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[H.A.S.C. No. 106–2]



FOR FISCAL YEAR 2000—H.R. ????






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FEBRUARY 2, 1999



House of Representatives,
Committee on Armed Services,
Washington, DC, Tuesday, February 2, 1999.

    The committee met, pursuant to call, at 10:05 a.m. in room 2118, Rayburn House Office Building, Hon. Floyd D. Spence (chairman of the committee) presiding.


    The CHAIRMAN. The meeting will please be in order.

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    I want to welcome Secretary Cohen, General Shelton and Under Secretary Lynn and thank you for all for being with us today.

    Before we proceed, the committee needs to take care of one administrative matter. We have two classified hearings this week, and under the rules, the committee must have a record vote to close the session. Since the vote requires a quorum, which we have at this moment, I think, I want to take care of it right now so we can go ahead and take care of the rest of the meeting.

    I called a meeting, and after having consulted with Mr. Skelton, I recognize the gentleman from Arizona, Mr. Stump, for the purpose of a motion.

    Mr. STUMP. Mr. Chairman, pursuant to committee rule 9(a) and House Rule XI, and for reasons of national security, I move the committee close to receive testimony in executive session on Wednesday, February 3 and Thursday, February 4, 1999. The closing shall not apply to committee staff approved Top Secret/Codeword to carry clearances.

    The CHAIRMAN. Now if committee rules require a record vote, the clerk will call the roll.

    The CLERK. Mr. Spence.

    The CHAIRMAN. Aye.

    The CLERK. Mr. Spence, aye.
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    Mr. Skelton.

    Mr. SKELTON. Aye.

    The CLERK. Mr. Skelton, aye.

    Mr. Stump.

    Mr. STUMP. Aye.

    The CLERK. Mr. Stump, aye.

    Mr. Sisisky.

    Mr. SISISKY. Aye.

    The CLERK. Mr. Sisisky, aye.

    Mr. Hunter.

    Mr. HUNTER. Aye.

    The CLERK. Mr. Hunter, aye.

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    Mr. Spratt.

    Mr. SPRATT. Aye.

    The CLERK. Mr. Spratt, aye.

    Mr. Kasich.

    [No response.]

    The CLERK. Mr. Ortiz.

    Mr. ORTIZ. Aye.

    The CLERK. Mr. Ortiz, aye.

    Mr. Bateman.

    Mr. BATEMAN. Aye.

    The CLERK. Mr. Bateman, aye.

    Mr. Pickett.

    Mr. PICKETT. Aye.
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    The CLERK. Mr. Pickett, aye.

    Mr. Hansen.

    Mr. HANSEN. Aye.

    The CLERK. Mr. Hansen, aye.

    Mr. Evans.

    [No response.]

    The CLERK. Mr. Weldon.

    [No response.]

    The CLERK. Mr. Taylor.

    [No response.]

    The CLERK. Mr. Hefley.

    Mr. HEFLEY. Aye.

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    The CLERK. Mr. Hefley, aye.

    Mr. Abercrombie.

    [No response.]

    The CLERK. Mr. Saxton.

    [No response.]

    The CLERK. Mr. Meehan.

    [No response.]

    The CLERK. Mr. Buyer.

    Mr. BUYER. Aye.

    The CLERK. Mr. Buyer, aye.

    Mr. Underwood.

    Mr. UNDERWOOD. Aye.

    The CLERK. Mr. Underwood, aye.
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    Mrs. Fowler.

    [No response.]

    The CLERK. Mr. Kennedy.

    [No response.]

    The CLERK. Mr. McHugh.

    Mr. MCHUGH. Aye.

    The CLERK. Mr. McHugh, aye.

    Mr. Blagojevich.

    [No response.]

    The CLERK. Mr. Talent.

    [No response.]

    The CLERK. Mr. Reyes.

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    Mr. REYES. Aye.

    The CLERK. Mr. Reyes, aye.

    Mr. Everett.

    [No response.]

    The CLERK. Mr. Allen.

    Mr. ALLEN. Aye.

    The CLERK. Mr. Allen, aye.

    Mr. Bartlett.

    Mr. BARTLETT. Aye.

    The CLERK. Mr. Bartlett, aye.

    Mr. Snyder.

    Mr. SNYDER. Aye.

    The CLERK. Mr. Snyder, aye.
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    Mr. McKeon.

    Mr. MCKEON. Aye.

    The CLERK. Mr. McKeon, aye.

    Mr. Turner.

    Mr. TURNER. Aye.

    The CLERK. Mr. Turner, aye.

    Mr. Watts.

    [No response.]

    The CLERK. Mr. Smith.

    Mr. SMITH. Aye.

    The CLERK. Mr. Smith, aye.

    Mr. Thornberry.

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    Mr. THORNBERRY. Aye.

    The CLERK. Mr. Thornberry, aye.

    Ms. Sanchez.

    Ms. SANCHEZ. Aye.

    The CLERK. Ms. Sanchez, aye.

    Mr. Hostettler.

    Mr. HOSTETTLER. Aye.

    The CLERK. Mr. Hostettler, aye.

    Mr. Maloney.

    [No response.]

    The CLERK. Mr. Chambliss.

    Mr. CHAMBLISS. Aye.

    The CLERK. Mr. Chambliss, aye.
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    Mr. McIntyre.

    Mr. MCINTYRE. Aye.

    The CLERK. Mr. McIntyre, aye.

    Mr. Hilleary.

    Mr. HILLEARY. Aye.

    The CLERK. Mr. Hilleary, aye.

    Mr. Rodriguez.

    Mr. RODRIGUEZ. Aye.

    The CLERK. Mr. Rodriguez, aye.

    Mr. Scarborough.

    [No response.]

    The CLERK. Ms. McKinney.

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    [No response.]

    The CLERK. Mr. Jones.

    Mr. JONES. Aye.

    The CLERK. Mr. Jones, aye.

    Mrs. Tauscher.

    Mrs. TAUSCHER. Aye.

    The CLERK. Mrs. Tauscher, aye.

    Mr. Graham.

    [No response.]

    The CLERK. Mr. Brady.

    Mr. BRADY. Aye.

    The CLERK. Mr. Brady, aye.

    Mr. Ryun.
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    Mr. RYUN. Aye.

    The CLERK. Mr. Ryun, aye.

    Mr. Riley.

    [No response.]

    The CLERK. Mr. Andrews.

    [No response.]

    The CLERK. Mr. Gibbons.

    [No response.]

    The CLERK. Mrs. Bono.

    [No response.]

    The CLERK. Mr. Hill.

    Mr. HILL. Aye.

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    The CLERK. Mr. Hill, aye.

    Mr. Pitts.

    Mr. PITTS. Aye.

    The CLERK. Mr. Pitts, aye.

    Mr. Hayes.

    Mr. HAYES. Aye.

    The CLERK. Mr. Hayes, aye.

    Mr. Thompson.

    [No response.]

    The CLERK. Mr. Kuykendall.

    [No response.]

    The CLERK. Mr. Sherwood.

    Mr. SHERWOOD. Aye.
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    The CLERK. Mr. Sherwood, aye.

    Mr. Larson.

    Mr. LARSON. Aye.

    The CLERK. Mr. Larson, aye.

    Mr. Kasich.

    [No response.]

    The CLERK. Mr. Evans.

    [No response.]

    The CLERK. Mr. Weldon.

    Mr. WELDON. Aye.

    The CLERK. Mr. Weldon, aye.

    Mr. Taylor.

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    [No response.]

    The CLERK. Mr. Abercrombie.

    [No response.]

    The CLERK. Mr. Saxton.

    [No response.]

    The CLERK. Mr. Meehan.

    [No response.]

    The CLERK. Mrs. Fowler.

    [No response.]

    The CLERK. Mr. Kennedy.

    [No response.]

    The CLERK. Mr. Blagojevich.

    [No response.]
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    The CLERK. Mr. Talent.

    [No response.]

    The CLERK. Mr. Everett.

    [No response.]

    The CLERK. Mr. Watts.

    [No response.]

    The CLERK. Mr. Maloney.

    [No response.]

    The CLERK. Mr. Scarborough.

    [No response.]

    The CLERK. Ms. McKinney.

    [No response.]

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    The CLERK. Mr. Graham.

    [No response.]

    The CLERK. Mr. Riley.

    [No response.]

    The CLERK. Mr. Andrews.

    [No response.]

    The CLERK. Mr. Gibbons.

    [No response.]

    The CLERK. Mrs. Bono.

    [No response.]

    The CLERK. Mr. Thompson.

    [No response.]

    The CLERK. Mr. Kuykendall.
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    [No response.]

    The CLERK. Mr. Chairman, on that vote there are 38 ayes, none in the negative. The motion is agreed to.

    The CHAIRMAN. The motion to close has been agreed to. Under the terms of the motion, both hearings will be conducted in executive session where only members and staff with proper security clearances shall be allowed in the room.

    I appreciate everyone's indulgence in taking care of this administrative matter.

    Today the committee starts its oversight of the Fiscal Year 2000 defense budget. While I believe that our military forces continue to confront a series of worsening problems, the President's admission that the services are facing serious quality of life, readiness and modernization shortfalls, and his recognition that increased defense spending would be necessary to address them marked an important milestone last fall.

    And there is some good news. The budget request does call for an $84 billion top line increase over the next 6 years. Of course, the President has indicated that $80 billion of this increase is expressly predicated on Social Security reform as well as on renegotiation of the Balanced Budget Act. With fairly significant strings like this attached, it is difficult to judge just how serious the President is about addressing even the limited share of the chief's unfunded requirements this budget professes to do.
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    Mr. Secretary, as I have indicated to you in the past, you deserve a lot of credit within the executive branch for getting the administration to at least recognize the seriousness of readiness problems, and more recently, to admit that the Rumsfeld Commission was right about the seriousness of missile threat.

    Likewise, you deserve much credit for convincing the administration to at least begin confronting defense shortfalls and the need for increased spending.

    The bottom line, however, is that this budget falls well short of adequately addressing the services' unfunded requirements.

    This budget does not represent a $12 billion increase in fiscal year 2000 or a $112 billion increase over the next 6 years. Instead, it proposes a $4 billion increase next fiscal year—and I would note that $2.9 billion of this $4 billion is perhaps suspect—and an $84 billion increase over the next 6-year plan. The difference is about $28 billion worth of assumed savings and reductions from within the budget. Even if valid, these assumed savings in no way represent increased top line spending.

    As I have just indicated, the degree to which the President is serious about the $84 billion increase remains an open question in my mind.

    Last fall the chiefs identified more than $150 billion in unfunded requirements, and I suspect that figure is understated since several of them have since testified that the problems are getting worse. Even if every dime of assumed savings from within the budget materialize, from inflation to fuel to BRAC, the 6-year plan still falls more than $40 billion short of meeting the services' requirements, which translates, on average, to about $7 billion per year. If the assumed savings do not materialize, the 6-year plan is almost $70 billion short or almost $12 billion short per year.
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    Mr. Secretary, despite assertions that this budget represents the first sustained increase since 1985, two of the next 3-year budgets, including the fiscal year 2000 budget before us, fail to keep pace even with record low inflation. They represent real decline. There is no sustained growth in this budget proposal until beyond fiscal year 2003, which occurs after both the President's term and the Balanced Budget Act expire. In fact, more than $50 billion of the proposed top line spending increase occurs after the Balanced Budget Act expires and on the watch of the future administration.

    Unfortunately, the picture is clouded further by the fact that the fiscal year 2000 budget appears to rely heavily on assumed spendings, spending cuts, and outlay gimmicks. This budget is adept at giving with one hand while taking away with the other.

    For instance, in order to fit the budget under next year's spending caps, the President proposed rescinding $1.6 billion of prior-year defense spending, no specifics, just a cut. Without getting into the technical details, the outlays associated with the proposed rescissions will likely result in many more billions of dollars in reductions, certainly more than the $1.6 billion, to the investment accounts.

    Also tucked away in this budget is a proposed rescission of almost $900 million of missile defense and intelligence funding agreed to by the President in last fall's omnibus appropriations bill. These rescissions are being proposed to offset the costs associated with the so-called Wye River Agreement. We have been assured that these funds will be reprogrammed in the outyears. But unlike already enacted emergency spending, future spending has to come out of somebody's hide.
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    In essence, the Administration is embracing last fall's budget deal, sacrificing congressional priorities and making DOD pay for it twice. On another front, the Administration has gone to great lengths in its packaging of pay and retirement proposals to demonstrate its commitment to taking better care of the troops and their families. Yet this budget proposes a cut in an already anemic military construction program by a whopping 40 percent next fiscal year. This $3 billion MILCON massacre was apparently necessitated last December by the fact that the budget was $3 billion of the desired $12 billion increase in fiscal year 2000.

    This is a shell game that will decimate the military construction account, likely compel a construction freeze or worse, and will almost certainly increase the cost of hundreds of construction programs.

    In the area of contingencies, the Bosnia operations are only funded for about the first 18 months of this 6-year plan. I hope this means the Administration has decided finally to pull the ground troops out of Bosnia in fiscal year 2001. Instead, I suspect it means that billions of dollars for future Bosnia operations are simply unfunded and will have to be budgeted later. It is unclear to me whether these funds will come out of the services' hides or whether the President will provide resources above the top line.

    There is also the question of $25 billion in assumed economic savings based on lower than anticipated inflation and fuel costs. As I indicated to General Shelton 2 weeks ago, it is one thing to bank on such savings once economic assumptions have proved inaccurate; it is quite another thing to project the sustainment of historically unprecedented economic conditions 6 years into the future and to build the hope for savings into the services' budgets.
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    Just last week, Alan Greenspan testified before the Senate and once again reminded us that economic assumptions and predictions have a consistent and remarkable way of proving all of us wrong.

    Speaking personally, I hope my investments at least return 40 percent in the next 6 years but I am not prepared to bet any of my grandchildren's future on it. To count on $25 billion in inflation and fuel savings as a source of future funding for critical defense needs is a gamble, to say the least.

    If the savings fail to materialize, where will the funding necessary to fill in the hole come from? The services' unfunded requirements are real, but the savings may never be.

    Mr. Secretary, while the budget may look good, one does not have to scratch it very deeply to identify problems ranging from its being $70 billion short of the chiefs' requirements to its heavy reliance on assumed savings, spending reductions and gimmicks. If each annual budget submission in the years ahead relies as heavily on assumptions and gimmicks as the fiscal year 2000 budget appears to, the services are in deep trouble.

    And finally, as I indicated earlier, even a cursory look at the budget materials indicates a number of outlay problems that are being dumped into Congress' lap. If recent history is any indication, CBO will score this budget $4 to $5 billion higher in outlays than will OMB. But I fear this may not be the end of it. This budget increases spending by more than $8 billion in the high outlay personnel and O&M accounts, yet total outlays for the entire budget function decline by about $3 billion. This fact alone ought to be a warning flag alerting us that there is some ''creative accounting,'' I call it, ahead.
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    In the context of an already serious CBO or OMB outlaying scoring mismatch, this kind of creative accounting could easily necessitate $12 to $15 billion in budget authority reductions to the President's request just to stay within the spending caps. It would take some time to understand this budget in detail. I just fear that what we will discover is that for every step the President wants us to take forward, the hard reality of the budget will represent two steps backwards.

    Mr. Secretary, I hope I am wrong. Maybe you can convince me otherwise.

    Before turning to our witnesses, I would like to now recognize the gentleman from Missouri, the committee's ranking member, Mr. Skelton, for any opening remarks he would like to make.

    [The prepared statement of Mr. Spence can be found in the appendix.]


    Mr. SKELTON. Thank you, Mr. Chairman. And I welcome Secretary Cohen, General Shelton for the first major hearings on the budget this year. I must tell you, and I am not by myself, that we appreciate the hard work that you do, representing the troops, making recommendations, and tending to the day-to-day business. We appreciate your efforts.

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    This is our first effort in putting together this year's budget, this year's bill, spending for our military. It is my hope that 1999 will be known as the year of the troops, the year that we in Congress took care of those many needs that those in uniform require to keep them, to encourage them, and to allow them to do the duty that you and our country call upon them. The troops, those in uniform, are our No. 1 assets. They are our seed corps. They are the ones that are the backbone of the military. We must take care of them; we must take care of their families. The adage is so true that you recruit individuals, but you retain families.

    I am personally so very proud of those in uniform today. They are good people. We must let them know that the American people appreciate them. We must let them know that Congress appreciates them.

    Also, Mr. Secretary, your efforts have not gone unnoticed, so let me compliment you on your efforts in making the American people more aware of the importance of our young Americans in uniform.

    We have problems in the personnel system, the backbone of our military; retention, particularly in the areas of critical skills such as pilots, high technicians, retention for the mid-career COs, for many of the junior officers; serious problems in two of the four services in recruiting.

