, the
concurrent receipt of veterans' benefits, et cetera.
A lot of those changes were passed in 2001--time frame,
TRICARE for Life. So the military personnel costs have really
been increasing since about 2000-2001, and that has taken a
bite out of procurement, and it has taken a bite out of the
RDT&E budget. That is really the main thing I see.
How the future is differing from the past is, we have a
momentum in military personnel and in operations and
maintenance to the extent that civilians get paid out of that
account that is squeezing out the procurement accounts.
Mr. Taylor. Is the ratio of R&D to procurement, has that
been constant, say, over the past 20 or 30 years?
Dr. Goldberg. It has not been. R&D has been pretty constant
in sort of real dollar terms, but procurement has fluctuated a
lot. So the ratio of R&D to procurement was low during the
Reagan years when procurement was high. I think it is easier to
say it the other way around. Procurement was the dominant
factor in the 1980s, less so in the 1990s, when RDT&E was
pretty flat and procurement came down. And then, more recently,
since 2000, procurement has been up again and RDT&E kind of
flat, so procurement has been a higher fraction.
Mr. Taylor. Okay.
Mr. Berteau. Mr. Taylor, if I could add two things to that
from our CSIS work, two anomalies, I think, are worth your
paying attention to here.
Everything that Mr. Goldberg says is correct. But the
growth in the percentage of O&M over the last 10 years has been
historically unprecedented; and absent changes in getting that
under control, that is going to continue to be the most
significant unfunded shortfall.
Mr. Taylor. Now, that is a huge thing. So is that medical,
is that housing, is that equipment repair?
Mr. Berteau. It is a combination of increased pay for
civilians, increased use of contractors, and supplemental costs
from the war.
Mr. Taylor. Okay.
Thank you, Mr. Chairman.
The Chairman. Thank the gentleman.
Mr. Franks.
Mr. Franks. Well, thank you, Mr. Chairman.
Thank all of you here today.
Mr. Donnelly, if it is all right, I am going to start with
you. You know, I know the Administration continues to talk
about the nominal increase in the defense budget, but you point
out so effectively that that is not a reflection of the actual
increases as a part of GDP.
And the service chiefs tell us all the time that they need
more. And I think that their challenge is complicated by the
fact that so much of the time their baseline budget is being
eaten up by personnel issues.
And there is a major shift. And Mr. Taylor, I think, was
trying to get at that point. And if I can just be very direct
here, it seems this Administration finds massive amounts of
money for bailouts and economic stimulus packages, but not
enough to fund the basic money needed for the defense hardware
and the equipment reset for this country. And there is, of
course, a point--I won't say of no return--but where it becomes
very difficult to undo all of that because we reach a tipping
point and our future capability is diminished. And with all
respect to Mr. Daggett, I think that we too casually consider a
future where America's military capability and our influence is
diminished and more balanced in the world. And I think that has
pretty profound implications for the future and for freedom
itself.
And so, with that, when do you think or do you think we are
actually facing some critical junctures here where if we don't
react, there could become some tipping points in our future
that would be very difficult to recover from?
And I will ask that generally, and hope I will have time
for another question.
Mr. Donnelly. Well, I will try to be succinct then.
I really believe that the coming year is very much a point
of deflection. We have not only the Quadrennial Defense Review,
but the Nuclear Posture Review and the Space Review; we have a
new budget, the first fully vetted or the first budget that
will fully reflect this Administration's priorities. And the
path that we are on, I think is pretty clear. So the
conversation, particularly in the Congress this coming year, is
going to be really quite critical.
I would just conclude with, I don't believe that the ebbing
of the Pax Americana is anything like inevitable. And I think
it would be ahistorical to suggest that there is an ironclad
connection between, you know, slice of global GDP and strategic
preeminence. Great Britain at the height of the Pax Britannica
never accounted for more than nine percent of global GDP, yet
they were still able to rule the waves and essentially
establish the international order.
So I think that issue needs a lot more reflection and work
than is often given.
But again I would say that this coming year and the
decisions that we will see enumerated in the various reviews
and the numbers that we will see in the budget and FYDP
presented to Congress really mark a fork in the road for us.
And if we--we should think very hard before we go down that
path.
Mr. Franks. I suppose, if all philosophies at the table
were of equal import or equal effect in the world, it wouldn't
bother me so much. You know, I wouldn't mind handing over some
of this responsibility to China if I had the confidence that
they would take care of freedom. Given their own record, it
makes even the most casual among us a little concerned.
And you know, I am also--it seems like there is an old
saying that there is nothing so tragic in the world as a
beautiful theory that becomes totally destroyed by an unruly
set of facts. And the realities in the world, I think, that we
face are pretty significant. And when two airplanes hit two
buildings it cost our economy two trillion dollars, which is
about four times our Defense Department budget at the time. So
I am just concerned that the more pressure we put on our
military and our defense capability, that the more significant
those risks could grow in the future, and that we ask very
noble people to do things that are really almost impossible to
do. And we keep handing them that equation.
