Panetta: Military Leaders Unified Behind Budget Request

By Karen Parrish
American Forces Press Service

WASHINGTON, Feb. 14, 2012 – Inflation-adjusted Defense Department spending will drop 20 percent from its 2010 peak, Defense Secretary Leon E. Panetta told Congress today.

The fiscal 2013 defense budget request Congress received yesterday reflects the Budget Control Act’s requirement for a $487 billion reduction in defense spending over the next 10 years, Panetta told the Senate Armed Services Committee.

The Defense Department’s senior military and civilian leaders took part in an intensive strategy review before compiling the fiscal 2013 budget request, the secretary said. The proposal asks for $525.4 billion in the base budget, and $88.5 billion for overseas contingency operations.

Panetta acknowledged the military has reached a turning point that likely would have required a strategic shift under any circumstances.

As the United States confronts a very large debt and deficit problem, the secretary said, defense leaders “decided to step up to the plate” and use the budget crisis to establish a new strategy for the nation’s future force.

“That strategy has guided us in making the budget decisions and choices that are contained in the president’s budget,” he noted.

The military mission in Iraq has ended, and while “we still have a tough fight on our hands in Afghanistan,” Panetta said, 2011 saw markedly reduced violence and increased transition to Afghan-led security efforts. The secretary cited a weakened al-Qaida and the successful NATO-led Libya operation as further proof that some threats have receded.

But a complex array of security challenges remains, Panetta told the senators, including the war in Afghanistan, terrorism, and proliferation of lethal weapons and materials.

“The behavior of Iran and North Korea continue to threaten global stability,” he said. “There is continuing turmoil and unrest in the Middle East from Syria to Egypt to Yemen and beyond. Rising powers in Asia are testing international rules and relationships, and there are growing concerns about cyber intrusions and attacks.”

Meeting those threats while exercising fiscal discipline is not an easy task, he said, and requires the fivefold strategy President Barack Obama and the secretary announced in January.

Panetta said the military will be:

-- Smaller, flexible and technologically advanced;

-- Rebalanced toward the Asia-Pacific region with a focus remaining on the Middle East;

-- Engaged in “innovative partnerships” in Europe, Latin America and Africa; and

-- Ready to defeat any adversary “any time, anywhere.”

The strategy and the budget request were driven by more than trying to achieve a dollar target, the secretary said.

“This can’t just be about cuts,” he told the Senate panel. “It also has to be about protecting and prioritizing key investments in technology and new capabilities, as well as our capacity to grow, adapt and mobilize as needed.”

Panetta said DOD’s spending plan ensures a sound force, takes a balanced approach to cuts, and keeps faith with troops and families.

He and Joint Chiefs Chairman Army Gen. Martin E. Dempsey worked with service leaders and combatant commanders to develop the budget recommendations, Panetta said, and the Defense Department is “strongly unified” behind them.

Defense savings going forward will stem from three broad areas, he said: efficiencies, force structure and procurement adjustments, and compensation. Tightening up the force must begin with the Pentagon, the secretary said.

“We’ve got to reduce excess overhead, eliminate waste, and improve business practices across the department,” he said.

The fiscal 2013 budget request adds $60 billion more to the $150 billion in cost-saving efficiencies last year’s budget request set out through fiscal 2016, Panetta said. The new savings will come through measures such as streamlining support functions, consolidating information technology enterprise services, rephasing military construction projects, consolidating inventory and reducing service support contractors, he explained.

But significant savings will need to come from adjustments in infrastructure, Panetta said, noting that the president will request that Congress create base realignment and closure processes for 2013 and 2015.

“As somebody who went through the BRAC process in my own district, I recognize how controversial this process is for members and for constituencies,” Panetta said. “And yet, it is the only effective way to achieve needed infrastructure savings.”

The most recent BRAC round, in 2005, resulted in the department closing 14 major military installations and realigning nearly a dozen others.

The five defense strategic priorities directly affected changes to planned force structure and procurement in the fiscal 2013 spending request, Panetta said. Department leaders chose “not to maintain more force structure than we could afford to properly train and equip,” he added.