    There is a high operations tempo. So many are gone so much from home, and it requires a great deal of the family and in many cases—in most cases—it is a wife and children. And I know there is a lot to the old saying, ''If mama ain't happy, ain't nobody happy,'' so we want to do our very best to take care of those families.
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    Also another area where there is a low morale factor is that in spare parts. We have to keep the spare parts going.

    So in this we look at not just the bad news; we look at the good news, the high quality of the young men and young women in uniform. As I say, I am so very proud of them, the high morale that we find in so many places. They are well trained. In some areas they could be better trained.

    Our National Guard, our Reserve Forces, are doing well. This is not the hollow force of the 1970's.

    No other nation approaches our technology. But if we look at our military, particularly our personnel, if the U.S. military were a patient in the hospital, the condition would be serious, but not critical.

    We can correct this, and some of your recommendations have made giant strides in this regard: pay raises, pay table reform, the retirement system reform, bonuses, a military thrift savings plan, better family housing, better barracks. I must say that this must be a multi-year effort, not just a 1-year effort. But this can be and should be known as ''the year of the troops,'' because if we know we are taking care of the troops and they know we are taking care of the troops, they are going to stay, they are going to be recruited easier, and you will have the personnel that can make things work.

    Of course, all of those high technology items that we in this committee work with so hard and try to produce through our industry will be used by the finest young men and young women who are able, capable; and whether they are called upon to do peacekeeping or whether they are called upon to enter into conflict, they will be able to use them because they are well trained and they have the finest technology available to them. So I compliment you on that step.
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    Let me say, however, that I do have some serious questions about the budget. Four years ago, Mr. Secretary, you are aware of the fact that I did a budget. And I challenge anyone to do it easily. You cannot do it. But I did and testified before the Budget Committee, where I recommended for the succeeding 3 years a $12 billion increase, $15 billion increase and a $14 billion increase.

    I recognize that you have recommended to the President an increase in military spending. It is a step in the right direction. It is turning the corner. Of that I am pleased. I think we need, however, to take a good look and see if we cannot do more and cannot do better. If it is a problem with the budget caps, then that is for us in this Congress to address.

    So thank you both for being with us. We look forward to your testimony and looking at the budget. But let's do keep in mind, Mr. Secretary and General Shelton, that this can be and should be and needs to be ''the year of the troops.''

    Thank you.

    The CHAIRMAN. Thank you, Mr. Skelton.

    Before turning to our witnesses, let me remind the members of the committee of the ground rules for questions. We are supposed to have a 5-minute rule. In the past I have let various members slip past this. It is an injustice to other members who do not get a chance to ask questions when we take up the more than the allotted 5 minutes. And I am going to adhere to that 5-minute rule; and I wish you would, too. Of course, we cannot cut the witnesses off and we would like them to answer fully the questions, but sometimes our members run past their allotted time. And so I would appreciate the indulgence of all of you in that respect.
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    Without objection, the witnesses' prepared statements and any accompanying materials will be submitted for the record.

    Mr. Secretary, the floor is yours.


    Secretary COHEN. Thank you very much, Mr. Chairman and Congressman Skelton, for your opening comments. I think, as you pointed out, there are problems, to be sure. But there is also great promise; and I would like to focus, first of all, on the promise and the performance of our troops.

    Mr. Chairman, it is a pleasure for me to be here to present the President's 2000 defense budget. I want to thank all of you, you, Mr. Chairman, and Congressman Skelton, thank all of you for the support that you have given to the military over the years. We would not be where we are today—whatever deficiencies or problems exist, we would not be where we are today, able to carry out the missions that we assign to the military, without your strong support. So it is always important for the Chairman and myself and others who come before you to see if we cannot indeed build and sustain a strong bipartisan commitment for a strong national defense.

    I also want to extend my greetings to the new members on the committee and want to pledge to you that I and the entire Department are looking forward to working with the new members. I had occasion to see several of you up at the Kennedy Institute during that program that I think worked so well.
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    Mr. Chairman, rather than going through my entire statement, I know that Congressman Sisisky has an early departure appointment, I will try to be as brief as I can and to summarize much of the testimony.

    I would like to refer to the charts, if I can, because I want to at least point out initially that the central aim of this defense budget is preserving our military excellence; and that was the focus of the meetings that we had with President Clinton during the past year and all of the meetings with the CINCs and the service chiefs and service secretaries and also in our budget formulation.

    As you and Congressman Skelton and others would be quick to point out, we have the finest military in the world, we are the envy of the world, and our forces continue to excel in every single mission that we assign to them, and so we have a great deal to be proud of. From Desert Storm to Desert Fox, our forces have performed with skill and precision in the vital Persian Gulf area.

    In Korea, where I just returned from a trip, our troops are maintaining their relentless vigil against aggression from the north. In Bosnia, as you mentioned, Mr. Chairman, the forces are adeptly accomplishing the missions that have been assigned to them to foster permanent peace in that area. Humanitarian crises from Rwanda to Central America, we have delivered relief whatever the obstacle. So we ought to be very, very proud of the men and women who are serving us and how they are carrying out their missions with extraordinary professionalism and competence.

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    As I mentioned, I have been traveling quite a bit, recently taking a trip to bolster the morale, Congressman Skelton, to our troops over in the Gulf. I flew out during Christmas to visit the troops in Saudi Arabia, also in Kuwait and on the Enterprise. Then I visited our forces in Yokota, Masala and then in South Korea.

    The troops' morale is extraordinarily high. It is higher now as a result of some of the proposals we will talk about in a moment. But I want to take this occasion to send the signal to them of how much we appreciate what they have given and what they are doing.

    On chart one, Mr. Chairman, this does in fact represent a turn in the direction that we are headed. It does represent an increase in defense spending since the end of the cold war, a sustained increase. The President does make available $112 billion in additional resources between 2000 and 2005. And, as you pointed out, there is an $84 billion increase to the budget top line and $28 billion from savings from lower inflation, lower fuel prices and the other economic adjustments which you mentioned which we can talk about in a moment.

    And these are real savings. When we look at fuel and inflation, those savings are real. They are not manufactured. Those are the savings that would ordinarily go back to the Treasury. As the President said, we are going to keep those savings. So those savings certainly for the fiscal year 2000 budget are real.

    If I could have chart two—I am told by Sandy Stewart, who I want to take this occasion to point out, this is her last meeting with the House members. She will be leaving after the preparation of the budget to the House and to the other body, and I know that she is going to be missed. She has really done an outstanding job in working with all the members and attending to your interests. And she has just advised me that this microphone should be pulled closer, so I am responding.
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    Mr. Chairman, on chart two, the 6-year budget supports the strategy we have talked about for the past 2 years, that is the QDR strategy, and the first element of that shape and respond and prepare.

    The first part of it is shaping. We are maintaining our forces forward deployed. We have, as you know, about 100,000 forward deployed in the Asia Pacific region. We have another 100,000 basically throughout the European theater as well as in the Gulf and in Korea. So we are forward deployed, and we are shaping the environment in ways that are favorable to our interests, and we are going to continue to do that.

    The budget also provides funding for our Cooperative Threat Reduction program, and that is some $2.9 billion over the FYDP. That is also very important in terms of our relationship with Russia and the threat that excess nuclear capacity and systems that need to be dismantled and destroyed could pose to our security if we do not have this program. So I am a very strong proponent of the Cooperative Threat Reduction program, and we have placed $2.9 billion into the budget for that.

    The second element is that of responding. And, again, I will not take the time to point out, but we have been able to respond all the way from humanitarian operations right up to the conflict that we are seeing taking place in Iraq today; and our men and women are performing in an outstanding fashion.

    We help maintain that high state of readiness and capability by providing for substantial pay raises. And, again, I will not take the time to go through into how it breaks down, but we are providing a pay raise of 4 percent across the board, the pay table reform, which can go up another 5.5 percent for individuals. And, in addition to that, we are changing the REDUX plan to go back up from 40 percent to 50 percent. All of that just sending that signal—and Congressman Skelton I want to agree with you—sending a positive signal has had I think an enormous consequence as far as our troops looking at us, saying, you have been listening and now you are responding. So that is what we have to do—to continue to send that kind of signal.
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    Mr. Chairman, in addition, of the fiscal 2000 budget funds, the most pressing requirements, and here you have pointed out correctly when the chiefs testified before this committee they not only testified to it but signed up to a chart that indicated that they believe they needed $148 billion over the FYDP in order to meet all their needs. This provides $112 billion. And we can talk about whether or not that is real or not real in terms of economic assumptions for the future or top line increases based upon a budget agreement as far as the surplus is concerned for Social Security and other matters, but this does in fact meet their most pressing requirements. It does not measure up to the $148 billion. It does meet the most pressing elements.

    The third element of the QDR is preparing. And here I would include the funding that I have included, and the President has included $6.6 billion for the National Missile Defense system. This is cumulative. It is the money that has been included by the supplemental as well, but it basically allocates $6.6 billion over the FYDP to make it a total of about $10.5 billion for NMD.

    I felt that we had the 3-plus-3 program, that we could not keep faith with you if we said we will wait until next year after the President makes a decision whether he is going to deploy the National Missile Defense system and then we will talk about funding it. I felt it was important to come here and say we are putting the money in—as far as the budget allocation is concerned—we are putting that money in and allocating it for the National Missile Defense system if the President goes forward next year and says he is prepared to make that decision.

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    In addition to that, we have—well, I have already talked about the pay raises and the changes that the chiefs felt was so important as far as pay table reform and REDUX.

    The follow-up point on the preparation is government's modernization. As you have heard me come before the committee in the 2 years past and say, we had to get to that $60 billion by 2001. We are on track to accomplish that. If we have the next chart, you can see we are a little bit short this year. I had hoped to hit $54 billion for Fiscal 2000. We will actually hit, roughly, $53 billion. So we are slightly below the goal that I had set for the next fiscal year.

    But you will notice from the chart we are actually above it; as far as 2001 it will be roughly $61.8 billion. So we are a little bit below this year, and in 2001 we will be above the $60 billion mark. So that is all part of our modernization effort and part of our response capability.

    A quick word if I could, Mr. Chairman, on defense reform initiative. We are streamlining operations. I see that Congressman Kasich is here, and we have talked about this in the past. We are streamlining our operations in the Pentagon. I set as a goal through the defense reform initiative to cut OSD staff down by a third. We will accomplish that result. We are about 90 percent there. We will finish it by early summer. And so we have set the reductions for OSD itself. We have set for reductions for the joint staff to come down by 29 percent. We have called for consolidation of agencies.

    We are moving to a paperless society as such. We will do much of our contracting through the internet and not have a large accumulation of documents which are unnecessary. We are using the credit card now for purchases under $2,500, a dramatic increase of the use of that credit card, eliminating lots of overhead and expenses.
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    We set up a Joint Electronic Commerce Office. Now we are having this commerce office which has been set up—a supply officer sitting at his base with a computer can key into the internet and order supplies through that system. So we are trying to bring the Defense Department into the 21st century by adopting best business practices.

    I continue to meet on a regular basis—Dr. Hamre and I meet with corporate executives asking them how they are able to achieve the kind of efficiencies that they achieve and how can we bring those into the Defense Department. And as recently as this past week, I had another meeting with six top CEOs talking about ways in which they manage their logistics supplies.

    So, Mr. Chairman, let me just conclude by saying that I would agree with you, this $112 billion—and we will talk about how we arrived at that and why it is constructed in the fashion that it is—that this $112 billion will in fact take us a long way toward meeting the requirements the chiefs have laid out to you in prior testimony. It does not get us all the way. And, indeed, if these savings do not materialize, then we have to face up to how to pay for them. But they are necessary. They are needed. They have been documented. And we will work with you to achieve that.

    So there is no backing away from the $148 billion. This, we think, is a substantial down payment in achieving those goals and dealing with the most immediate, pressing requirements of the chiefs.

    In closing, let me simply assure the American people that our military is ready to carry out any operation, any mission that we give to them. And, again, if you look at what is taking place day in and day out, they are performing magnificently. So any talk about having a hollow Army or having an Army and military that cannot function and cannot carry out its missions is simply wrong. They are the best and brightest. And we have some difficulties making sure we keep them, attracting them and retaining them, and that is why we are proposing the pay raises and other types of compensatory measures to make sure that we continue to attract and retain them.
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    But I want the American people to know that we have strong forces that are shaping the global environment in ways that are favorable to our interests and they are able to respond to the full spectrum of crises. We have an unrivaled human and technological foundation on which to prepare for future challenges.

    [The prepared statement of Secretary Cohen can be found in the appendix.]

    The CHAIRMAN. General.


    General SHELTON. Mr. Chairman, Congressman Skelton, distinguished members of the committee, it is an honor to be here with you today and to report on the state of America's Armed Forces. Rather than try to condense the rather lengthy written posture statement that I have submitted for the record, I would like to talk for a few minutes about our priorities for the future as well as some concerns, and then we can move on to your questions.

    At the outset, I, like Secretary Cohen, would like to pay tribute to our men and women in uniform, many of whom are deployed overseas far away from their home and loved ones, defending our Nation and our interests and helping to go keep peace in a still very dangerous world. America can be very proud, as you are, of its soldiers, sailors, airmen, Marines, and members of the Coast Guard because they represent the United States at its very best. That is why, Mr. Chairman, the package of compensation initiatives proposed in the President's budget are so important to the joint chiefs and to the unified commanders.
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    The Triad, as we have called it, of across-the-board pay raises, pay reform and return to a retirement formula based on 50 percent of pay in 20 years will meet our most pressing retention and recruiting challenges. Furthermore, this compensation package will address those concerns without upsetting the balance of a larger triad of enduring budget priorities. These are, of course, maintaining our current readiness, preparing for the future through modernization and sustaining the quality of the force by taking care of our people.

    It is often said, as Congressman Skelton just said, that we enlist a young man or woman but we reenlist a family. That is why we must act decisively now to provide an attractive compensation package, one that our service members and their families richly deserve.

    Mr. Chairman, as important as personnel issues are, they are not the only challenges that we face, as you indicated. Although the United States currently enjoys relative peace, the international security environment is complex, as you know, and dangerous. And as a global power with global security commitments, our Nation's important interests around the world are challenged every day. To meet these challenges we have the world's finest military force bar none. But we are a much smaller force today than we were just a few years ago and in many ways we are a much busier force, a busier force in terms of busier than we have ever been. That is because our national military strategy, as Secretary Cohen has just talked about, shape, respond and prepare, was developed during the QDR and it emphasizes the importance of military contacts and engagements as the best way to reduce the sources of conflict and prevent local crises from escalating.

    That is the right strategy for America and for our armed forces. But it is also a very demanding strategy, and we must ensure that we have the resources needed to execute this strategy, including the most challenging scenario that we face, the ability to prevail in two nearly simultaneous major theater wars. We can never lose sight of the fact that when deterrence and diplomacy fail, the ultimate mission of our armed forces is to fight and win the Nation's wars.
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    As I have said, that is a very demanding strategy, and I am concerned about the high impact the tempo of operations is having on our people, their families and our aging equipment. We have taken many steps, working closely with the service chiefs and the unified commanders, to better manage the operational tempo of the force, particularly those units that we categorize as low density, high demand. The services and the unified commanders are also taking significant steps to restructure forces to meet the rotational deployment realities of today's operations and also to reduce unnecessary administrative training requirements in between deployments.

    We are also leveraging the assets of the total force, exploiting the very significant and sometimes unique capabilities of our National Guard Reserve units and their personnel. We simply could not meet our global commitments, Bosnia, Europe, Southwest Asia, Central America, the Pacific, you name it, without our Reserve components.

    Finally, we are employing innovative approaches to meet our contingency requirements. A recent example of this is Operation Desert Fox against Iraq where we used a combination of very capable forward deployed forces able to strike with very little notice backed up by an alert force here in the United States ready to move quickly if needed. As all of you know, this operation was conducted with remarkable precision and professionalism, and we accomplished our military objectives.

    We cannot and will not allow ourselves, however, to become complacent with these measures. As this committee well knows, the pace of operations is one of the principal concerns of our people. Along with pay and retirement, it remains a constant drumbeat that I hear and that the Secretary hears when we visit with the troops in the field. We must continue to adapt, to manage and to innovate; and we must also ensure that we work all alternative solutions before we commit America's military to extended operations.
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    Mr. Chairman, even as we focus on current personnel challenges and the demanding pace of today's operations, we must also look to the future, as Secretary Cohen just indicated, to ensure that tomorrow's force is prepared to meet the security challenges of the next millennium.