So let me ask you, what do you think the proper percentage
of GDP should be for the military, and the fact that, if it is
a percentage of the GDP, it increases as the economy grows?
What should that percentage be?
Mr. Donnelly. I don't think that the GDP metric tells us
what is affordable or not. If it were so high that it would
cripple the ability of our economy to grow, that would be--I
think that is when you really begin to worry. But whether it
is, you know, four percent or five percent, it is clearly
consistent with historical patterns of economic growth and
higher defense spending.
So I think the question is whether it is adequate to meet
the strategic requirement or achieve the goals that we have set
for ourselves. I think that is highly debatable at this point.
But if you are asking, can we afford a sufficient defense,
I also think that is a no-brainer kind of question too. Four
cents out of our dollar, five cents out of our dollar won't
beggar us and won't prevent our economy from growing, but it
could quite clearly close a number of these gaps that my
colleagues have mentioned.
The Chairman. Thank the gentleman.
Mr. Franks. Thank you, Mr. Chairman.
The Chairman. Dr. Snyder.
Dr. Snyder. Thank you, Mr. Chairman. You all have given us
a lot to think about today.
I want to be brief in my question and let each of you
discuss the answer in the time that I have. We are talking
today about the Defense budget, but we probably would be
smarter as a country if we were talking about the national
security budget.
Mr. Daggett, you referred several times to you think the
future is--I believe your words were--``cooperative
relationships.'' The Secretary of Defense has been probably the
leading spokesman in the last year or two of the Bush
Administration about the need to increase our investment in
diplomacy, and the State Department--State Department budget,
State Department employees, U.S. Agency for International
Development (USAID), USAID budget--and yet in the process we
have here on the Hill we don't really balance a line of
helicopters versus the budget for USAID. In our budget process
it will be basically a top line versus a top line on the floor
of the House, which I don't think gets at all to the kind of
weighing that we should have.
Let me start with you, Mr. Donnelly. How should we, as
Members who are trying to sort this out, look at the overall
national security budget that is much broader than just
Defense? And much broader, by the way, than just State
Department and USAID. We have veterinarians and the Ag
Department and----
Mr. Donnelly. I am absolutely sympathetic to your basic
approach. And if you start using the kind of metrics that I
used about the Defense budget relative to other elements of
Federal spending or our economy as a whole, certainly our
ability to afford better statecraft or create other elements of
``national power,'' to use the silly term of art, to be able to
do a better job of state building in Afghanistan or Iraq, again
our ability to afford those things is quite clear. Again, the
limiting factor, it seems to me, is not the size of the economy
or the relative size of the Defense account or the State
Department's budget, but the thing that is squeezing everything
out is the mandatory spending for entitlements and debt
service.
So to solve the long-term problem, to build the capacity
that you refer to, which I think is essential, we really need a
larger dose of broader fiscal discipline. To rob the Defense
Department to create a more responsive set of diplomats or
USAID seems to be kind of a zero-sum approach from where I sit.
Mr. Berteau. Mr. Snyder, if I could add a couple things to
that, you will recall that the President, in announcing his
initial Afghan strategy back in March, part of the element of
that was what I believe he referred to as the ``civilian
surge.'' And it is interesting to compare what civilian surge
capability is with what military surge capability is. And the
orders of magnitude are wildly different. You can triple the
capacity or the delivery of certain USAID services in
Afghanistan and you are still talking fewer than 30 people. If
you triple the military surge capacity, you are talking 100,000
people.
So I think that the orders of magnitude are so different
that we have a lot of work to do in terms of not only building
the resources and putting them in place, but building the
capacity and the capability to use those resources. That is a
very significant challenge.
It is one of the best responses to the strategy issues that
Mr. Daggett laid out in response to Chairman Skelton's
question, but it is going to take us a good while to get there.
And I am not even sure we have really started yet.
Mr. Daggett. I have been thinking about exactly the issue
you raised. How do you even begin to think about the role of
Defense in conjunction with the other agencies of government in
setting global policy in this international environment? And I
think there is a starting point for talking about it, and it is
actually work done by the Intelligence Community (IC).
The National Intelligence Council (NIC) every five years
does a report called Global Trends. The latest is Global Trends
2025. So it looks out 15 years. And it is a really pretty
thorough look at the evolving international security
environment.
And they emphasize a number of things. They do take a look
really at military challenges, of the changes in military
technology and how that is affecting security. But they discuss
changes in financial power as well. They talk about the growth
of ideological extremism, Islamic--you know, extreme Islamic
fundamentalism as a persistent issue.
They also discuss things like energy policy, access to
other kinds of resources, limitations on water resources as a
potential source of conflict in many areas of the globe,
regional conflicts over various other kinds of issues, the
potential impact of climate change on all of the above, which
tends to overlap where there are already potential bases for
conflict in other areas.