The active Army will resize from 562,000 to 490,000 soldiers by 2017, and the active Marine Corps from about 202,000 to 182,000, he said. The Air Force will reduce and streamline its airlift fleet, retaining 275 strategic airlifters and 318 C-130s, he added, while the Navy will retire seven cruisers.

“The budget maintains the current bomber fleet,” the secretary said. “It maintains the aircraft carrier fleet at a longer-term level of 11 ships and 10 air wings. It maintains the big-deck amphibious fleet.”

Panetta said the budget request also restores Army and Marine Corps force structure in the Pacific -- while maintaining a strong presence in the Middle East -- as troop levels draw down in Afghanistan.

“Our goal is to expand our rotational presence in both areas,” he added.

The department will balance proposed cuts with targeted investments in key systems, the secretary said. Big-ticket items he listed include $300 million for the next-generation Air Force bomber; $1.8 billion to develop the new Air Force tanker; $18.2 billion for 10 new warships, including two Virginia-class submarines, two Aegis-class destroyers, four littoral combat ships, one joint high-speed vessel and one CVN-21-class aircraft carrier; and $100 million to increase future Virginia-class submarines’ cruise missile capacity.

The department also will invest in NATO and other partnership programs over the next five years, he said, spending more than $1 billion for the NATO Alliance Ground Surveillance System and nearly $60 billion to “develop and deploy missile defense capabilities that protect the U.S. homeland and strengthen regional missile defenses as well.”

To defeat multiple adversaries with a reduced force, Panetta said, the U.S. military must bring 21st-century capabilities to future conflicts.

“We have to leap ahead of our adversaries by investments in the latest technologies,” he said, noting that the budget request includes $11.9 billion for science and technology, $2.1 billion for basic research, $10.4 billion to sustain continued growth in special operations forces, $3.8 billion for unmanned air systems, and a $3.4 billion investment in cyber activities.

The request also sustains the nuclear triad of bombers, missiles and submarines to ensure a safe, reliable and effective nuclear deterrent, the secretary added.

The president’s strategic guidance mandates that DOD cut lower-priority modernization programs, he said, “particularly in light of schedule and cost problems.” The budget request includes $75 billion in savings over five years from canceled or restructured programs, the secretary noted.

He listed savings of $15.1 billion in delayed joint strike fighter purchases “so that we can allow more time for development and testing”; $1.3 billion from delaying development of the Army's ground combat vehicle, which has experienced contracting difficulties; and $4.3 billion from delaying for two years the next generation of ballistic missile submarines.

The department will terminate the “Block 30” version of the Global Hawk unmanned aerial vehicle, which “is simply no longer cost-effective,” and the weather satellite program, which existing satellites render unnecessary, he said.

Military pay and benefits must be put on a sustainable course, Panetta told the Senate panel.

“This is an area of the budget that has grown by nearly 90 percent since 2001, about 30 percent above inflation, while end strength has only grown by 3 percent,” he noted. The budget request addresses those costs “in ways that we believe are fair, transparent and consistent with our fundamental commitments to our people,” the secretary said.

“There are no [military] pay cuts,” he said. “We've created sufficient room to allow full pay raises in 2013 and 2014. However, we will provide more limited pay raises beginning in 2015, giving troops and their families fair notice and lead time before changes take effect.”

The budget requests nearly $50 billion for health care costs, he said, noting that amount has more than doubled over 10 years. “To control the growth of these costs, we're recommending increases in health care fees -- in co-pays and deductibles -- that are to be phased [over] four to five years,” Panetta said.

None of the fee proposals apply to active duty service members, and their families will not pay increased premiums, he added.

While the proposed budget requests Congress to establish a commission to review military retirement, the president and DOD leaders have “made clear” that current troops’ retirement benefits should be protected by grandfathering, Panetta noted.

Overall, the fiscal 2013 defense budget request “is balanced, it keeps America safe, and … it sustains U.S. leadership abroad,” the secretary said.