    For most of this decade, procurement accounts served as bill payers for current readiness, contingencies and maintenance of our infrastructure, some of which is excess to our needs. As the Secretary has testified in the proposed DOD budget and supporting future years defense plan, we must keep our commitment to reversing the shortfalls in modernization. There simply is no alternative if we are to provide future soldiers, sailors, airmen and Marines with state-of-the-art weapons and technology to carry out their assigned missions.

    As I said, Mr. Chairman, in my witness statement, there is amplifying information on these issues as well as many others which are less in-the-news type of items but nevertheless extremely important to our future war fighting capabilities.

    We are making progress toward making our conceptual framework for future military operations, which we have spelled out in Joint Vision 2010, a reality. We have established a joint experimentation program under the unified commander currently responsible for joint forces training and integration, U.S. Atlantic Command, and the joint experimentation process is a multi-year series of simulations, war games and exercises that will rigorously test the key operational concepts of Joint Vision 2010. Our intent is to focus on the seams that exist between service core competencies and incorporate lessons learned from service experimentation and exercises.
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    Ultimately, the joint experimentation process will influence everything about the Joint Force of 2010: systems, strategy, doctrine, force structure and professional military education.

    Joint Vision 2010 describes how we expect to fight on the battlefields of the future, and we realize that we must have the accompanying vision for how best to organize our forces to support the joint battle of the future. That conceptual framework, which we call the Unified Command Plan 21, will be included as an annex to the 1999 Unified Command Plan recommendation. The Unified Command Plan 21 will lay out a flexible plan to establish a Joint Forces Command, a Space and Information Command, and a Joint Task Force to deal with the complex issues.

    In conclusion, Mr. Chairman, today the United States has the finest military in the world, a force that is fundamentally sound and still capable of executing our national military strategy and defending our interests around the globe. But, as I have also previously testified, the combination of a smaller force with many missions, recruiting and retention shortfall, aging equipment and a decade of reduced defense spending has produced some fraying at the end edge of that force. Thanks to the vigilance and the support of this committee and the Congress as a whole and the administration, these warning signs have not been ignored. We are applying corrective action now to avoid a downward spiral, and this budget I feel will go a long way toward meeting our critical personnel and readiness requirements.

    Mr. Chairman, thank you again for the opportunity to appear before this distinguished committee, and I will be happy to answer your questions.
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    The CHAIRMAN. Thank you, General.

    [The prepared statement of General Shelton can be found in the appendix.]

    Mr. Secretary, I was unaware that Sandy Stewart is leaving and I might take this opportunity on behalf of the committee to thank her for her work over a long period of years we have known her and she made our work a lot easier. And she has been an asset to you, too. Thank you, Sandy.

    I will pass for right now.

    Mr. Skelton.

    Mr. SKELTON. I will pass and yield to the gentleman to my left, Mr. Sisisky.

    Mr. SISISKY. Thank you, and I thank the gentleman from Missouri.

    I have to leave at 11:00 a.m.. Mr. Bateman and I have to leave. I was going to bring up the subject that the Chairman brought up that worries me, military construction, but I am sure Mr. Hefley is going to take care of that, and I will leave that to him.

    My other favorite subject, because I do have a favorite, is outsourcing of privitization as an answer to everything. Let me compliment you, Mr. Secretary, first. The other problem that I think we have had on this committee, and it relates to people, is health care both for retirees and in-service people. And I might say, through Secretary de Leon in hearings that we have had with Tricare, we have learned a heck of a lot, and we are learning a lot more. And even that goes back to outsourcing again.
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    We had a hearing in Norfolk last week. We had a hearing—Mr. Pickett and I and Secretary de Leon—and people were complaining and the contractor says, well, I hired an additional 96 people and am ready to hire more. And I said, who is paying for that? Is that part of your contract? He said, we pay for it. Well, right away it triggered in my mind people, No. 1, did not have enough; and the other complaint was the training of the people. And that is what worries me.

    When I was talking to a high official in TRADOC, I asked a specific question on outsourcing of TRADOC. Will this affect training of our people? He said, yes, no pause, no hesitation, it has some effect. And I worry about it because in this budget because you have savings to that and I am not sure that you always will meet—and you have heard me talk about morale of Federal employees—you cut one-third off of OSD staff or we hire consultants in their place. We looked at the budget, the readiness budget, a year ago or 2 years ago, fantastic growth in consultants. Which is fine. Most of them are in Virginia, so I love that. But is it right to do that and are we replacing them with other things?

    And I just bring that up for your comment. And my apologies that I do have to leave.

    Secretary COHEN. Well, thank you very much, Congressman Sisisky.

    Tricare is a new system. It is still in its evolutionary stages. The two principal complaints that we have heard with respect to Tricare——
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    And you are absolutely correct about Secretary de Leon. He has been working very hard on this issue.

    The two most constant complaints we have is, No. 1, the lines or queues to get into the facilities to get treated and, No. 2, from the doctors and the medical profession saying they are not getting paid on time and getting paid quite late. And those two factors have contributed to a good deal of the discontent in those areas.

    We are working very hard to correct them; and, like any new system, it takes time for it to eventually evolve into really a first class and high quality health care system. But we think we have made a number of changes that will bring that about.

    With respect to outsourcing itself, yes, indeed, with this budget we are looking to outsource as much as we can. You will note from the figures in the book we are looking at basically some 229,000 competitions that will take place for people. We think that that will produce significant savings. I think the range runs all the way up to about $11 billion over the FYDP. But, in any event, what we find in these competitions is that the private sector is winning about half the time and the government is winning about the other half of the time. But, in any event, the bids are coming in, saving about 20 percent.

    Mr. SISISKY. Excuse me. Since my green light is still on, I would take the liberty to say, you are right and I know. If you do away with the competition, who are you going to have to build against? I am talking about depots now. I mean, in all honesty, that is what creates the competition of the public depots. Who are you going to have to bid on that if you do away with those?
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    Secretary COHEN. As I indicated, the public is winning about half the time. But even when the depots are winning, the costs are coming down by some 20 percent so, ultimately, the taxpayer is benefiting. We are getting that kind of competition which you would want for your taxpayers as well. So we are looking at it. We are not going to award contracts to people who cannot carry out the job with quality and competence, and we think the competition still is the best way to achieve these savings.

    The CHAIRMAN. Mr. Stump.

    Mr. STUMP. Thank you, Mr. Chairman.

    Mr. Secretary, I thank you and your staff for appearing before us today; and I would like to concur in the statement that the Chairman made. Those of us that have had the pleasure of working with Sandy will indeed miss her services. Thank you.

    You stated in your written statement the strong support in the role I assume with the states addressing weapons of mass destruction. Would you expand on that a little to the extent you can in this open meeting, please, what your plans are? Is it going to be with individual states or exactly how?

    Secretary COHEN. We have tried to approach our relationship with the States in two respects. Number 1, we have set up so-called 10 regional rapid assessment and identification units as such. They will work within the 10 regional units of FEMA, the regional jurisdictions, basically to help train people to deal with a chemical or biological, or nuclear for that matter, type of an attack. So we are having these raid units as such work with local officials and governments to prepare ourselves for this type of an attack.
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    In addition, we have a program where we, DOD, is working with about 120 cities around the country to help, again, train the trainers. We are working with people to try and train them on identifying the nature of the substance that may have been released, how they can handle that, what kind of protective garments they should have, what measures they should have.

    We have, I believe, completed the inspections as such and are working with the communities, about 46 out of 120 so far. So we have got quite a ways to go. That is our effort to try to help local governments, State and local communities, to deal with what we believe is an emerging threat that is likely to face us in the coming years, if not sooner.

    Mr. STUMP. Thank you, Mr. Secretary.

    The CHAIRMAN. Mr. Spratt.

    Mr. SPRATT. I thank you both for your testimony. Let me simply make something clear if I can. What you are proposing the administration is seeking is an increase in your top line of $114 billion, and of that, $84 billion is new money; is that correct?

    Secretary COHEN. That is correct.

    Mr. SPRATT. And when we had the Chiefs here a couple of years ago, and each one was sort of outlining, laying out his confounded requirements, still not met requirements, which I understand total somewhere between $36- and $42 billion over this same time period, I got the impression that modernization was still short, that new procurement of systems. But as I look at the charts you have laid today, we are not only tracking the quadrennial review for modernization. If we were able to project and carry out, track this budget, you will have more money for modernization than you originally planned in the QDR; is that correct?
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    Secretary COHEN. That is correct.

    Mr. SPRATT. So how much of the unfunded requirement is still in the realm of modernization, new procurement?

    Secretary COHEN. Some of it is in the realm of modernization. The services, for example, if you took—let's take the Marine Corps by the way of example. The Marine Corps might wish to have a greater number of V–22's, go up to 36, for example, per year, as opposed to the 30 in which they currently are on track. So they would like to—some of that money would go to accelerating more in the field sooner. And each service might have the same type of desire.

    But much of it has to do with infrastructure repair, in terms of dealing with some of the facilities which are in need of repair, maintenance, that sort of thing, which need to be done, which are not seen as being the most compelling, pressing need. So that is where much of that money would fall within.

    But I think as far as modernization is concerned, it would have to use a portion of that to accelerate the introduction of these new systems in larger numbers sooner.

    Mr. SPRATT. I don't dispute the need for money, but I can recall even in the flush years of the mid-1980's when the defense budget was about to flatten out, Chairman Aspin had a series of hearings here with the Chiefs, and they all still had requirements exceeded even those budgets in that year. There has always been a planning wedge that exceeds what is actually available. Everybody is still pushing the margin a little bit.
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    Is that the same phenomenon here, or do you think these are more urgent requirements than we might have had in the mid-1980's?

    Secretary COHEN. They are more urgent than in the mid-1980's. We had a substantial increase in the budget at that time. We were looking at increases in the range of 5 and 6 percent, and following the hollowing out of our military back in the late 1970's, and so a dramatic increase at that time. And frankly, we have been living off of that. We have been living off the increases that were voted back in the 1980's.

    And if I had the chart up there to show you, since that time, when you look at where we were in procurement, and then where we arrived at in the early 1990's, it was about a 66, 67 percent reduction in procurement alone, and a 40 percent reduction in the overall budget, so that we have been living off that buildup that took place in the 1980's.

    And now we have come to the point where we have got to start replacing it if we are going to have the technology and the people to really run that technology out in the future years. And so if you look at this technology we have been using, the Tomahawk missile, for example, that is 1970's technology. We developed that back in the 1970's, and we are still using that to great effect. But the environment in which our men and women are going to have to fight in the future is going to be much more sophisticated, much more complicated, and so we have to start infusing our procurement budget with the kind of resources necessary to keep us that one or two generations.

    Mr. SPRATT. Let me quickly, before that light comes up, ask you about National Missile Defense. You say you will make a decision in June of 2000. Will that decision be based on the threat, or will it be based on technology, or will it be based on both? Do you think the threat warrants it now, or are you still awaiting evidence in the year 2000?
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    Secretary COHEN. Let me indicate, I have stated publicly that I believe the threat is not there just now, it will be there by 2000. For example, North Korea continues to test its Taepo-Dong missile. And we have seen testing taking place in Iran as far as the Shahab–3. We have a Shahab–3, 4 and 5 perhaps. I think by the next year at the time when the President will make a decision, the threat will be there.

    The next big issue will be is the technology there, and so it will be a major issue as far as the technology.

    We also in the meantime will be negotiating with the Russians the ABM treaty, which is a very controversial matter. But the fact is that the ABM treaty does serve our interest in holding down the levels of weapons that the Russians currently have and others and contribute to at least containing the proliferation problem, which I think is going to be unabated unless we are able to work out an acceptable arrangement.

    As I indicated before, these negotiations are under way. We have talked preliminarily to the Russians. We will continue to talk throughout. But when it comes down to June of next year, the President will base his decision primarily on the maturity of the technology, with some other factors, economic factors, obviously, but I think primarily the technology.

    Mr. SPRATT. Extending the time that it will take to deploy these systems, if that decision is made, you seem to indicate you think that technology still has some maturing to do?

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    Secretary COHEN. Well, I do. I am not the expert. I have been dealing with General Lyles on this, and I know that there is some disagreement on that. But we have looked at it, and saying if we stay—assuming that the President were to make a decision to deploy—to mandate that it will be deployed by 2003, when, in fact, the technology at this point at least doesn't seem—will not be really there or mature enough without having an extraordinarily high risk, I have looked at this and said would we rather force a deployment of a system that may not work, or have a little more testing done to be sure that we have a system that will work.

    We will have four tests between now and next June as far as an NMD program that will, I believe, put the President in a position to say, you know, the technology we think is there, enough to warrant me to say let's deploy. And then we have a series of additional tests, and we will not actually have the first full-up production model, a kill vehicle and the booster, until 2003. I think it would not be prudent to base the final deployment decision on a one-production vehicle, but if Congress decides that you still want to adhere to the year 2003, you can legislate that.

    I am not—I don't believe it is wise to do that, and based on my conversations with the experts in the field, this is a more prudent course of action to take. We would reduce the risks somewhat. It would still stay very high. And I have talked at length with the members of the Rumsfeld Commission, who I give a good deal of credit to, Mr. Chairman, in terms of the work that they had done to change the way in which we look at how we judge the nature of that threat.

    But we have not—with all of the members of the Commission, I believe they are satisfied that laying it out in this fashion is a more prudent way to go. If the technology matures that much faster, we could still try to hit the 2003, but the judgment was give a little more time in order to make sure we have got the right system.
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    Mr. SPRATT. Thank you, Mr. Secretary.

    The CHAIRMAN. While you are out there, I can understand the development of the technology part you were talking about, but you mentioned something about the threat developing by 2000 from North Korea. How about the threat from the people developing—like China?

    Secretary COHEN. Oh, Mr. Chairman, we have had a threat for some years in terms of being vulnerable to an ICBM attack. We have depended upon deterrence as our method of discouraging anyone from ever considering launching ICBMs against the United States. But the former Soviet Union, the Russians, have had many thousands of missiles that could—and warheads that could have struck the United States, and we would not have any active defense against that.

    We have depended upon deterrence. And what we are talking about here as far as this system—I should make this very clear. We are not talking about developing a system that would be able to defend against an all-out assault by the Russians or anyone else. We are talking about defense against a limited attack by a rogue nation or an accidental or unauthorized launch. That is the system that we believe we can, technologically at least, produce within that timeframe I have talked about. But we have been vulnerable to an ICBM attack for a long time.

    The CHAIRMAN. Thank you for making that clear.

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    Mr. Hunter.

    Mr. HUNTER. Thank you, Mr. Chairman.

    Mr. Secretary, in my judgment, this Clinton administration budget continues to destroy national defense. I have looked at the figures that you have given us in the so-called outyears, and I wish you would have somebody pull that chart back, the one that is entitled DOD Funding Increase, because that chart does not increase DOD funding $112 billion. In fact, the great majority of that chart occurs during some other President who has yet to be designated tenure in office.

    So this—when you have a title, it says, DOD Funding Increase, this President has no capability of determining what that future President's DOD budget is going to be, does he?

    Secretary COHEN. Nor does this Congress. I mean, the reality is that you can only vote for one session, and then you have to depend upon another session to commend another Congress to admit——

    Mr. HUNTER. Mr. President—precisely the difference between us and the President. We are not holding out budgets whereby we are promising what the defense budget is going to be in the future.

    So let me get down to what the President can do. What the President can do is increase defense funding on his watch; that means this year.
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    Now, the President's—the President's defense budget increase this year, as I understand it, is $12 billion roughly above the budgeted—the blueprint for national security; is that right?

    Secretary COHEN. It is $12 billion above what we submitted last year, that is correct.

    Mr. HUNTER. And I think we all agree that DOD is in trouble, that our national security is in trouble. We are 18,000 sailors short. We are 700 pilots short. The Army is short 1.6 billion in ammo. Marines are short 193 million in ammo. We have declining readiness rates, which I think is very critical across the board, Air Force, Marine Corps, Navy, declining an average of 10 percent.

    And I think it is important to understand what the Clinton Administration has done. The Clinton Administration has cut defense dramatically in terms of forestructure. We have gone from 18 Army divisions to 10; 24 active fighter air wings to 13; and 546 ships to about 333. So you have cut the forestructure almost in half.

    The tragedy is the half that we have left is not ready. And incidentally, with respect to your statement about how we can handle Desert Storm or other exigencies in the same fashion that we had, I talked to General Schwarzkopf last week, and in his opinion, you could not handle 10 Army divisions in house; you can't handle Desert Storm and win in the conventional fashion that we did when we fought that war.

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    So my question is this: We had the chiefs sitting in your position about a week ago with General Shelton. I asked each of them to tell us how much they needed to repair national defense on an annual basis. They each gave an answer, and they signed that answer. I want to show it to you.