So it is a good starting point for thinking about what are
the kinds of problems the country as a whole needs to address,
and then what agencies of the government are most appropriate
to take the lead in addressing those kinds of challenges.
Dr. Snyder. Thank you.
The Chairman. Thank the gentleman.
Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman.
I have got a couple comments unrelated to anything you guys
are even remotely responsible for, but they do tie in. All of
these numbers that you churn around and play with are unaudited
and unauditable. DOD across the system does a great job of
thinking they know what the money is and where it is going, who
is doing it. But they don't, they can't audit it, and so I am
going to continue to beat on the Administration to continue
this effort to get the numbers correct.
Now, at 50,000 feet, which is what we are talking about
right now, it would take a spectacular error to sway these
numbers much. But every one of those dollars we spend gets
appropriated one at a time, even though en masse, and they get
spent one at a time. And the DOD, along with the Intelligence
Community, neither one of them can show us that they know for
sure where all this money is going. So we will keep pounding on
them, with an acknowledgment that the basis for the
conversation might not be as firm as we would like to have it.
Mr. Daggett, you had mentioned that the growth in
compensation, regular military compensation, is about 45
percent above rate of inflation, which I think is reflective,
if you look at Mr. Daggett's chart, of underpaying our military
for a long, long time.
We made a concerted effort before I got here to try to
right that ship. If you take a look at this chart, it looks
like we are closing the gap. We still haven't closed it
entirely.
While that is a factor, I think we need to recognize that
in 1998 they were underpaid. And today I think they are
probably reasonably compensated for what we are asking them to
do.
But, Mr. Chairman, I want to yield back my time because I
don't have any comments beyond that, other than to just thank
you for having this hearing this morning. Thank you.
The Chairman. I thank the gentleman.
Mr. Kissell.
Mr. Kissell. Thank you, Mr. Chairman.
And thank you, gentlemen, for being here today. Just a
couple quick questions.
Mr. Berteau, you had mentioned something about, that our
thinking sometimes excludes the technical advances that are
made elsewhere in the world. I just wonder if there are any
glaring examples there that we have overlooked.
Mr. Berteau. I think one of the primary areas was already
referred to by Mr. Daggett, and that is in the rotary wing
industry, in the helicopter industry, where the technological
capacity from an avionics perspective, from a drive train
perspective, from a turbine engineering perspective has evolved
more dramatically with the commercial industry on the European
side than it has on the U.S. side.
And I think, there we are being put at risk of future
technology developments in the rotary wing industry, not from
the electronics packages, from an equipment package point of
view, from a mission package point of view, but from a platform
capability point of view, or we run the risk of the Europeans
leaving us behind dramatically there.
Mr. Kissell. Do you think that is because we just didn't
see the need for this or just somehow missed it altogether? How
did that come to be?
Mr. Berteau. About 20 years ago we had the idea that we
could push in the defense industry what we called ``dual-use
technology,'' that we could simultaneously have companies that
were satisfying our highest-level military needs, and at the
same time use much of the same fundamental core business base
to satisfy commercial needs. That has proven to be a much more
elusive objective than we thought it would be in the early
1990s.
I have not done a thorough assessment of this. Off the top
of my head, I would say it is that, in part, the gap in Europe
and the gap elsewhere in the world between military use and
military technology and commercial use and commercial
technology, is a more narrow gap elsewhere than it is in the
U.S. In the U.S. it is a bigger gap.
We are always pushing for the latest technology edge. That
makes it harder for our guys to bridge that dual-use gap there.
It is an issue worth further study.
Mr. Kissell. And, Mr. Goldberg, and if anybody else has any
ideas on this, we passed a pretty sweeping piece of
legislation, the Weapon Systems Acquisition Reform Act
(WSARA)--get rid of the waste, let's do this better. But I have
heard in different comments that you all have made that, you
know, we still don't have a way of accounting for this, we
still don't keep score, and all the things that we were wanting
to address in that legislation.
Mr. Goldberg, do you see that legislation being effective
towards helping this budget process?
Dr. Goldberg. Mr. Kissell, I am assuming you are referring
to the legislation this session, the Weapons Systems
Acquisition Reform?
Mr. Kissell. Yes.
Dr. Goldberg. I think it is a little too early to tell, but
I think there is great potential in that legislation,
particularly redesignating the Cost Analysis and Program
Evaluation office, the so-called CAPE, in DOD, which has the
potential at least, if implemented correctly, to get more
realistic estimates of cost and schedule not only internally to
the Pentagon, but to the Congress, much earlier in the
procurement process so there can be much better oversight.
So I think there is a potential there, if that office and
that program is implemented correctly, for a lot of reform. I
don't think it will solve any--I don't think it will solve all
the problems; it is not a panacea. But it would give greater
visibility and greater congressional oversight, so I think it
has a lot of potential.