    If you go across the board, the Marines said they need $1.7 billion a year, and this is excluding—and they put notifications up here, this is excluding personnel costs. Navy, $6 billion; Army, $5 billion; Air Force, $5 billion. If you add the $2.5 billion for the personnel costs, the pay raise, to that, that comes to $20 billion.

    What this President is capable of doing this year, what is within his power, is to increase the defense budget this year. He has offered, and I think some of the $12 billion is a little bit shaky, as the Chairman pointed out. But even if you accept in full faith that all the good economic assumptions are going to happen, and he is able to come up with $12 billion as a result of inflation savings, et cetera, obviously $12 billion is less than the $20 billion that your chiefs asked you to give them or told Congress that they need.

    Why aren't you coming up with the additional $8 billion?

    Secretary COHEN. Well, first, Congressman Hunter, let me indicate that I don't believe I made the statement that we could carry out Desert Storm today. I celebrated the capability of our military in having carried out Desert Storm and also Desert Fox. I have never suggested you could do the same thing with the same forces we have today, given the reduction in the size. I have also pointed out in past testimony nor do we have to that size of force given what we have done to Saddam Hussein in the past.
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    Let me turn at least to this issue here as far as the increase. Whenever you have a budget agreement, it is very difficult to increase the defense spending. We have caps that have been imposed. The President agreed to increase the top line over and above where we are last year by $4.1 billion. That is a real increase in terms of programs for the Defense Department.

    These items here, the fuel, the inflation, the MILCON, which you can talk about at length, these all represent moneys that can, in fact, be used for the military. It falls short of the $17.5 billion, which I believe they testified, not counting the pay raise. It falls short of that. But that figure was what they said they would need to make them whole; that they would fix all of the things that needed to be fixed. This takes us a good part of the way toward what they need. It is the most pressing. It is not everything. As I indicated in my opening statement, it doesn't meet the full requirement. And so we are short in that respect.

    Mr. HUNTER. Thank you, Mr. Chairman.

    The CHAIRMAN. Mr. Ortiz.

    Mr. ORTIZ. Thank you, Mr. Chairman.

    I think when we talk about the President, it is just like us. We are very dependent on what is recommended to the President. I guess you play a big role as to what you recommend, and then he decides on what decision he is going to make. But I am going to move to another area.
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    Mr. Secretary, I want to commend you and General Shelton on your successful efforts to increase funding for the Navy's Mine Warfare Mission. Can either of you please tell me what methods of analysis and criteria would be used to determine which mine hunting systems would be deployed to the fleet?

    And I ask this because of what experiences we had during the Persian Gulf War, and maybe you can enlighten me a little bit on this.

    Secretary COHEN. Perhaps the Chairman can give you the specifics on it, but my concern has been that we have spent too little time developing an organic capability to defend our ships which are being deployed in areas that are developing these countership capabilities as far as mine warfare is concerned. I have met with the Navy and the CNO on several occasions, and it always became a question of funding, and my preference was to find the funding within the Navy's budget, to say this is an issue that we really have to address because we are deficient.

    I can't—Mr. Chairman, you might be able to give a breakout of what technology we are calling upon right now, but we have—we are now developing an organic capability that will allow us to go out and protect our ships from this increasing mine threat.

    General SHELTON. I think probably, Congressman Ortiz, the best thing for us to do is to provide you with an answer for the record that will give you the specifics in terms of what the underlining foundation was for the study, but there is no question that is one of the shortfalls in our capabilities. We have in the past leveraged our coalition support. There are some of our partners around the world, allies, partners that have a fairly robust mine capability, mine detection, countermine capability. We have leveraged that in the past.
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    We are working the organic, and I will provide you with the underpinning for that—of that report.

    [The information referred to can be found in the appendix.]

    Mr. ORTIZ. Thank you.

    I also hear a lot about information about technology programs and the role of computers in the Department. And we have arrived at the point where we are dependent upon computers for almost everything that we do. I also know that it would be essential for the critical computer systems of those public services and infrastructures upon which the military rely, such as electricity, supply, and rail and air traffic control systems, to be millennium-compliant.

    I am very much concerned about the potential impact of the year 2000 problem relating to computer systems and adequacy of resources to ensure continuity of essential activities. I would like your views on the following questions: Are there sufficient funds and trained personnel available to the Department of Defense to be able to detect, to fix and validate through some of the formal field tests that all of the critical data systems will be millennium-compliant. And we have—what have we spent so far, and what is your estimate of the costs of DOD in the future years defense plan? Are major commanders being required to tradeoff other essential readiness exercises to perform mandated tasks because of a change of funds? And maybe you can, you know, expand on that a little bit.

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    Secretary COHEN. OK. Before I do, I just want to point out that we are going from an organic to a dedicated mine warfare capability. So this is a real change in our outlook as well as not having organic but dedicated to the fleet upfront. So that is a point I wanted to make on the mine warfare.

    With respect to Y2K and cyberterrorism, the need to protect our critical infrastructure, there have been some statements and gradings in the past which give Defense Department a ''D'' that is based on information a year old. We have made tremendous strides in dealing with the Y2K problem. In fact, we spoke with John Costinen yesterday, and he puts us in the ''B'' range as far as compliance. We have—our status is 2,304 mission-critical systems will be compliant by March 31st of this year.

    And I can go down the list. Our nuclear systems are Y2K-compliant already. We have a number of dealings with our allies certainly, and also we are working very closely with the Russians as far as setting up an early warning system just because we need to be concerned about their Y2K compliance and whether they are devoting the kind of resources, which exceed some $2 billion, as I recall, 3 billion that we are dedicating to the Y2K problem.

    The Y2K I think that we have well under way. The other issue is how to protect against an attack. And there we created the first military command organization, a joint task force on computer network defense. We have established control procedures over some 800 plus computer systems that we have in DOD. We now have control procedures and now are assessing the vulnerability, whenever we discover it, and then corrective action.

    A year ago we would be in a position where I couldn't come before you and tell you if our systems were under attack, whether they are under attack, what we could do about it. Today, 1 year later, I can say that we know it. We know when they are under attack. We have procedures to deal with it. We know how to diagnose it, and we know how to counter it. So we have taken tremendous steps to protect our critical infrastructure against cyberterrorist activity.
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    Mr. ORTIZ. Thank you very much.

    The CHAIRMAN. Mr. Bateman.

    Mr. Hansen.

    Mr. HANSEN. Thank you, Mr. Chairman.

    Mr. Secretary, I enjoyed watching you on C-SPAN the other day when you were speaking to the Illinois Legislature. You did your usual articulate and excellent job. However, I must respectfully say I didn't agree with all of your conclusions.

    Secretary COHEN. Well, I did mention base closures there, and I forget to mention it here.

    Mr. HANSEN. You knew I would catch you on that one, didn't you?

    Let me just say that I agree totally with what Chairman Spence and Chairman Hunter said about underfunding this military budget at this particular time. I agree that our military families are the best. There is no question about it. I was with the Chairman on the Belleau Wood in Kuwait not too long ago, and I have to say my heart went out to some of those youngsters who expected to be there for 30 days and now they are in 6 months and still no end in sight, and the deployment all over these areas.

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    I would like to mention two things that have kind of—I am a little weary of right now. One, I keep hearing the idea of all of these things that Congress bought the military that they didn't need and they didn't want. And if my count is correct, in the last 4 years we have put out $35 billion above the President's request. I would be curious to know how old this equipment is that is bought that is sitting around idle and unused. I hope that is not the case.

    The second thing is back to what you did such a great job in front of the Illinois Legislature. Frankly, I think it is kind of a myth, if I may say so, you get down to the idea and you say, OK, let's say we are going to give you $20 billion, or in 4 years from now we are going to cut the bases, cut a few bases out and save you $2- or $3 billion. Which would you rather have?

    I mean, when you really get down to it, we are looking way down the line. In fact, I can't see the savings from the last round of BRAC yet. I would hope it is going to come. I hope we put a padlock on those gates. I hope we see some savings, but right now it is on the other side. It costs a lot of money to pay for these things, the environmental cleanup and all of those type of things.

    So if you had your druthers, so to speak, which would you take? Wouldn't you rather have the money at the front end now rather than looking down the pike when we are probably out of all of this business and then save $2- or $3 billion?

    Secretary COHEN. I would like to have as much money as we need, frankly. There is no disagreement on that. Unfortunately, we are working—fortunately, depending upon your viewpoint, we are working within a budget agreement. So we have caps that have been established for spending, and one of the things that we have tried to do is work within those caps. And that is the reason why the President agreed to roughly a $4 billion increase in our top line spending, but we are up against those caps.
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    I would prefer to have money; anyone would prefer to have money up front than count on it in the outyears. But we also have to work within an estimate that we have, a balanced budget agreement.

    Let me talk quickly. I won't take too much of your time.

    In terms of dealing with base closures, we will realize roughly $14 billion in savings by the year 2000, as I recall, and $3 billion, and then about $5.6 billion each and every year thereafter. So we will be seeing real savings from the bases we have in fact closed.

    We still have some environmental money we are paying out, and that is in our budget to do that, but we believe that two more rounds are, in fact, necessary, and it won't affect you, it won't affect me, because those savings don't really start to get realized until 2008.

    I have put money in the budget, and I think the amount that I have put in the budget is just under $3 billion for base closure expenses for 2001 to 2005. That money we will have to spend in order to close the facilities, but with the idea that we will, in fact, save another $20 billion overall, and then roughly $3 billion annually. That will come into play in the year 2008 to 2015. That is when all of those systems that we are buying now have to be paid for.

    So we have got—in larger numbers, we have the Joint Strike Fighter coming along. We have a new aircraft carrier that will be coming along. We have all of these systems. Neither you nor I will—you may be here, but I won't be here during that time in order to then start paying for it.
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    So what we will do now is let's start taking the measures that we have to take today to make the savings and the investment to get the savings in the year 2008 to 2015.

    Mr. HANSEN. I agree with you, Mr. Secretary, there will have to be further base closures because of the excess capacity that is out there. There will be no question on that. Frankly, I say very respectfully, there is not a lot of trust in the last go-round. And I think we have had this discussion many times.

    What about the idea, General Shelton, the equipment that you did ask for and you aren't using; is that true?

    General SHELTON. I am not aware of any equipment we have got that we aren't using. And, of course, in this particular budget, as the Secretary pointed out, it is designed to continue the procurement at the QDR rates, and the additional money that was asked for that is not included in the budget for modernization would have been to have a more efficient buy or to buy at a faster rate in such areas as Comanche, as the Crusader, et cetera.

    Mr. HANSEN. Thank you.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you.

    Mr. Underwood.
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    Mr. UNDERWOOD. I thank you, Mr. Chairman, and I would like to—I enjoyed the presentation, especially the part about the year of the troops. I certainly endorsed the idea of revamping the REDUX system and putting some more money into pay raises.

    The issue that is always fascinating to me, and maybe I don't understand governmental accounting, so I understand putting more money into something. I don't understand really saving money and then reprogramming it. And it kind of reminds me of a kind of planning my wife and I do in terms of she is always saying, well, we will save money here, and don't worry, we will be able to buy more clothes down the line. And so it always—and the savings never seem to pan out.

    So in the line that you have there where you have $28 billion of reaapplied savings, maybe you could speak to the issue of where that $28 billion comes from, break it down either by the DRI and the BRAC. And in your presentation, Mr. Secretary, you said that the $14.5 billion in savings will come by the year 2001, but in your response to Jim Hansen it was 2003. So I am wondering is that a big part of the $28 billion right there?

    Secretary COHEN. It should be 2001.

    Mr. UNDERWOOD. It should be 2001. So could that number be broken down, and could you tell us what would happen if we don't get another round of BRAC closures?

    Secretary COHEN. Well, with respect to the difference on the $28 billion in reaapplied savings, if you will note that dotted line is where we projected our budget last year and those were the costs that we believed that we would incur in our budget.
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    The solid line right now is what we have—what we expect we will be paying out because of the drop in fuel prices and inflation, and that breaks down to roughly $3.8 billion in fuel and inflation savings that we anticipate. And the rest of it—oh, it's OO right now for the fiscal 2000 budget. And then also, as the Chairman has pointed out, there's some $4.7 in military construction and recisions. And that breaks down to $3.1 in military construction and $1.6 in recisions for just the year 2000 budget. That's how that $12.5 figure was arrived at.

    We are planning on those savings because of the economy that we have had to date. They are historical in nature. They could change, as the Chairman has pointed out, if the cost of inflation goes up, if fuel prices go up, then that of course changes the saving that we are projecting. We have to project in the future, but we have to put our budgets together in this fashion on a 6-year basis. So we are projecting these lines based on what past experience has been.

    If it changes, that will change the savings, that will present a different problem for us, in which case we have to come back either for top line increases or some other way to pay for it. But this is the way in which we have to project for our budgeting purposes.

    Mr. UNDERWOOD. Now how much is that dependent upon BRAC activities?

    Secretary COHEN. There is no BRAC activity here. It is all payout. We pay roughly $3 billion out for the next two rounds of BRAC. You don't get the savings until 2008, well beyond the FYDP. So we are making the investment, the costs we are bearing now, but you don't get the savings until 2008 to 2015.
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    Mr. UNDERWOOD. OK. On the question of our basic position in Asia, a matter which is of some concern to me, in your planning for the next few years, do you see the base structure and the overseas bases that we used there remaining relatively stable over the course of the next decade?

    Secretary COHEN. Well, I foresee us maintaining a regional presence throughout Asia-Pacific itself of roughly 100,000. What bases that would include and not include would of course depend upon a future BRAC proceedings, and no one can give you any guarantees up front in terms of what is on, what is off. But we intend to maintain roughly 100,000 for the indefinite future. That is something that we think is within our strategic interest.

    Mr. UNDERWOOD. So you still have on the table the possibility of using other countries other than the ones we have now, including Australia, perhaps stronger agreements with the Philippines in the future?

    Secretary COHEN. Well, we don't have any bases in Australia. We have an agreement that we have signed with the Philippine Government, it has not yet been ratified by the Philippine Senate, which should be ratified, we hope, sometime by the spring. But it will allow us a Visiting of Forces Agreement. But there has been a significant shift. Many of the Asian countries and Asian-Pacific countries would like to see us maintain a visible presence and so they are making facilities available to us. Singapore is a good example where they built the new pier to be completed this year.

    Mr. UNDERWOOD. For the carriers.
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    Secretary COHEN. Yes, for the carriers.

    Mr. UNDERWOOD. I want to amplify if I could, Mr. Chairman. I recently visited China, and even in many of the discussions I had with various officials, they all tacitly agreed that in the long run American presence was good for everybody, including themselves.

    Secretary COHEN. Right.

    Mr. UNDERWOOD. Thank you.

    The CHAIRMAN. Mr. Hefley.

    Mr. HEFLEY. Thank you very much, Mr. Chairman.

    Mr. Secretary, in one of the statements you made in your statement, and I will just do this as an aside, was that you visited all of these bases, these troops, these ships, and the morale is high. And we like to say that. But if you are really getting that—and I assume you are, I don't question your word at all.

    Secretary COHEN. Dramatically, when I announced the pay raise and the changes.

    Mr. HEFLEY. That does help. I am getting that feeling. But I have never seen the morale so low. I have visited not as many as you do, but quite a number of these facilities. Talked to a lot of airmen and the soldiers and the sailors, and the morale has never been lower in my experience here. They say the pay is lousy, the retirement is lousy, the living conditions are lousy, the OPTEMPO is lousy. The ability to do their job because of lack of spare parts and that kind of thing is lousy.
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    In a recent grouping of enlisted people that I talked to, 93 percent of them said they were not going to make a career of the services, and the only ones that were going to make a career of the services were the ones that had so much time in they couldn't afford not to; otherwise they said they would get out, too.

    So we are hearing different things. And I think we need to take both into consideration.

    Secretary COHEN. Could I just respond quickly?

    Mr. HEFLEY. Sure.

    Secretary COHEN. If all of that were true and everything that you have identified were lousy, we would be doing a lousy job. We are doing an outstanding job. So even though there are some complaints and some deficiencies, we are trying to address them. But I must tell you, whenever I go out in the field and I see them performing, I couldn't be more proud of them. And I find the morale extraordinarily high, even though they identified pay. We have listened to them. We have talked about REDUX. We have listened to them. We talked about pay table reform. We have done that in this proposal.

    So we are trying to address their complaints. To say that they are always on a high as far as morale is concerned is wrong. But I would say overall, every time that I visited them, they are very proud of what they are doing. They are extended, overextended, and we are now implementing management reforms to try to deal with that.
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    We have our monthly review as far as the Joint Requirements Oversight Committee. We have the jammer system whereby we are identifying on a monthly basis who is going where. So we are trying to lower that operational tempo because of the complaints we have heard. But I must tell you, if everything were lousy, we wouldn't be doing the kind of job we are doing.