Mr. Kissell. Any other thoughts on that?
Mr. Berteau. I would add one thing, sir.
At CSIS we are actually tracking the implementation of the
Weapons Systems Acquisition Reform Act. And I will be glad to
send you a copy of our report card when it is done.
On that particular point that Mr. Goldberg raised, better
cost analysis, the Congress has just confirmed the new director
of that position, and so--she will be in position shortly. They
have yet to fill the billets of the additional staff, and they
right now don't have the capability in place to do the
additional cost estimates required by the law.
Mr. Kissell. I would appreciate that information.
I yield back my time, Mr. Chairman.
The Chairman. Thank the gentleman.
We have Lamborn--wrong list. Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
Gentlemen, thank you so much for joining us today. I have a
couple of questions for Dr. Goldberg and Mr. Daggett.
The decision has apparently been made to move on our
aircraft carrier construction cost centers from four years to
five years. And as we know, if you look at the cost of
production there, those overhead costs haven't changed; they
are going to continue along the lines.
My concern is that as you look at those overhead costs and
that capacity, those costs are still going to be there. Those
yards then are going to have to look to distribute those costs
elsewhere. And they also build other ships; my concern is,
those costs might be shifted to the construction of other
platforms.
We have also recently been unable to get a commitment out
of the Under Secretary of the Navy concerning the commitment of
the production of two Virginia class submarines per year. So if
we go to a one-sub-per-year build, that concerns me also about
the overhead costs, also those up-and-down cycles in manpower.
As you know, the folks that construct our nuclear subs and
nuclear aircraft carriers are highly skilled individuals. If we
are up and down on a roller coaster ride both with cost and
with availability of personnel, that gives me some concern.
So I just wanted to get your perspective, if you can speak
to those issues and give us your perspective on consistency in
decision-making, whether it is on cost centers or whether it is
on commitments on the number of subs that are being built.
Dr. Goldberg. Well, I think ultimately the decision to
reduce the carrier force has been made on the basis of more
strategic decisions, how many we need to meet the mission, and
in particular, with the Fleet Response Plan and the way the
Navy can get carrier presence, the feeling that they can get by
with less. It does lead to volatility and a problem in covering
overhead. Undoubtedly--I don't have estimates of those numbers,
but undoubtedly, some of the costs of maintaining that
capability at the yards will be passed on. We do not completely
avoid those costs by reducing the frequency of the carrier
purchases, and similarly with the submarines.
Mr. Daggett. Yeah, just a very general comment.
We haven't looked directly at allocation of overhead costs
in shipbuilding for some time. My colleague, Ron O'Rourke, did
a pretty detailed study of the shipbuilding industrial base
some time ago, but it is getting pretty old at this point. So
it might be time for another look at it, given the changes in
requirements in the Navy.
In general, you know, a big issue for the shipbuilding
industrial base has been, the Navy has been trying to put
pressure on shipbuilders to invest in improvements in
efficiency. And to my way of thinking, the more you have
predictability in the shipbuilding plan, the more you can
insist on that. So it is important for the Navy to settle on a
pretty long-term sustainable shipbuilding plan.
And I can only think that the recent decisions will help to
some extent in that regard. At least it is identified, we are
going to build one carrier every five years. And as long as we
follow through on that commitment, we can plan on that basis.
It would be helpful from the point of view of the shipbuilding
industry to get up to two submarines a year if possible.
But we are also now, you know, we know at least--I think,
after the QDR, we will know whether we are going to go back to
some version of DDG-1000 or, instead, rely on DDG-51 hull for
most of the other--most surface-combatant basic designs. And it
appears likely to be DDG-51 as the basic design. So that will
rationalize that as well.
And you know, the comment I made in my testimony is, to the
extent that we do have relatively long production runs of
fairly stable designs of major ships and other systems as well,
then we can focus on efficiency-improving measures, including
encouraging the industry to make more investments in those
areas. So, you know, it could be a positive step in that
direction, but we will have to see where it goes.
Mr. Wittman. One additional question to you both. Do you
see the current course that we are on with strategic planning,
authorization, and budget being in the proper balance to make
sure that we provide for the robustness in our fleet, in our
capability, but also making sure that we are looking at
sustainability as far as our industrial base to meet those
needs?
Dr. Goldberg. Sustainability is a big issue. And I guess I
don't have any recommendations for how to do it differently.
One thing we didn't get this year was the Navy's annual
shipbuilding plan, which helps us. We generally do an annual
forecast of the sustainability of the program and the resources
it would require, which we could not produce this year.
Again, I think, to echo what Mr. Daggett said, having a
predictable plan that doesn't change year to year would be a
good thing in terms of sustaining the industrial base and
giving the yards a basis for forecasting their workforce. So I
would hope that we could reach that state.
Mr. Daggett. Again, very much in general, since the end of
the Cold War, we have really been in flux in terms of defining
what the strategy is. And I do see a long-term trend.
I think if you read--if you start with the base force in
1990 and the Bottom-Up Review in 1993 and then the Quadrennial
Defense Review since then, you see a progression. And the
progression has been actually in the direction of broadening
the kinds of challenges that we think we face. And that has led
to--in turn, to really changes in our strategic plans and
setting strategic priorities, the latest big change being an
increased emphasis on ground forces, when all the trend
previously had been moving away from that and making ground
forces more deployable.
I am not sure we have reached the end of that discussion by
any means. I mean, I think this QDR appears to be addressing
some pretty far-reaching decisions about future threats that
might be quite unique. So, you know, on the one hand we do want
stability in shipbuilding and areas like that; we want to get
there. But the discussion of strategy has really been moving in
a direction that I think is coming to grips with actual--you
know, real changes in the international security environment
that we need to continue. And they are evolving and changing
over time. There are new threats that we are facing, and we are
going to have to figure out how to deal with that and how to
shift investments in the Defense accounts in order to do that
as well.
So I don't see us at the end of it by any means.
Mr. Wittman. Thank you, Mr. Chairman.
The Chairman. Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman. Let me start with Mr.
Donnelly, and then I will work my way to the left. And that
would be that a concern of mine that we are so focused right
now on asymmetric warfare or counterinsurgency operations that
require very light forces.
Are we losing our focus on maintaining the type of
conventional deterrence that is necessary with a resurgent
Russia, with Iran, with China, with North Korea?
Mr. Donnelly.
Mr. Donnelly. Honestly, I don't think so. You know, to talk
to people in the Air Force or the Navy, you get much greater
concern about, say, the rise of China and the growth of the PLA
military capacity or, you know, lots of discussions about what
an Iran campaign might look like.
However, you know, I think that it is true that in the
political world the focus has been lost on that. And
particularly wrestling with the Chinese challenge is just very
difficult for people to come to grips with.
So it would be better if we could have an out-loud
conversation about these things. And that would, I think,
advance all our understanding, and we would probably come to
some sensible answer and be able to balance these things
appropriately.
But I am less concerned about the dialogue inside the
Pentagon than I am sort of amongst the rest of us.
Mr. Coffman. Mr. Berteau.
Mr. Berteau. Sir, I think we are okay for now. I think the
bigger question is, what does the longer-term structure look
like and what are we willing to invest over the long term? And
we really just don't have the visibility that we need to have
into the Pentagon's thinking today to be able to answer that.
I am going to be cautiously optimistic for a little while
until I see numbers that make me pessimistic. If I don't see
numbers that sustain cautious optimism by next February,
though, I am going to start turning more pessimistic.
Mr. Coffman. Mr. Daggett.
Mr. Daggett. Yeah. The argument you referred to, it seems
to me, is mostly within the Army. It is really how the Army
should be organized as much as anything else.
And, you know, it faces some difficult issues. Does it
focus mostly on capabilities for irregular warfare or does it
try to maintain, you know, large armored forces with offensive
capabilities and so on, which some argue are becoming less
relevant? And it is really a very vigorous debate going on
inside the Army over how to square the circle essentially.
And, you know, I think what the Army--what I see the Army
is coming down to is trying to maintain across-the-board
capabilities and really struggling with the best way to do
that. And I am not sure that they are at the end of the debate.
I am not sure the answer they have come up with is the right
one.
But for the present it appears to be that the basic unit
will still be a brigade combat team. We will have a balance of
heavy and light forces. And brigade combat teams in cases like
Iraq and Afghanistan will be augmented to be able to carry out
training with foreign militaries, but they will still be the
basic unit. We are not going to build separate units
specifically for training of foreign militaries. We will have
some of those capabilities in Special Forces, but otherwise the
all-purpose forces are going to have to remain all-purpose
forces.
You know, whether that is sustainable or not, I am not
sure. I am not sure you can train everybody for everything all
the time. So, you know, it is a big issue.
Beyond that, the Air Force and the Navy are still focused
on high-end combat.
Mr. Coffman. Dr. Goldberg.
Dr. Goldberg. Mr. Coffman, I would agree it is principally
an Army issue. The promise that was put forward for Future
Combat System (FCS) was that we would have a force that is
lighter, faster, more easily deployable, and make some trade-
offs in terms of less armor versus greater informational
awareness. And the Army itself, narrowly, as well as in the QDR
process, is rethinking that whole strategy, what kind of manned
vehicles they want. And I think that is really where the debate
is.
I don't know how it is going to turn out. But in the next
few years, as we see what the successor is to the FCS program,
the Army ground combat program, we will get a better idea.
Those considerations of lighter, faster, more deployable, I
think, are very important because we don't know where we'll
be--nobody knew we would end up--15 years ago that we would end
up in Iraq and Afghanistan. And the fact that we have great
mobility assets and some lighter forces has turned out to be
fortuitous.