    Mr. HEFLEY. We have some good people, and they are doing a good job. And I don't think there is any question about that. But I am saying what they are telling me. Now you can rationalize in your own mind, however you want to, that that translates into the fact that they are satisfied and happy. But they are not satisfied and happy. And I think you ought to understand that.

    Let me get to the other parts of your budget here. I have tried to listen carefully and look at your presentations, and I have yet to receive an adequate explanation of one of the principal problems I see with this budget request. And that is the critical errors in budgeting for the military construction and military family housing programs for the upcoming fiscal year. In his remarks, opening our procedures today, Chairman Spence referred to the extraordinary low request for appropriations in the coming fiscal year for military construction.

    $5.4 billion would be the lowest nominal appropriations for MILCON in 19 years. Just last year the budget projects for the fiscal year showed a committment to $8.7 billion for these accounts. I believe we need the commitment of additional resources to begin to fix the longstanding and corrosive problems in the Nation's enduring military infrastructure.

    This infrastructure is not overhead, and it is not luxury. It directly supports readiness, training, and the quality of life for the military personnel and their families. The testimony on the record is not ambiguous. Crumbling infrastructure threatens military capability and retention.
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    I was hopeful a year ago that the Department might be prepared over the long term to begin to put a few modest resources toward the problem. Sadly, the Department has chosen to kick the can down the road yet again by choosing to build an $8.5 billion program and spread its funding over 2 fiscal years.

    And quite frankly, Mr. Secretary, I am deeply disappointed with this approach to budgeting. It simply is not good government and will not deliver its promises on time. The Department asserted yesterday in our press release that this request represents a robust construction program. Senior officials of the Department have suggested it means a commitment to the revitalization of military facilities.

    The fact is that this budget request will not revitalize facilities, it will merely delay the completion of badly needed facilities to support readiness, as well as critical improvements in military housing. The MILCON request rests upon a shaky financial structure and relies on a number of unsound budgetary gimmicks and risky administrative assumptions that will affect execution.

    3.1 billion, 36 percent of the funds needed to implement the Department's program, would be pushed into the following fiscal year. Moreover, for each new-start construction project listed in the budget request, you have requested about 25 cents on the dollar for fiscal year 2000. Now I see the red light is on, and I take note of the Chairman's request that we follow that. But I do have a lot more wisdom here I would like to share that with you, but I will do that in writing.

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    Secretary COHEN. I have a lot more replies I would like to give you. You raise a very valid point, Congressman Hefley. I was bumping up against the caps: How do I produce $12 billion, $12.5 billion in programming power for the military? This is not a system as far as the advance appropriation that I have endorsed in the past, nor do I like it. Other departments have used it. It is a one-time proposal for 1 year only, to get us by into that 2001.

    But NASA uses this. The Department of Energy has used it. As a member of the Senate, I didn't particularly like it either and resisted it, and so I have only proposed it for a 1-year time, that total amount of money will be picked up in fiscal 01. But it is the only way that, frankly, I could get to that $12–1/2 billion real program authority for the services to buy. And so I have asked for a 1-year change on that.

    But it will not affect our building program. All of the contracts will be executed under the year 2000 without any hindrance, and we pick up that cost in 2001 after we get the budget summoned. But I agree with you; as a general rule, I don't favor it. I had to do that here in order to come under that cap. And that is the reason for it.

    Mr. HEFLEY. Mr. Secretary, I understand the reason. I will be very brief here. But in the past, we have done some things in funding, but it has been on a complete and usable standard. And we have done this on large projects. But in this budget, even minor projects are done this way, with no way to tell how you have anything complete and usable. And if the projections for next year fall short, as they have between the last 2 years, some of these projects will never be done and the costs will go up.

    Sorry, Mr. Chairman.
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    The CHAIRMAN. You can put it in the record as I said, Mr. Hefley.

    [The information referred to can be found in the appendix.]

    The CHAIRMAN. Mr. Reyes.

    Mr. REYES. Thank you, Mr. Chairman.

    Mr. Secretary, General Shelton, thank you for being here this morning, and giving us this opportunity. I first want to express my appreciation, Mr. Secretary, for your recent decision on restricting the deployment of military on the border. I think that is very much appreciated not only by those of us who represent border districts, but by the people that live on the borders. So we really appreciate that decision.

    Having said that, I want to kind of express concerns along the same lines as my colleague, Mr. Sisisky, in terms of the outsourcing and privitization issue. And I heard you say that from our experience to date, from the Department of Defense's perspective, about half are won by the private sector and half are won by in-house Federal sources employees. And I was wondering how are we tracking that.

    Is there a way that we can see those reports or that we can evaluate that kind of information, because I have, from personal experience, had an opportunity to do some of those kinds of things that showed that two things were important. The first one was we didn't save money. And the second one was it affected our ability to carry out the mission. That was my experience as a chief in the Border Patrol.
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    But I am more concerned about it as it relates to military facilities, because in the context of contracting out or outsourcing, we may get ourselves into a situation where we can't recoup, and and it affects our ability for readiness.

    Secretary COHEN. Congressman, I have just been advised that Secretary Gansler has in fact sent a report to Congressman Sisisky, and will make sure that you get the same report. And I won't take any more time from your questions to go through this. But we believe that the studies have been done. And the record shows that there have been significant savings.

    You do raise the other issue in terms of making sure that we don't define our competency down. We want to make sure that we are always—we have our critical missions and are really taken care of by in-house personnel.

    Mr. REYES. Well, good. Thank you very much. And I would like to quickly switch gears to MEADS and ask a couple of areas. Can you please clarify for me what the MEADS program is now? And also in the context of what we are doing with that program, do we have a system, a removable system that we are working toward to protect our troops in the field, and in that—what would be the Maneuver Force Air Defense System of the future, if, in fact, we haven't made the progress we intend to in MEADS?

    Secretary COHEN. We have engaged in a rather substantial restructuring of that program as originally envisioned. The MEADS program was really not affordable to us or to our German-Italian allies. Dr. Gansler, who is behind me, can perhaps give you a more technical description of what is involved in the MEADS as restructured. But basically we are trying—we agreed that it is important to have a system that is mobile, that has a 360-degree radar that can in fact track systems that might be incoming to our troops.
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    We have restructured the program so that it would be a combination of the PAC–3 program that we are developing, plus working with the Europeans to have perhaps a system that would be compatible with that, so it would work for them and us as well. But Dr. Gansler would be in a better position to give you the full details on that. If you would like it now, we can do it now, or I can get you a separate report on it.

    Mr. REYES. Probably a separate report would be better for me.

    Secretary COHEN. And we are meeting—we are carrying on our discussions as of this time with the Europeans, I think that they will see that the original program as structured was not affordable, and that this makes more sense for them and for us.

    Mr. REYES. And so based on your response and your comments there, the reaction of our European partners has been—you are categorizing as favorable?

    Secretary COHEN. I would say disappointment, but also an element of realism, saying that this system as restructured can work for all of us. It was a disappointment that the original MEADS program did not go forward, but we believe that in working with them we will be able to come up with a satisfactory resolution of it.

    Mr. REYES. Very good. Thank you, Mr. Chairman.

    The CHAIRMAN. Mr. Buyer.

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    Mr. BUYER. Thank you. Thank you, gentlemen, for coming over. I want to go fast, because I don't have a lot of time. Let me just jump right into, extend to both of you, to also include General Jones, your active work in the Guard and Reserve integration issue. We have come a long way in 2 years and I just want to say let's stay at it.

    With regard to recisions, I am concerned that since 1997 Congress authorized and appropriated funds for seven KC–130Js. I have in my hand here a letter that General Krulak, Commandant of the Marine Corps, had sent to the Speaker on September 28 of last year, saying that ''Your Marine Corps needs the KC–130's.'' And I am hearing rumors two of them may have been included in a recision package. I just appreciate your confirmation and comment on that to clarify that.

    And the other is last month I promised the service chiefs that I would help solve some of their concerns that they had in the personnel arena. I intend to hold the hearings on recruitment, retention pay, pensions, and health care. And my intent is to go into the field. The first hearing I will hold is down at Norfolk with the Navy later on this month. I am concerned with regard—on the recruiting, General Shelton, in your statement you said that the reality is that recruit quality today is moot; excuse me, you said in your written statement, all of the services met their quality goals.

    I want you to explain what you meant by that to me, because the reality is I think that recruit quality is a moving target at the moment. And the Army reduced its quality standards just 18 months ago and is now on the verge of another reduction in recruit quality because they cannot make their recruiting goals. So it is rumored to me. The Navy just this month announced a major reduction in recruit quality standards, while still above their stated goals, while the Air Force and the Marine Corps have sustained erosion to recruit quality that is most troubling. And potentially it appears that the Army, Navy, and the Air Force will all miss their recruiting goals and will come in under their end strength floors as set by Congress in fiscal year 1999. So I would appreciate it if you comment on that.
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    And, General Shelton, during the questioning in the other body, on the REDUX retirements that came over in the proposal that my subcommittee will look at, you acknowledge that there was little analysis to support the repeal of the REDUX retirement as an effective retention tool. So I want you to comment. Explain that one to me.

    Also, I bring to both of your attentions that on September 24th of just last year, the House had voted on the House floor to pass the bill, and I had to hold a hearing on the shortages in the health programs. So now I want your clarity with specificity. If you don't have an answer, turn to someone, Secretary Cohen, that may have the answer. But I have the testimony right here with regard to—the Surgeons General at the hearing testified about the projected shortfalls. Effectively Admiral Nelson testified that the shortfall was between $157—between $156 and $157 million for year 2000.

    General Roteman testified that it was at $288, and General Blank referred to unfunded requirements of $153 million. Now, it has been also rumored to me. So I want you to confirm or deny or clarify that from this, it is my understanding that this is what may have happened in helping clarify these shortfalls, is that in order to, quote, solve this funding shortfall, what has been done is that there has been a reduction in the FY00 Department of Health programs' funding for the services by a total of $118 million.

    You took $15 million out of TRICARE management activity, $36 million out of real property maintenance, $20 million out of information management and $38 million out of the advanced medical science.

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    So my question to you: Were the services required to reduce their Department health programs by $118 million as part of this budget in an effort to achieve full funding? So why does it make sense to further reduce the health program that is already short-funded and then to call it a fix? So I would appreciate you to clarify those questions I have just asked.

    Secretary COHEN. Let me—before turning to General Shelton for the bulk of your answers, I want to thank you personally for the strong statements you made when we were involved in Desert Fox. It was important. I know it was controversial at the time in terms of the timing. But it was very important that there be voices that speak out in favor of what we were doing under those circumstances. So I want to thank you for that.

    With respect to recruit quality, I will turn to the Chairman on that. But before we get to the Chairman, I would like the Comptroller to specifically answer the questions in terms of the funding of the health care program. I believe he is in the best position to give you the details on the funding.

    Mr. BUYER. Thank you, Mr. Secretary.

    Mr. LYNN. Thank you very much. Mr. Buyer, we have talked I think at some length about this issue prior to the budget being closed. We have increased the Defense Health Program funding across the FYDP included in FY00. We did that in consultation with the Surgeons General. I believe, I hope, that we will say what they said to us; that the funding should meet in 00 their needs.

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    Some of the allocation—some of the funding came from an increase to the Defense Health Program from other areas of the Department. Some of it came from a reprogramming in a couple of different services. And some of it, you were correct, in some of the items that you cited we reallocated some funding from central funding into the Surgeons General area and into the direct care program in order to meet the essential needs of the direct care.

    So it was a combination of things. We believe this program is funded to meet all of the needs as I identified by the Surgeons General, and we met with them personally to review that with them.

    Mr. SHELTON. Congressman Buyer, in reference to the quality comment. My comment specifically was that the services met the quality goals. Those are established by DOD, 60 percent category 1 through 3-A, and 90 percent high school graduates. The alarming thing is that for the last, for about the last 3 years, there has been a downward trend in each of those areas. So while they continue to meet the goal, it is going downhill. And that is the reason that we are concerned.

    And regarding the evidence of REDUX, as you know, we live on a moving train, and at any given time you can take a snapshot of that train. And at the last hearing when asked specifically about evidence, the evidence has been coming in. The Rand study that was recently completed regarding military compensation shows that they think that the new pay table and the reform of the retirement system, the REDUX, would increase overall retention by 14 percent and increase the appropriation of enlistees that would stay for a 20-year career by 20 percent.

    We had an Army survey last spring that showed the difference in satisfaction among soldiers that entered before and after REDUX. Since 1992, retirement benefits are the fastest rising reason for leaving the Army for both officers and enlisted, and paying retirement benefits were No. 1 and No. 3 of those reasons cited for leaving the service.
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    Looking at the Navy, retirement moved from 15th position in 1995 to fifth in 1998 and, is the most important reason for leaving the Navy. And since 1992, retirement benefits have steadily increased as the reason for leaving in each of the services. It ranks right now as one of the top three. So that was the evidence that we have at this time.

    The CHAIRMAN. Mr. Allen.

    Mr. ALLEN. Thank you, Mr. Chairman.

    Mr. Secretary, as you know, my district director in Maine served you well during your time in the Senate for 8 years. He has a favorite expression, which is, ''No good deed goes unpunished.'' Listening to some of the criticism today, that expression came back to mind. I would have thought that even in Washington, the $112 billion over 6 years was real money. And I would have thought that even here we would recognize that you have to operate within the budget caps that this Congress has passed.

    But my question is actually about—one question is about an omission. I note that the fiscal 2000 budget calls for the procurement of just six ships. And that again is not at a rate which will sustain the 300 ships that the Navy has called for under the QDR. And I am really wondering, particularly in light of almost $7 billion for National Missile Defense that I will come to in a moment, the shipbuilding rate stays flat. And I am wondering how we carry out commitment of maintaining a forward presence in light of that fact.

    Secretary COHEN. If you will look at the projection as far as the modernization program is concerned, you will see that we actually move up to 7 and 8 ships, 8 and 9 ships actually in the fiscal 05, but we move from fiscal 01, we go up to 8 ships a year, and that is sustained through 04, and then we go up to 9 in 05. So we are in fact going up.
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    Mr. ALLEN. You are getting there.

    Secretary COHEN. We are getting there. So we have in fact added ships, and we will sustain our shipbuilding program.

    Mr. ALLEN. Am I right in thinking it takes 11 or 12 a year to sustain 300 with a 35-year life?

    Secretary COHEN. Eight to 10.

    Mr. ALLEN. Eight to 10.

    My second question has to do with National Missile Defense. There has been a lot of conversation about the Rumsfeld report. But we also saw last year the Welch report and, General Shelton, I think you referred to some of the themes in the Welch report in your testimony before the Senate Armed Services Committee.

    The Welch report said this is a program which is in its present form ''a rush to failure.'' And the concern was the amount of risk in the program, because we are trying to develop it faster than the technology will allow. And I am really concerned about this issue, particularly in light of the fact that I think we have had no tests of the National Missile Defense. Some of the tests, you know, whatever it is, 5 of 22 in Theater Missile Defense, which I support and believe needs to be encouraged—but National Missile Defense is another whole problem. It seems to be that we have relied on deterrence to defend against thousands and thousands of missiles.
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    And I hope that we will consider the technology, the maturity of the technology, as you put it, but also look at the risk as it exists in whatever year we start to consider this. North Korea might be a different country; who knows what the risks will be? And I am afraid that both the House and the Senate are rushing ahead, assuming that the only question is technology, and I think that is a mistake.

    But I would appreciate your comments or General Shelton's on the technology risks in National Missile Defense. If you could elaborate, I would be grateful.

    Secretary COHEN. I think the testimony has always been it is a very high-risk program. Extremely high risk. Trying to stay within the goal of deployment by the year 2003, I believe that the Missile Defense Office has testified and General Lyles has testified on many occasions that this is extremely high risk.

    What he had proposed by stretching it out to 2005 or sooner, if possible, it gives a little more testing and is a little more reliable, but it is still high risk. So everybody should understand that this is a program which is very complicated, very difficult, and that involves very high risk.

    General Welch was also part of the Rumsfeld Commission, so he has served in both capacities. And again I give a good deal of credit to the Rumsfeld Commission. They did an extraordinary job in analyzing exactly what the methodology that has been used that allows us to calculate when the threat is going to emerge. So as a result of his and the Commission's efforts, we have in fact looked at it differently now. So the threat will be sooner than we had planned. They are also concerned about this rush to failure. And that is the reason why. It is not to delay the program, but to say should we have a few more tests and to satisfy ourselves we are taking as much of the risk out as we can, knowing that it is very high risk.
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    Mr. ALLEN. What I am concerned about is confusing capability of North Korea or anyone else with the threat. It seems to me capability is part of the threat but not necessarily all of the threat, that we have to go back to deterrence and keep thinking about that.