Mr. Berteau. Mr. Coffman, could I add one thing to that?
Mr. Coffman. Please.
Mr. Berteau. Both my colleagues to the right indicated this
is primarily a ground forces or an Army issue. I think it is
important to keep sight of the lift problem as well.
For much of my career we have had more Army than we could
move on the timetable. That was the whole driver behind the
FCS. And if we do rethink that, the role of the Navy and the
Air Force is going to be very, very powerfully affected here in
terms of both sealift and airlift. And it is pretty easy to
project scenarios in which we don't have nearly enough of
either.
Mr. Coffman. Thank you. Mr. Chairman, I yield back.
The Chairman. Thank the gentleman.
You know, in talking with the Army leaders, they are trying
to train and build for a full-spectrum Army, and I have
indicated to them there are only two problems with that: One is
time and one is money. And I think it might be very difficult
to train a soldier to be a first-class individual in the
mountains doing Special Operations-type and then a platoon
sergeant backing up an armored division across a plain. And I
just don't see how that can happen.
Do you have recommendations for the Army along this line,
Mr. Daggett?
Mr. Daggett. No. If I may, I think you have put your finger
on precisely the issue; and I have to say I am not in the
position to be able to judge how much training you can do.
The Army does insist that in Afghanistan and Iraq the
brigade combat teams are quite capable, when augmented
appropriately, of carrying out the training mission. And you
know, I can understand, in particular in Iraq, that they are
almost forced to come to that conclusion because if you are
going to have a training presence still in Iraq, you don't want
to rely strictly on the Iraqis for force protection. You want
to have that organic to the training unit itself. And if you
are going to have a large self-protection capability, well, you
may as well have a full brigade team with all the combat
capabilities that go along with it.
So assigning your regular unit to do the training is quite
likely the right answer in Iraq. Now, does that apply also
elsewhere in the world or is the training mission more
specialized than that, requiring, you know, particular people
with particular experiences? And the answer to that is maybe.
That may be the case.
It may not be universally applicable elsewhere, but I don't
see it as necessarily being the wrong answer under current
circumstances, though.
Mr. Donnelly. Mr. Skelton, if I could toss in two
sentences. My colleague, Fred Kagan, and I did a whacking big
study a couple years ago on sort of the future of American land
power. So I want to recoup that investment briefly, if I could.
Actually, I think overall the Army is doing a pretty good
job of adapting to an immensely wide variety of challenges. I
mean, the kinds of operations that the Army has conducted in
land forces more broadly over the last--since 9/11 ranges all
the way from the most traditional kind of mounted armored--you
know, the march to Baghdad in three weeks was, you know,
arguably the best expression of blitzkrieg that there has ever
been in terms of distance covered and so on and so forth.
But that same force has adapted quite remarkably to quite
different irregular warfare challenges. And we have also
learned that the best--that all kinds of training are not the
same. Training, say, a Filipino counterterrorism unit as
opposed to standing up an Iraqi Army or an Afghan Army while
they are in the midst of fighting a war are quite different
challenges. And when it comes to the Iraqi and Afghanistan
experience, unit partnering has proved to be the most efficient
and the most effective means of increasing the capacity of our
partnering forces, which sort of throws you back onto the
brigade combat team as, actually, a quite useful tool in this
regard, although it needs enablers of all kinds to be able to
do this.
So when you are talking about the full spectrum of
operations, I think that is just the reality. And the Army is
not buying a lot more heavy tank units as it adds forces. And
even now it is shifting a number of heavy brigade combat teams
(BCTs) to Stryker-equipped BCTs. So the balance of the force is
slowly shifting, but the broad capabilities that it retains
have all been employed at very high rates in recent years.
The Chairman. Thank the gentleman.
I have Mr. Spratt, and then as I understand it Mr. Bartlett
has a second-round question.
Mr. Spratt.
Mr. Spratt. I am sorry to be late in arriving. I heard from
half the team before because we had a similar hearing on the
Budget Committee and had a briefing this morning.
This may be redundant to what you have already discussed,
but there is lots of talk now about how much it costs to deploy
one troop, one combat trooper, to a theater like Afghanistan or
Iraq. And the number being bandied about now is a million
dollars incremental cost.
Do you think that is a valid estimation? And if not, what
is the proper way to calculate on the back of an envelope the
incremental costs for deploying troops to theaters like this on
an average annual basis?
Dr. Goldberg. Mr. Spratt, I would have to take that for the
record.
We have not at CBO done an explicit study, particularly of
the conditions in Afghanistan, as opposed to the combined
Global War on Terror (GWOT) Central Command (CENTCOM)
operations, which were the basis for our previous estimates. So
I don't really have it at this time. And I entertain a request
from either this committee or the Budget Committee to do a more
detailed analysis of the cost of operations in Afghanistan. I
don't have that at the present time.
[The information referred to can be found in the Appendix
on page 111.]
Mr. Spratt. Okay.
Mr. Daggett.
Mr. Daggett. Can I say we have looked at it, just as you
said, just as a really back-of-the-envelope calculation. And
the calculation is pretty straightforward.
The most recent estimate of costs in Afghanistan is, it is
about $68 billion in fiscal year 2010, and that is for roughly
68,000 troops. So the math is pretty simple; it is about a
million dollars per troop. But that is really just taking the
top-line, total amount of spending that is allocated to
Afghanistan and scaling it to the number of boots on the ground
in Afghanistan.
And if you make an incremental change in the number of
troops, does it scale one-for-one? And the answer is, a big
part of it does. Eighty percent of that is military personnel
and operation and maintenance, and that likely would scale
pretty closely.
There are some parts of it that don't. Afghan Security
Forces Fund, the amount of equipment we provide to equip the
Afghan Army wouldn't necessarily change with the size of the
U.S. force. It changes with the size of the Afghan force, but
not with the size of the U.S. force. And there are some
overhead activities which might not have to increase quite in
proportion to the increase in the size of the force.
But that said, if it is not a million dollars per troop it
is not far off, I think.
Again, it would be phased in over time, so it wouldn't be a
million dollars the first year. But in the end, that is
probably not far off from what the sustainment costs of a troop
would be, I think.
Mr. Spratt. Mr. Berteau.
Mr. Berteau. Similarly, sir, we have not looked at that
specific question.
But I think that I would probably agree with the front end
of Mr. Daggett's calculation, but not necessarily the back end.
I think that the marginal change up or down for troops is
actually quite dramatically different. And my own estimate,
based upon the costs we have looked at, is that drawing down
would not save you anywhere near a chunk of a million dollars
per person. Increasing will cost you a little bit closer to
that.
That is just the estimate. I think we would have to look at
that further as well.
Mr. Spratt. Mr. Donnelly.
Mr. Donnelly. Very briefly--and I would never want to try
to outdo my colleagues on the actual arithmetic of this, but I
think there is one important conceptual thing to keep in mind
in making these calculations, and that is, where do the costs
of mobilizing Guardsmen and Reserve people, get accounted for?
There is certainly a large part--I mean, one of the reasons
that we have done this is because we have been able to slough
off personnel costs of mobilization into emergency
supplementals and not increase active duty on the book's end
strength. We have had more than 100,000 folks mobilized pretty
much every day since 9/11. So certainly in Afghanistan, since
Guard brigades have, for example, been responsible for the
Afghan Army training mission, one of the things that you would
want to pick apart, to understand where the money is actually
going, is how much of it is going to mobilize Guardsmen and
Reservists who account for active duty shortfalls?
Mr. Spratt. One final question. We have got a Defense
budget at historic highs. And when you look at the components
of it, they are all swelling.
There is no single component that is driving this. The O&M
costs and personnel costs due to the deployment of the troops
to, and expeditionary forces, and the extraordinary wear and
tear and the harsher environmental conditions on equipment,
that is one factor.
And then you have got the increase in size of the
personnel, 92,000 troops being added to ground forces, and
increased costs per troop because of the benefit increases that
we have effected over the last 10 or 15 years.
And then, of course, you have got acquisition costs, which
are substantial with the Army redoing its forces, the Navy
rebuilding its surface ship Navy, and the Air Force buying the
F-35 and other airplanes.
Where do you look for savings in a budget like this at the
present time?
Dr. Goldberg. I would say you really have to look hard at
procurement, because all the personnel compensation changes are
already built into the numbers.
In other words, so many improvements have been enacted to
the point where I think we have achieved pay comparability and
we have improved benefits and improved housing; and there is a
momentum that carries those benefits forward. And there is no
way to cut the benefits that have already been enacted.
And similarly in O&M, to the degree that O&M is funding
civilian salaries, which tend to get parity pay increases with
military personnel, and for other reasons--O&M has, so to
speak, its own momentum--I would think the area with the most
latitude for cuts would be the procurement accounts.
Mr. Daggett. Traditionally, when the budget has been
declining, the part of the budget that has disproportionately
been affected has been acquisition, has been procurement and
R&D. They have declined--you know, they have declined very
rapidly when the budget has declined marginally; they have
increased very rapidly when the budget has increased even
marginally. So that is the variable part of the budget.
That said, by no means would I give up on looking at O&M as
a potential place for savings. I would be very leery of
projections that O&M costs are going to level off in the
future. Historically, when the Defense Department has projected
that, it hasn't worked out. And in the end, year after year,
DOD ended up taking money out of the procurement accounts in
order to pay ``must'' bills in O&M.