    Thank you very much.

    The CHAIRMAN. Mr. Bartlett.

    Mr. BARTLETT. Thank you very much.

    I want to thank you all for meeting with us today.

    Let me first ask if you could answer Mr. Buyer's question that the press of time prevented you from answering as to whether or not the rescission package includes cutting two KC–130Js.

    Secretary COHEN. Yes. And we do not have a specific rescission package. We have identified the amount that would be required to meet that $12.5 billion amount, but we have not proposed a rescission of any specific items. In fact, we will not until we meet with Members of Congress since you will be very much involved in any kind of decision. So we have had no specific recommendation.

    Mr. BARTLETT. But, as of now, you are suggesting two KC–130Js be cut?
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    Secretary COHEN. We have not suggested anything. We have not made such a recommendation.

    Mr. BARTLETT. Thank you.

    I would like to return to Mr. Reyes' questions relative to the MEADS program. I am pleased that you reaffirmed the service's position that they really need a system that is mobile, that has 360-degree capability, that none of the other systems have that. I am very disappointed that you are apparently going to cancel the MEADS program. I do not think that it is at all certain that we can meet those requirements with any of the other systems, and this now leaves our troops in many circumstances unprotected.

    I also have a question relative to the international situation. This is not the first time that we have reneged on our commitments to international partners; and I am wondering what, in your view, this does to our credibility with these other countries. First of all, I would like your comments on how are you going to meet the need which you agree occurs and, second, on what this does to our international reputation. Then I have a brief question relative to the THAAD test program.

    I understand that we have slipped the flight test No. 9 because of problems with the target, that the suggested solution to that is to switch the booster for flight test No. 10 for flight test No. 9. And my question relative to that is, are you satisfied with this as a solution to the test problem for flight test No. 9? And, if we do that, does this put at risk flight test No. 10?
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    Secretary COHEN. Let me respond, first of all, about the need to have a system that would provide 360-degree coverage and a mobile system for our troops. We do need that.

    What you will notice from the MEADS program, we have raised the dollars from zero, which we had in from last year's budget, we put $150 million into the budget to restructure the MEADS program. And so we are working with our European counterparts. We went over and presented to them, saying, this is the cost of this program which you have paid a part of and we have paid a larger part of; we cannot afford this system. And it will not be even deliverable until, I believe, as I recall, 2008 or 2009. So the date of the IOC was quite far into the future, and the costs were really getting quite extraordinary.

    So Dr. Gansler and others have been meeting, as well as myself, with our German and Italian counterparts, laying out the options. I believe, while there is disappointment that MEADS as originally conceived is not going forward, the program as restructured will be beneficial to all of us. So that is the best answer I can give for you now. I can have Dr. Gansler talk to you privately for a more professional judgment.

    Mr. BARTLETT. If we need this capability, how can it not be affordable?

    Secretary COHEN. Well, in developing the PAC system, for example, a brand new missile, we are finding there are difficulties in developing this missile. We need a lot of systems. We need the PAC, the Navy theater wide, we need a number of systems to protect our forces, but we are pushing technology as fast as we can do it.
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    I will have to get back to you on the answer of moving one test from nine to ten and whether that causes a serious problem. I will get you a technical answer on that one.

    [The information referred to can be found in the appendix.]

    Mr. BARTLETT. Thank you very much, Mr. Chairman.

    The CHAIRMAN. Thank you.

    Mr. Snyder.

    Mr. SNYDER. Thank you, Mr. Chairman. I appreciate your close following of the 5-minute rule, those of us who sit in rows 2 and 3 here.

    Thank you, Mr. Secretary and General Shelton, for being here today.

    Mr. Secretary, one of the items that I saw in the Air Force budget, and I assume it is in the other budgets also, is a decrease in dollars available for real property maintenance. Is that one of those areas that you would have preferred not to cut?

    Secretary COHEN. The answer is yes. That is something we really need to focus on, and it is important, but it was not the most compelling need we had to address.

    Mr. SNYDER. It does have some negative dividends down the line, does it not?
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    Secretary COHEN. It impacts on morale. It also impacts on readiness. To the extent soldiers are not operating in an environment which is conducive to high morale, that affects it.

    Mr. SNYDER. Robbing Peter to pay Paul comes to mind.

    Secretary COHEN. I understand.

    Mr. SNYDER. I also want to make a comment on the Cooperative Threat Reduction program. I have visited Russia a couple of times. I know you are very supportive. In fact, I cannot find anybody in the military or intelligence community that is not supportive of that program. It has been a great success. But, as you may recall, just a couple years ago it has been quite controversial in the Congress; and I think that has been turned around now because of a lot of comments and education that you all have done.

    I went down to Fort Benning a couple days ago to visit the School of the Americas. Now, it is a much smaller program monetarily, but it does have some impact on another region of the world, Latin America. It also has become highly controversial. It also had two or three very close votes in the Congress. I have supported the last couple times we had a vote on it. But, you know, what can you say to my constituents down home that write me on a fairly regular basis, close the School of the Americas?

    Secretary COHEN. I am always perplexed about the notion that armies and other military people who come to train with the Americans are simply being trained how to be more brutal.
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    What we find is that the association that various militaries have with our people is to upgrade the standards, to talk about how, in fact, they can train subordinate to civil control, to have them really measure up to the kind of standards we have for our military. We think that is very beneficial for them. And so the notion that somehow we are training people to be more skilled in the exercise of brutality is contrary to our goals and I think contrary to the experience.

    There have been exceptions, and we try to deal with that in a very proactive way. But I would ask Chairman Shelton to give you his impressions of the people who come into the School of the Americas, the program. Dramatic changes have taken place in South America, that you see democracies for the most part prevailing throughout. You have civilian control over the military. You have judicial systems that are not set up to punish those who abuse. We think that the training that we provide helps to elevate standards and qualities rather than devalue them. But, General Shelton, perhaps you could elaborate on that.

    General SHELTON. I would underscore what Secretary Cohen said that, from our perspective, the School of the Americas provides a very unique opportunity to influence a lot of the officers, the mid-grade and even senior officers that come to the School of the Americas that imbue them with the same values that our forces have, teach them the fundamentals of how we operate in the United States. We have seen evidence of that as a lot of these individuals rise to very high ranks within their service, some of them chiefs of their services, that this takes.

    I would not say that every case that has been there has been a total success story, of course. But I think that everyone that comes there is better off for having had that experience, and it is our opportunity to try to influence them as they are in the point and stages of their careers and try to imbue them with the same values and principles that we operate on, which they then carry back to their country; and we hope in some way, in a small way, maybe a large way, that that will have an influence on them in the way they elect to run their own armed forces when they rise to those levels.
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    It is the same thing we do when we operate with forces all over the world. I think that is one of the great things about our military-to-military contact. They see how we operate. They get a chance to observe the standards that we operate by, the way that we respond to our civilian authorities and control.

    And I do that at my level. I spend a lot of time with my own counterparts, and we talk about how we operate within a democracy, and I think that is very beneficial long-term to militaries of these other countries.

    Mr. SNYDER. Thank you for your comments. Thank you for your service.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Mr. McKeon.

    Mr. MCKEON. Thank you, Mr. Chairman. And thank you, Mr. Secretary and General Shelton, for being here today. I think that we should thank the President for proposing to increase the defense budget. Even though he does not meet the $148 billion that the chiefs say we need to adequately defend our nation, he is making, I think, an attempt.

    I think our only argument should be how we meet the limited commitment that he does propose. If we can only find 75 percent of the $148 billion that they requested at $112 billion, then I think that we definitely should fund them, not use smoking mirrors and not pretend that we are doing something that we are not.
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    Given this year alone, the numbers that Mr. Hunter talked about earlier, the $20 billion that the chiefs said that they needed this year at our meeting last week, if we take the $4 billion of new money, I am really concerned that the $12 billion may not be there even if—or the $8 billion that we are talking about picking up in the savings, that would only get us up to $12 billion. Why shouldn't we put the risk of meeting that on the additional $12 billion? In other words, take the $4 billion new money, put in another $8 billion of real money, and then put the risk on reaching the $20 billion that they say they need on picking up the additional?

    I understand the caps, but we did not let that bother us last year in a lot of our other spending, and it did not bother the President in his State of the Union and a lot of the new programs that he proposed. I am just saying, let's put it in defense.

    Secretary COHEN. If we did not have the caps, that would be the preferable way to do it, but we do have the caps, and we try to work within them. But we do need the money. And, frankly, I have tried to indicate and the Chairman has indicated that the chiefs testified to $17.5 billion. I inquired, what is the absolute minimum we have to have to take care of the most compelling needs; and they said roughly $12.5 billion. And that is how we tried to come up with it, dealing with these caps.

    You may recall in the past we had caps. We also had walls. The walls are down this year. Now that presents a unique challenge to this committee and to the Congress. Because you could go to your colleagues and say, let's take some money out of domestic and put it over here so we do not have to worry about whether we get the savings or not; and let's just plus up the defense part of it by another $8 billion. That is something that you are going to have to deal with and your colleagues. But in the past the walls said you could not do that, but now the walls are down.
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    But there may be other people who say, let's take it out of defense and put it over in domestic programs. And so it is going to be a political challenge for all of us in terms of how do we ensure that we get at least this $12.5 billion or more if it can be achieved with a consensus in both the House and the Senate. It is a tough problem.

    Mr. MCKEON. Well, I think the debate is just starting. But I think really we do a lot of things here, but this is the one that really is our constitutional responsibility, is the defense of our Nation; and when the chiefs come to us and say they have certain requirements and we are not meeting those, then we are not living up to our responsibilities.

    Thank you.

    The CHAIRMAN. Before I recognize the next member I would like to announce we are going to have a break at 12:40. I understand we have worked this out with the Secretary, and you can get a sandwich and do whatever until 1 maybe. So just a good warning to everybody. At 12:40 we will break and reconvene at 1.

    Mr. Turner.

    Mr. TURNER. Thank you, Mr. Chairman.

    General Shelton, I have one question I would like to direct to you.

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    I had recently had an opportunity to visit with some Guardsmen in my community who expressed their concern about the lack of training in the Guard. And, of course, I am very supportive of this budget in the sense that it improves pay for our military. But one other factor that is involved in maintaining morale is allowing the troops to have adequate training opportunity. And I notice there are increases in operations and maintenance accounts in this budget, but I am unable to tell—other than a reference that I picked up regarding increase in training by increasing Army tank miles and some increase in aviation flight hours, I am unable to pick up whether or not there are some real increases in training in Active services.

    And also the increase amount that is going to the National Guard and the Reserve components, I would like to have you address whether or not they are actual dollar increases for training in the Guard and Reserves and, if so, what is the percentage of increase that is represented in this budget for training in both the active and Reserve and Guard components.

    General SHELTON. Sir, there has been a significant increase in the Guard and Reserve budgets. I will have to get you the specific amount that it is, but it is significant.

    [The information referred to can be found in the appendix.]

    Now, what the programming is within the two components I do not have that level of specificity, but I can get that for you, and I will give you an answer for the record. But it has been substantial.

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    Mr. TURNER. Thank you, General. I know you share that concern, as did General Reimer when he appeared before the committee the other day, and I do think it is very important. Many of our National Guardsmen serve out of their sense of patriotism, and there is nothing more demoralizing than showing up on your training weekend and not having anything substantive to do, and I think we have got to change that.

    One question I have for you, Secretary Cohen, and this is a policy question, but I guess in a way it does relate to a budget because I am convinced that, oftentimes, our limited military objectives that were displayed most recently in Operation Desert Fox result in prolonged military engagements which ultimately mean greater dollars in cost. And I would like to ask you, after we made the decision a few weeks back to do 3 days of sustained bombing against Iraq, why we then continued our policy of respecting the no-fly zone, which, as I recall, a few weeks ago resulted in our aircraft turning back as they started to depart the no-fly zone in pursuit of enemy aircraft.

    It seems to me that once we made the decision to engage in 3 days of bombing of Iraq that it became somewhat immaterial that the no-fly zones existed in the first place and that we should have abandoned that policy as well.

    Secretary COHEN. I am not clear exactly the nature of your question, Congressman Turner.

    Following the bombing, which was carried out with absolute excellence on the part of our pilots and those aboard our ships, we maintained the containment policy. We still have the no-fly zones in the north, no-fly zones in the south, and we are enforcing that. As a matter of fact, the Chairman and I were just talking before we started this hearing.
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    There was activity most recently last evening again. And we continue to tell Saddam he is not going to move SAMS in the north, not move them in the south and put our pilots at risk, and that every time there is an illumination or any threat to those pilots they are going to pay a penalty for it. So we are, in fact, maintaining the no-fly zones.

    Mr. TURNER. What I am referring to, as I recall just a few weeks ago it was reported that our aircraft did not pursue enemy aircraft out of the no-fly zone because we were respecting Iraq's right to fly in those areas not covered by the no-fly zone; and I thought that was probably a mistake on our part to have not pursued beyond the no-fly zone when we faced that threat. And my question is, why are we continuing to maintain that policy, which seems to me to be one that not only might put our forces at risk but simply does not make common sense in light of the fact that we made a decision a few weeks ago to deal sternly with Saddam Hussein?

    Secretary COHEN. I will let the Chairman respond in a moment. But we did deal sternly with him in Desert Fox, and we also said we would maintain the containment policy which we have established. We unilaterally have established these no-fly zones.

    One of the reasons that pilots do not necessarily pursue these aircraft they come across either by accident or by intent back to their bases is it does pose a different level of risk to the pilots. We have been worried about decoy operations where they try to lure our aircraft into a SAM site, so to speak, or SAM trap and then take them down.

    As you know, Saddam Hussein has now put a bounty out on the heads of our pilots and anyone they can come across who is American or a member of the British forces. But there are reasons why we continue to enforce the no-fly zones as they exist, and there is a military reason why you would not want to chase those planes into what they call the super-missile areas in the middle of the country.
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    But, Chairman Shelton, perhaps you should address it.

    General SHELTON. Congressman, first of all, the rules do allow for him to operate north of the 33 and south of the 36; he can operate his aircraft. But if he comes across one of those boundaries, then we in fact, the ROE, do allow hot pursuit.

    However, we are very conscious of what he has attempted to do, as the Secretary talked about. If he sucks us into a missile engagement zone—let's say he ends up getting an aircraft. So we are approaching it from taking every prudent action to protect our force and make sure that we enforce the no-fly zone without doing something that would allow him to gain the upper hand on us. Once you cross 33 or come south of 36, you are entering into this super-missile engagement zone which he has most of his strategic systems located in.

    Mr. TURNER. Thank you, General.

    The CHAIRMAN. Mr. Thornberry.

    Mr. THORNBERRY. Thank you, Mr. Chairman.

    General Shelton, I want to begin by applauding the statements that were in your oral and written statement about joint experimentation and how important that is. I think that is exactly right. I think you all have made a good start down at ACOM. I understand they still only have about 35 percent of the people they were promised as far as Active Duty and government service. They are coming. But it is a very good start. And I also want to commend the changes that you announced on the unified command plan.
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    I had a bill last year to require joint forces command. I think it is absolutely essential we modernize our structures in order to really prepare for the future, and I have gotten concerned in the past that there has been more lip service on transformation than actual real things happening.

    When you start moving responsibilities around, I am sure you encounter a little flack about it, but that shows you something is happening. And I appreciate and want to commend you for both of those things. I think both are absolutely essential in preparing for the future.

    Mr. Secretary, I want to ask you a question about oil and our energy security. The administration has gotten lots of flack about raising the ceilings on how much oil Iraq could export in exchange for food. A lot of people do not understand exactly how that makes sense in furthering our goals to make changes happen inside Iraq. Another consequence is that every barrel of additional oil that goes out on the market increases the glut, drives down the price and ultimately is putting domestic producers out of business.

    Once upon a time, the President issued a finding that the amount of oil we were importing threatened our national security. That is back when it was down about 50 percent. We are up to about 58 percent now of our domestic oil needs are imported. It is going to go through the roof if a few more months like the past few are in front of us. And so, I guess I would like for you to explain how lifting the ceiling makes sense on Iraq policy.

    But, second, was the President's finding that imported oil represents a threat to our national security in error or does it truly represent a threat to our security?
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    Secretary COHEN. Let me address the issue of the sanctions and the relief for the Iraqis. We have been sponsors of the Oil for Food program in the past. That was an American initiative. And the reason that we took that initiative is that Saddam Hussein has been waging a public relations campaign that has been moderately and perhaps even more so successful within the Arab community. Namely, he has pointed to the United States and to the West and saying, they are the ones imposing this infliction upon the poor Iraqi people.

    We have tried to point out that he is the one who has imposed the infliction upon the Iraqi people by not complying with the sanctions and with the Security Council resolutions. Nonetheless, we have tried to indicate that we are also sympathetic to the plight of the Iraqi people. We want to see to it that whatever revenue that he derives from the sale of oil goes for humanitarian, for medicine, for other types of people-oriented programs as opposed to more missiles, chemical or biological weapons. So this is a program whereby he loses control over his revenues. And you have some I would say in the Security Council who are eager to pull the sanctions off altogether, which would allow him to get more revenue that would then go into his missile and other military production system.

    So we have tried to be responsive. We want to indicate to all of the Arab nations that we are not trying to hurt the Iraqi people but we are going to insist upon full compliance with the sanctions regime. So that was the purpose behind that Oil for Food program, and we support that. We have even supported increases just to show that we want the money to go for humanitarian purposes and not for military.

    With respect to the President's—which President made the statement?
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    Mr. THORNBERRY. It was President Clinton who issued a national security finding that the level of imported oil represented a threat to our national security.

    Secretary COHEN. Well, in the sense that if we come to be overly dependent on imported oil and do not have our own economic base to rely upon, surely if that is cutoff, such as the threat was back in the 1970's where you had the war between Iraq and Iran also carrying on at that point, it could in fact impose a threat to our national security.

    On the one hand, if we have too little of it, we have a national security problem. If we have too much of it and then it is cutoff and we have not secured our own domestic production, that could pose a threat to the national security, yes.

    Mr. THORNBERRY. If we are already at 58 percent, rapidly approaching two-thirds, I would say we are getting about as close as we need to get, Mr. Secretary.

    Thank you.

    The CHAIRMAN. The gentlelady from California, Ms. Sanchez.

    Ms. SANCHEZ. Thank you, Mr. Chairman. And I thank the General and Comptroller and, of course, the Secretary for being here today.

    I want to begin by saying I am probably one of the few members up here on this committee that would support another set of base closures in the future, and I know that the budget reflects an anticipation of us having to do that, because I do believe there is an overcapacity in infrastructure and that we need to fund other programs in the future with respect to, in particular, the research and development that we are doing right now.
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    But with respect to the base closures that are ongoing—and one of the reasons of course that I could probably support that is that you have already decided to close the bases in Orange County before I ever got to Congress, but, in anticipation of that, I am happy that in the budget you have put in money for environmental cleanup. I would just ask you that—we have had many problems with respect to base closures and trying to move those properties into the hands of local agencies that really want those properties and have in good faith been working with the different services there. I would ask you to really take a look at that.

    We are looking forward to having El Toro in local hands July 2nd of this year; and, of course, environmental moneys are important with respect to the cleanup there. But we are having a very big problem with Tustin base, and I would hope that you might give us a hand, because that is savings and dollars that we can put forward to the other things we need to do with respect to defense.

    I guess I come back to the fact that we are talking about the budget today, and I am really concerned with the fact that people keep talking about the budget and yet they really are not talking about an assessment of the threats and the opportunities as we move forward. So I guess I want to get your view on when you are building this budget, have you looked really at the threats for the future and work back from that or are you more concerned about these caps that we have all placed on ourselves in this Congress and working back the other way?

    Secretary COHEN. Congresswoman, we have to do both. We tried to make a threat assessment of what are the threats that are out there right now. We can look around the globe, and I tried to give just a brief overview. There is a threat in Korea, the Korean Peninsula. So we look at the level of the threat, what forces are required to defend against that and what type of environment, a chemical weapon environment in all likelihood should one ever occur. So we allocate resources to try to defend our people and our interests there.
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    We look throughout Europe and again assess the threat there. We look at the former Soviet Union, Russia today. What is the nature of the threat that is posed? The Cooperative Threat Reduction program is one that we fund because we think it is in our interest to protect against a dissemination or proliferation of materials to other countries given what has taken place in the Soviet Union.

    So we try to look at all the threats that we see today and then look out to the future and we make a threat assessment. A threat assessment, for example, on the proliferation of missile technology. What does that do in terms of putting our troops or our people at risk?

    And so that is the reason for the allocation of resources for theater missile defenses. That is the reason why we have allocated resources in the budget for a National Missile Defense system if in fact the President decides next year that we should go forward with the deployment.

    So we try to look forward in the future. We say, what are the emerging threats? Cyber terrorism. That is why we are devoting so much in our budget to try and make sure that our systems are protected as much as we can from external aggression through the use of the Internet, cyber terrorism.

    We think that there will be a proliferation of chemical and biological threats. That is perhaps the most dangerous we will look forward to in the future, where you have a situation where someone could set up a biological bomb. As such, you would know who set it off and under what circumstances and how many people are infected or afflicted and have that spread throughout various regions not only in this country but in others not knowing who, in fact, caused that problem. So we look at those threats as well and are developing systems to protect against them.
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    We have not talked about anthrax, as an example, which is an issue which just surfaced recently in the news media. We believe that our troops are at risk from a chemical or a biological attack in the sense of anthrax being the most readily available type of threat which has been weaponized by Saddam Hussein. For example, others are developing it. So we want our troops to be protected, those that we send out in the field. And because we have a total force, everybody has a potential for going out in the field.

    The Chairman and myself and others have all had our anthrax shots to send a signal to the people that this is important and we would not ask them to do something that we are not willing to do ourselves. So we try to look forward into the future and seeing the nature of the threats and prepare ourselves for them, also with the understanding that we do have to work within budgets.

    So if we have budget caps, we say, how do we raise the money necessary to do the things that are required to be done? And that is part of this entire debate, and that is why this is important. Because Members have a coequal responsibility. You are partners in this endeavor. We are on the same side. We may have different viewpoints in terms of how we allocate those resources and what should go where, but we are basically all out there. How do we build the best possible national defense system?

    So it takes restraint imposed by the budget. Because you have other voices that say, wait a minute. We think that is enough, and we do not agree with your service chiefs. We do not agree that they have done enough. We do not think you need this much over here.

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    So you will have different voices who will have different priorities. And because we are a democratic system, we have to work our way through it. We have to identify what we believe to be the critical military requirements are and then look to you for support to produce the funds necessary to supply it. But that is how we go about it.

    Ms. SANCHEZ. With this short answer, because I see my time is up, would you say, in your opinion, that this budget that you, the President, the General and others have put forward then attempts to address the threats? And the part that is unfunded, if you will—we are talking about a $6 billion or $7 billion unfunded portion—relies more to things like modernization, facilities, other things that are not at the forefront of a threat to the United States but in the long run may cost us more, more moneys, because we are not addressing those particular issues?

    Secretary COHEN. I think that is a fair assessment of it, that the moneys that we are seeking here will address the most immediate needs and the most immediate threats. The other requirements that have been outlined, articulated, deal with greater rate of production of those systems that will come on line, the infrastructure that we need to address as far as our facilities falling into a state of if not disrepair or in need of repair. Those things which are needed can be pushed out further until we address the most immediate problem, but they have to be paid for eventually, and sooner than later would be the better course.

    Ms. SANCHEZ. Thank you, Mr. Secretary. Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you. I think it is about time for our break. 1.
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    Mr. Hayes, you will be first up.


    The CHAIRMAN. For the benefit of our audience, during the last 20 minutes we have given the Secretary a chance to run down below and get something to eat, I hope, and do other things, and the rest of us got a bowl of soup. It shows we are working hard, all of us, on both sides.

    Mr. Robin Hayes, the gentleman from North Carolina, is next.

    Mr. HAYES. Thank you, Mr. Chairman. I thought General Shelton might have an MRE in his pocket for us.

    Two questions. Thank you all for being here.

    First, General Shelton, I understand there is a proposal to put 5,000 troops in Kosovo. What is your opinion of that?

    General SHELTON. Congressman Hayes, there has been no decision made on what participation the U.S. will have in Kosovo at this time. There is discussion going on. However, any talk of how many troops would be required would hinge on, No. 1, who would be a participant; No. 2, the mission we would be expected to carry out with them; what the environment would be like.
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    I think we all throughout NATO believe we have to have a peace settlement and then the conditions under which we would be employing any troops into that, NATO troops, would determine the size of the force that would be required, and then yet to be determined would be if the United States would participate and in what numbers. So I really cannot address numbers at this time.

    Mr. HAYES. Would this be NATO command or U.S. command if we did that?

    General SHELTON. Right now, it would be a NATO operation, of course, carried out under CINCEUR, who is an American. But the only discussions I have heard have been with the NATO force.

    Mr. HAYES. Question for Secretary Cohen. My concern is that the President be given true and accurate information both from the committee and the military about the status of the budget, stepping over to Fort Bragg and Pope Air Force Base for a minute, a significant part of our force strike deterrent capability.

    In this year's request there has been $143 million in needs identified, and the budget response from the White House gives only 23 percent fulfillment of that $143 million need. In other words, $33 million out of $143 million. I am concerned about the military construction because this is no guarantee of starting badly needed projects, much less than completing them. Now the Administration seems to be declaring victory over the shortfall in the military before fighting the battle, much less winning the war.
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    My question from a management point of view, how do you, Mr. Secretary, plan to go to the other end of Pennsylvania Avenue and follow up on this severely limited beginning construction budget and complete these badly needed projects not only at Fort Bragg but in MILCON overall?

    Secretary COHEN. I would say I would go to the White House in the same fashion I have this year, bringing the President and Vice President in to meet with the CINCs, the service chiefs, and lay out exactly what is required and then present to the President the argument that we need to have more, which we, in fact, were successful——

    This is a major turning point for us, because we have been going down and Congress has helped out by plusing up on an emergency basis some of the needs that we have had, and that is greatly appreciated. But we have, in fact, made the case and I believe the President has embraced that case to say that we need to do more.

    The $112 billion was a sizable down payment on the $148 billion that is required. In the next budget I will be back again with the President saying, this is the commitment that was made.

    Now, we have to be very frank about this. Much of this depends upon a budget agreement being reached on the surplus in terms of how that is going to be spent. And the President has laid out the allocation of his position as far as a formula is concerned, but it is going to take a budget agreement that says that if we have this surplus, so much of it has to go to defense, and right now that percentage is calculated, as I recall, at 11 percent.
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    But we are going to have to continue to work at this. If this budget agreement does not come about, then we have a problem. And we have a problem because the needs have been identified, the President has committed, saying, yes, we need this amount of money. So we have got to have a budget agreement in order to pay for it, and if we do not get it then we have major problems.

    Mr. HAYES. Stay after it, Mr. Secretary. Use all the flexibility at your disposal to protect our troops.

    Mr. Chairman, I yield my time to Mr. Hunter.

    Mr. HUNTER. Mr. Chairman, I understand we have a shortage of time. I appreciate the gentleman yielding, but I know other members want to ask questions.

    The CHAIRMAN. Mrs. Tauscher.

    Mrs. TAUSCHER. Thank you, Mr. Chairman.

    Mr. Secretary and General Shelton, Under Secretary Lynn, thank you for being here and thank you for your comprehensive presentation of the President's budget and the budget that you have worked with him on.

    Mr. Secretary, first of all, I would like to tell you that I represent California's 10th Congressional District, which is Contra Costa and Alameda Counties. We are the only State in the United States with two national labs in it, Livermore and San Diego, California. We actually have a third lab, Berkley, on our border. So I do represent the smartest people in the United States; and, on behalf of them, we would like to show you those labs. They are wonderful, and we have a lot to be proud of. We would like to show you those opportunities.
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    Second, do not ask me why I was up late last night, but I was watching C-SPAN and saw your press conference about Kosovo and many other issues about the budget. I was in Bosnia in December and actually got a plane about to go to Kosovo when 31 Kosovars were found murdered.

    I did have a chance to meet with Ambassador Hill, and I am very appreciative of his efforts and Ambassador Walker and all of the opportunities that we have. I believe that Mr. Milosevic is a world-class thug and only responds to threats and even does not do that very well. He responds to direct threats or real retaliation.

    What is our long-term plan about him? Is he indictable by the Hague? Is this a situation where we cannot find enough fingerprints on the hundreds of thousands of people that have been damaged? Can we do something creative like a RICO-like indictment? Is there something we can do to find a short-term solution to him? I think until he is gone we are going to be mired in this.

    And I really appreciate your comments that I saw last night about the possibility of us going into Kosovo would not even be entertained until there was a political solution, and I think that is absolutely the right opportunity for us.

    Secretary COHEN. With respect to Mr. Milosevic, right now we have to deal with him. Right now if there is going to be a peace agreement, then he is the one we have to deal with. So we do not necessarily disagree with any characterization about his leadership and what is taking place, but if we are going to get any kind of a settlement we have to deal with him at least in the short term.
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    Mrs. TAUSCHER. And the indictability?

    Secretary COHEN. Well, that is up to other people to make that determination as to what kinds of evidence would be required. I am not in the position to make a judgment as to whether he is indictable at this point or with what more evidence could be.

    Mrs. TAUSCHER. He appears to be afraid to leave Belgrade because he had feels that he may be under sealed indictment by The Hague. Is that an impediment to our being able to negotiate with him?

    Secretary COHEN. It is hard to go into Belgrade and then talk about bringing him out. It presents an enormous problem. But I think you are right. He is afraid to leave Belgrade. That is his base and anyplace beyond that he may feel that he would be subject to apprehension. Whether that is a real fear or imagined I cannot say at this point.

    Mrs. TAUSCHER. So a real impediment to short-term solutions is what we do with Mr. Milosevic and how we even negotiate with him because he will not leave Belgrade?

    Secretary COHEN. That is correct. We have to negotiate with him representing the Serbs, and we will have to find some combination of forces that we can negotiate with as far as the UCK and the KLA.

    Part of the difficulty has been getting those groups together with someone who represents and reflects their viewpoint that could make a commitment on their behalf. One of the real problems that we have in dealing with this is that we are not in any way going to be involved in an intrusive type of mission into Kosovo, if we go at all. There would have to be an absolute peace agreement provided by both sides. Absent that, it would be I think a grave mistake for us to think about going into Kosovo.
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    As it is, it was not until just yesterday that even the President was briefed by his national security team in terms of what the options were, what factors were under consideration, where the contact group was, what the next decision is going to be. All of that is still very much in flux right now. But the President was briefed for the first time yesterday, so it is really quite premature for us to be making decisions until we consult with you.

    One of the things that is very important and we all understood from the beginning is that when we are talking about any sort of operation in Bosnia or Kosovo or elsewhere we have to make sure that we have properly consulted with Congress to make sure there is some support. The last thing we want to do is make a commitment and find out that Congress is adamantly opposed to it and then we get into another battle in terms of where will the funding come from, will it be there, will it not be there, will they vote for a cutoff, will there be a resolution passed in the Senate and the House floor, all of which has an impact upon the forces that might be deployed.

    So we want to make sure that before anything is done that we properly consult with both the House and the Senate.

    Mrs. TAUSCHER. Thank you. Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you, ma'am.

    Mr. Sherwood from Pennsylvania.

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    Mr. SHERWOOD. Thank you.

    Mr. Secretary, regarding base closures, I know that it takes a long time for the services and the various commands to collect the data needed to make solid recommendations to the Base Closure Commission. And I also know from experience in my own district that it takes an even longer time for the BRAC actions to be implemented and for the real savings to begin to occur. And today, to my knowledge, there is no currently approved base closure process.

    I have concerns about a new BRAC, especially a BRAC process that would occur in 2001. For example, Tobyhanna Army Depot is still waiting to receive the workloads which were mandated by the Base Closure Commission in 1995. The delay in getting our workload that we earned through efficiency and through that commission, the transfer of that has been delayed politically.

    So I am very concerned that if we approve a new BRAC for 2001 we will be collecting data this year and next year and making decisions based on numbers which really do not show what happened even 5 years later about the savings and the efficiencies that were supposed to be produced by the 1995 BRAC.

    I am concerned that a 2001 BRAC looming just months behind the Presidential election will allow Presidential candidates from whatever side they might be to go to big States and promise the voters that their installation will be spared. I think this is a timing issue. I think that a BRAC in 2001 will not include all the results from BRAC 95 that we need to make the very best decisions. I think that a BRAC in 2001 will make the process more political and less savings.
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    My questions are, after that lengthy preamble, with that information, why 2001 instead of 2002 or 2003? And have the services already begun planning methodologies and data collection for a new BRAC in 2001 and, if so, what are they?