But again, it is not a reason not for looking very hard at
it. You know, we spend something like $20 billion a year just
on fuel. If you could reduce that by 10 percent, that is a
pretty substantial saving right there. We spend about $27
billion a year on base operation support activities. So if you
can improve efficiency even in operating your facilities by 10
percent, that is another two point five to three billion
dollars.
So there are certainly areas you can look at in the O&M
accounts to try to achieve some savings.
And I also think, frankly, if the budget is going to be
constrained over the long term, one area in which there will
have to be a discussion is whether we can sustain the increases
in the size of the force we have agreed on recently. I see that
as very much on the agenda. It is a difficult thing to take on,
but if the budget is going to be constrained by the deficit
situation in the long term, at some point it is almost
unavoidable that you have to take a look at that, for good or
ill.
The Chairman. Thank the gentleman.
Wrap it up, Mr. Bartlett.
Mr. Bartlett. Thank you very much.
There is a reality that is very hard to avoid, and that is
that the urgent almost always sweeps the important off the
table--this dynamic, along with the assumption that the EMP
threat is a very esoteric threat, probably coming only from a
Russia or a China, which would result in all-out war and
therefore very unlikely to happen, so we are not addressing
this threat.
Let me suggest that it will probably come from a nonstate
actor or a state masquerading as a nonstate actor. All that
they need is a tramp steamer, a Scud launcher, which they can
buy on the open market, and a crude nuclear weapon, perhaps one
loosed from the Soviet Union dissolution or one from Iraq or
Afghanistan. And, you know, if they miss their target by 100
miles it won't make any difference.
Now, this can't reach the center of our country, 300 miles
high, and therefore take down our whole country, but it could
take down all of New England, which would be Katrina 10 times
over. And we are not certain but what the cascading effects of
the collapse of the grid there would take down the grid in the
rest of the country, damaging some transformers so that we
could not bring the grid back up.
I know that the military is now taking a new look at EMP,
thank God, because during the Clinton years we waived EMP
hardening of all of our weapons systems. I asked why. As
Solomon Ortiz says, we don't need any of this high-tech stuff
to fight the enemies we are now fighting. And when we will need
is against a peer or near-peer, and one of the first things
they do--it is in all of their war games, all of their open
literature. One of the first things they do is an EMP lay-down,
which will deny us the use of all of the equipment that is not
EMP-hardened, which is essentially all of our equipment.
I understand now that the Pentagon is taking a new look at
EMP. But they are looking at either the 30 or 50--it is not
clear to me which--kilovolts per meter. The Russian generals
told the EMP Commission that the Soviets had developed and they
had a weapon which would produce 200 kilovolts per meter at the
center, which was 100 kilovolts per meter at the margins of our
country. And we have not, as I understand it, built or tested
anything at that level, which would mean that what we think is
hardened is not hardened, and about all we have hardened now is
our command and control. It is a little bit like me having my
brain and spinal cord work and my arms and legs won't.
I don't understand what good I would be in fighting a war
if that is true. Are my concerns unrealistic?
Mr. Berteau. I have to say, Mr. Bartlett, that I came in
here today with a long list of things that I was worried about.
You have added one to that list. And I am going to have to tell
you that I don't have a response to the challenge you have laid
out there. It certainly seems to me to be worthy of more
attention than I have seen it get.
Mr. Bartlett. By the way, sir, the tramp steamer they
launch that from will be sunk. There will be no fingerprints on
it. You know, this is a huge, huge vulnerability. It would, in
fact, end life as we know it in this country.
And I am very concerned that the urgency of processing
these two wars have swept this really important defense off the
table.
The Chairman. No comment?
Mr. Donnelly. I am no EMP expert either. But in addition to
a pulse that would be generated by a nuclear weapon--and this
may reflect my limited understanding of the technology, but I
think it is also becoming increasingly aware that there may be
other means for generating for sort of tactical purposes----
Mr. Bartlett. You are exactly right, sir, directed energy
weapons.
The thing I mentioned in the previous question was, there
is an absolute certainty there will be another major solar
magnetic storm, perhaps of the Carrington magnitude; and if
that happened, FERC tells me it would take down our grid, and
it would cost a trillion to $4 trillion, I think, to bring it
back, and take perhaps several years.
I asked them the consequences of that to our country. This
is the magnetic storm. By the way, the same thing you do to
protect against that protects you against EMP. And I asked,
what would be the consequences of that?
He said probably 80 percent of our population would die.
You are totally immune to EMP. You wouldn't even know it was
happening if you looked in the opposite direction. But, you
know, you can't eat. If there is no electricity, there is no
anything in our culture. You know, I just think that we are
permitting the urgency of these immediate problems to sweep
really important things off the table, and this is one of them.
There are others, but this is a major one.
The Chairman. Certainly thank the gentleman.
And if there is no further business, we appreciate the
excellent testimony of our panel, and we look forward to seeing
you again.
[Whereupon, at 12:01 p.m., the committee was adjourned.]
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