    Secretary COHEN. Well, Congressman, let me respond in this fashion: There is never a good year for a BRAC. I came my first year in this position to the committee, and it was 1997, and I recommended two more rounds. And they said, wrong year; do not bring it to us this year. You have not satisfied us in terms of what happened last year in 1996. I said, OK, I will be back next year. I came back 1998. They said, why do you bring it up in an election year? They said, come up and see us next year in 1999. So each year I come back they say, wait until next year.

    It is sort of like I am a Red Sox fan, and I keep waiting for the pennant next year, but it never seems to arrive.

    So we pick 2001 to try to get it beyond the Presidential campaign and 2005 to put it in a non-election year, basically, to allow enough time for those savings to come about. But I do not think you can ever calculate a year in which you can eliminate any political factors that you are concerned about.

    What you have to do is try to structure the BRAC process in a way that minimizes if not eliminates any political considerations. For example, if you had asked me, list all the things right now that you would like to eliminate, if I start to draw up a list you would say, that is political. Let's take a look at the people and the districts and the areas that you have picked and those you have omitted and having to play politics in this.
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    So, basically, the BRAC process tries to really put everybody at the same table. And if it does not work out that way—and, frankly, it did always work out that way for me. I was concerned about the way I was treated under a couple of BRAC rounds. I did not like it and made some changes in the law in order to try to minimize them from taking place again in the future.

    But I must tell you, there is never a good time for it in terms of dealing with districts or States. But there has to come a point where we simply have to have more. I will get the information from you.

    Frankly, I am not aware why this work that is supposed to be transferred to your facility has not been transferred. But I will tell that you will—unless we take action in the years that I have mentioned, we are going to keep pushing off into the future the savings, which means that those systems coming along you are going to have to increase the top line much higher and still carry excess capacity. That is not a good way to do business, and I know it is tough to deal with. But I have been traveling around visiting facilities that have been closed, and the community is really working hard to make it a success story, and we have got a lot of success stories to tell.

    But I would tell you now that if I push it off, how about year 2002 or 2003, what that does is it keeps pushing off the savings well into the future, at which time you are going to be here saying, where is the money to pay for all these systems that we are on line to acquire? I will tell that I picked those years to get by Presidential elections and now you say, well, it is coming too close after the Presidential election. And the argument will be, well, put it in 2002; and you will say, well, that is a congressional year for my election; and we kind of go round-robin every time.
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    There is no good time, but I must tell you there is a good time for us to make a decision for the national security interests, and those are the years I picked. I tried before. It did not work. But I think we have to really measure up and say we have got to do this. 2001, 2005 that will give us the time necessary between the two to accomplish the savings in the first round before we get to the second. And once you get to the second you will have the savings start to build so that when the systems come on line 2008 we can pay for them.

    Mr. SHERWOOD. It is a little bit like there is never a good year, but some are worse than others. We cannot pay the people in the military too much, but we can sure pay them too little. That is the corollary. And we all want the savings. But the BRAC 95 was supposed to be very well done and well orchestrated, and we earned our work, and we still did not get it. And so, therefore, the system is flawed; and I think we ought to go after those and get them straightened out.

    The CHAIRMAN. We are now in what we call the after-the-gavel portion of the meeting, and we are going to list in order people as they arrive regardless of party and anything else. So we will start off with Mr. Weldon.

    Mr. WELDON. Thank you, Mr. Chairman.

    Mr. Secretary, thank you for being here, General, and Mr. Lynn.

    One of the advantages in coming 2 minutes late is that you get to sit through all the testimony, but I am glad that I did because I will start off by giving what I perceive to be some corrections on a couple of issues that were raised.
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    But before I do that, I want add my accolades to Sandy Stewart. She has been an outstanding liaison for us. And as a Republican I want to applaud her for the role that she has played in trying to accommodate us on the issues that we raise with the Department. So, Sandy, thank you for a job well done.

    It was mentioned by one of my colleagues on the other side that the Welch Commission report really heavily criticized NMD. Well, in fact, if my colleagues would read the report, five of the six key judgments had nothing to do with NMD. In fact, the focus of the Welch Commission, and I encourage my colleague who made the statement who is not here at this point in time to read it, focused on our theater missile defense systems and primarily that problems that THAAD has experienced. And one of my responses to the Welch Commission, while I think there are some good recommendations there, was that people like Paul Kaminski who was on that commission, helped write it—we were the ones who fought Dr. Kaminski to put more money in for the testing that they criticized the systems for not having done.

    We recognized that 4 years ago, and each year put a billion dollars of added money in for additional testing assets for those programs to do the kinds of things that the Welch commission stated.

    In the MEADS program, 3 years ago, we zeroed funds to MEADS. I did it in my subcommittee. And I did it because I wasn't convinced the Administration was committed to the funding for MEADS. The Administration pleaded with us, at the time it was Deputy Secretary White, you have got to put the funding in for MEADS or we lose the confidence of our NATO allies.

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    And we put it back in, because I was assured then—and I am going to give the BMDO people a chance to make this case this year in hearings—that that layered approach that they talked about was so critical, that MEADS couldn't be accomplished, the threat that MEADS was dealing with couldn't be accomplished by the PAC–3 system. And the effort—we had to have separate systems. We put the money in, and now the Administration I think is reneging on a commitment to our allies.

    And I don't think it is because of a changed threat, I think it is because of the dollar problem. And I think we ought to recognize that. And that gets to the issue of dollars and a budget. And, Secretary Cohen, I understand the dilemma you are in. And you have, in my opinion, the highest integrity as a Secretary. It is not your problem, but the problem, as you say, is within budget caps. We all know that.

    Here is the problem. It is not budget caps. In 40 years, from World War II to 1990, the Commanders in Chief of this country deployed our troops 10 times. This Commander in Chief has deployed our troops 32 times. That is the problem. It is not budget caps. None of these deployments were planned for; none of them were budgeted for.

    And instead of having an up or down vote of the House to put the money necessary to fund Bosnia, to put the money on the table to fund Haiti, he committed us, and he knows we are always going to support the troops. Then we have got to find the money in an already decreasing defense budget to pay for them.

    My last check with the Comptroller was $18 billion of contingency funding over the past 6 years. That is what we are objecting to. If the President would simply work more to get our allies to pay more of the costs of the burden sharing, like Desert Storm where we actually had a net loss of zero, because, as you know, you were a Senator then, our allies put up the full cost of Desert Storm. But in the last 6 years, it has been time and time again where we are in a budget control by caps; the President keeps deploying our troops, and instead of Madeleine Albright coming before the Congress and saying we need to allocate money to pay for this operation, we are sucking the money out of a defense budget.
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    That is the problem, and what we are saying—and it was the whole debate over whether or not to support the troops in Bosnia. It wasn't that we didn't think they should be there, it was that we didn't think the process of paying for Bosnia was fair. And I think that is the frustration on both sides of the aisle here. And what I would ask you to do is in your Cabinet meetings to tell the Administration the problem is not that we don't support what DOD needs; the problem is we don't like DOD being robbed on a regular basis to pay for these deployments that are not being appropriately budgeted for. That is the problem with the budget as I see it.

    Now, base closings, and I would like to support another round of base closings. I don't think you're going to get it in this Congress. And you know why, as well as I do: not because of you, because the Commander in Chief interjected himself in two situations that offended Democrats and Republicans alike.

    I can tell you one horror story that I hope is not an example of supposed savings. One of the first base yards to be closed was the Philadelphia Navy Yard in 1991. Do you know that still hasn't been turned over to the city of Philadelphia yet? In fact, if it is not done within a month, because the Navy just reconfigured the way it is going to deal with Philadelphia, the shipbuilding deal, the Kvaerner Corporation could well go away. I hope Philadelphia is not an example of how we can do base closings in an expeditious manner.

    One final point. Can I put up the chart called Modernization on Target, please? Could someone put it up for me? I will make this very quick, Mr. Chairman, but I have to point this out to set the record straight. I did this with Secretary Perry when he was here. It is not anything against you, Mr. Secretary, because these numbers are handed to me by OMB. But this chart looks great. And I urge my colleagues to look at how that line flattened out, and how we talked about the modernization is increasing.
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    The point I wanted to make is 2 weeks ago I asked the service chiefs, where would you be today if the Congress hadn't over the last 4 years given you $28 billion more than what the President asked for? And I will just tell you one of the answers. The Commandant of the Marine Corps said—he said, ''You know how we call ourselves 911?'' He said, ''We would be 91 if Congress hadn't allocated the extra money.''

    I assume that that flattening out of your line includes not what the President requested for each year, but what the Congress gave you each year; is that correct, Mr. Secretary?

    Secretary COHEN. I believe that is right.

    Mr. WELDON. So the point is if you had what the Administration requested, that line would have taken a big dip, and then it would have a massive ramp up, because that $28 billion that we added in, which not you, Mr. Secretary, but some others in this room perhaps that speak for you from time to time have said was congressional pork, congressional add-ons, not needed.

    Yet the service chiefs last week said if they hadn't had that money they would have been in dire straits right now. I just want to set the record straight that what this Congress did, with the support of Democrats and Republicans alike, was in 99 percent of the case what the service chiefs asked for. And for those people, now hindsight is always 20/20, I would hope that they would reconsider their comments about the Congress adding in pork when we were just doing our job, seeing what was on the horizon in terms of the shortfall that we knew you were going to experience.
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    Thank you.

    The CHAIRMAN. Mr. Kuykendall.

    Mr. Andrews.

    Mr. ANDREWS. Thank you, Mr. Chairman. First of all, let me say to you and to those you represent, Thank you for serving your country so well, we are very proud of you.

    I have two questions. The first concerns my concern about uniformed men and women flying very old aircraft, dealing with very old equipment, and anecdotal evidence we continue to get about the shortage of spare parts. It is not a very attractive subject, but it is an awfully important one for the people serving in uniform every day.

    I would like to know, and please feel free to supplement the record in writing on this because I wouldn't expect you to know it right now, I would like to know the Secretary's assessment of the present need to bring the spare parts inventory up to where it ought to be, how much that would cost, and how much of that need will be met in this year's defense budget.

    Let me ask a second question. And I would be happy to hear the answer. The larger argument we have heard today is that the number used by the Joint Chiefs collectively for their needs over the next 5 years is $163 billion beyond that planned in fiscal year 1999 for that 5-year period. It is undisputed that the Administration is offering $84 billion in new budget authority; that leaves a shortfall of $79 billion.
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    The Administration's budget then assumes that $28 billion of that $79 billion will be met by a combination of recision packages, lower inflation savings, longer phase-in of expenditures on capital construction and so forth.

    I think it is awfully important for us to understand the credibility and legitimacy of that $28 billion number. And I ask this question with no prejudice. I would like to know for the 5 previous fiscal years, from 1999 going back to fiscal 1995, what the aggregate of recision packages turned out to be, both in terms of recision packages legislatively imposed and recision packages which the Department chose to impose on itself.

    I ask the question for this reason. We are all pretty much in agreement that over the next 5 years we are going to spend $1.5 trillion or so on the defense of our country. A $79 billion argument in the context of a $1.5 trillion commitment is not all that large. And if, in fact, the experience has been that recisions are relatively larger; if, in fact, the cost savings that would be accrued because of lower oil prices, lowered inflation and so forth may in fact exceed the $28 billion that you are planning, this argument may not be as large as it would appear to be on the surface.

    So I would like to hear—I don't expect you to have the specific answers, I would like to have them in writing—but I would like to hear your response to my questions.

    Secretary COHEN. I will get the specific numbers to you as soon as possible. I will get the Comptroller on this, when we finish, to get you all of that information.
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    [The information referred to can be found in the appendix.]

    With respect to the spare parts, I believe we have addressed all of the service chiefs' needs in the POM, and the Chairman can either verify or contradict. But I believe we have addressed the issue of spare parts. This committee and the counterpart in the Senate were very helpful in adding roughly a billion dollars back in 1999, I believe, for spare parts.

    And we have included additional money in this budget for spare parts. So we have addressed that issue, I think, to the satisfaction of the services. There is only one item I want to mention in this case in addition to that. I have enormous respect for the Marines. In fact, if you will notice behind me, the senior military assistant of mine is a 3-star Marine general.

    But when we talk about 911, 911 refers to our entire military. It is not just the Marine Corps. The Marines can't get there without the Air Force and the Army and all the other components, so we have a 911 force. But it is the entire military that is part of that force.

    Mr. Chairman, you may want to address the issue of the POM and spare parts, and I will get the information to you on the other items.

    [The information referred to can be found in the appendix.]

    Mr. ANDREWS. Thank you, Mr. Secretary.
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    Mr. SHELTON. From a parts standpoint, as you are probably aware, it takes about 18 to 24 months to turn around once you get stuck developing a deficit in the parts business. You put the money in, you don't get an instantaneous fix. As you know, the Department added a lot of money into the spare part account last year, I believe on the order of about a billion dollars. But, again, it takes time.

    As we look at the Navy, the latest information I got as an example from the Navy indicates, as you look across the POM, there is about a $600 million deficit, but they are going back and reassessing the requirement right now. So I am not sure that that will turn out to be a deficit at all. The Air Force in O1 through 05 is fully funded in the POM, and when asked about the concerns, they said the shortage for their parts are based primarily on the aging fleet, the fact that they have had a few contractors that defaulted, some technical surprises they got along the way, and then prior year underfunding which should be corrected by the latest influx of funds for the spare—for the parts account.

    Mr. ANDREWS. I thank you. I thank you, Mr. Chairman. I am proud to be part of a committee that is meeting that need, and I appreciate what you have already done. Thank you.

    The CHAIRMAN. Thank you, Mr. Andrews.

    Mr. Taylor, the gentleman from Mississippi.

    Mr. TAYLOR. Thank you, Mr. Chairman. And I do want to thank very much our panelists for staying as long as they have.
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    Let me begin by complimenting you on your attention to fixing the REDUX problem. I think it was a mistake then. I am glad that the—we are mature enough to admit that it was a mistake, that it was hurried tension, and I hope Congress will abide by your request to fix that.

    Along those same lines though, I can't help but have noticed the headlines on the New York Times today, at least front page story, that was covered on a number of major publications across the country, talking about the shortage of sailors, almost 7,000, and ships regularly setting to sea 10 to 15 percent short as far as manpower.

    I think it is more than just retirement. I think you certainly—when you are on line, going in the right direction as far as increasing pay, certainly the retirement was a contributing factor. But I am going to harp once again on what the 24,000 retired military people in my district remind me of every day in my mail. We broke our promise on health care. And we ought to have, in my congressional district alone, 24,000 recruiters out there telling young people that it was the best part of their lives, encouraging others to join the military.

    Instead, we have 24,000 people out there saying they have been betrayed, competing with 80 paid recruiters for the Armed Services. That is not a very good ratio to compete against. And again in listening to the President's remarks in the State of the Union, I noticed very clearly he spoke about the need to increase health care. He spoke very clearly about the importance of allowing patients to choose their medical providers.

    Why then as a Nation won't we allow our military retirees to chose their provider of choice, which is the base hospital they have been going to for the majority of their career? And why don't we provide that opportunity, increased health care for them? And I know there are some demonstration programs going on, Secretary Cohen, but you have got a shortage right now. And I know from my conversations with the chiefs that this is a concern; that their uncles, their grandfathers, their parents are talking to them saying, ''I got shortchanged. Get out before it happens to you.'' It is hurting recruiting, it is hurting retention.
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    Again, you are doing the right thing on REDUX. You are going in the right direction on pay. But you have got to solve the whole problem and get those 24,000 people just in my 435th of the country. I guarantee you it is going on. The other way ought to be your biggest recruiters, instead of on a monthly basis sending out a letter saying they have been shortchanged on health care.

    The second thing—I hope you will remark on this—the Guard and Reserve is now 38 percent of the total force. I recently had the great opportunity to visit with some of General Shelton's people in Bosnia, stayed in a sea hut with some young people from the 10th Mountain Division, absolutely phenomenal young people. Left me with two impressions.

    I am a strong supporter of the Guard and Reserve. But if they are 38 percent of the force, then they ought to take at least one-third of the Bosnia mission. And I think one way of solving some of the readiness problems, as General Shelton is having, some of the high OPTEMPO problems he is having, is to call on the Guard and Reserve to take every third deployment in Bosnia. And I think they are up to it.

    I mentioned that to a meeting of the generals in Washington just last week. I have found them very favorable toward the idea, if you give them enough warning so that the Guard and reservists can work with their employers. I think it is an opportunity for them to relieve the active force of what is a troubling and will continue to be a troubling mission. It is not going to go away.

    I am convinced now this is another Berlin, this is another Korea. We are there for 50 years, and we ought to be honest with the American people. If we are going to change those people's hearts, it is going to take 50 years.
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    Which brings me to my third point. From what I saw, we are the only forces in Bosnia that travel in full battle gear everywhere they go. I realize your concerns about forced protection. As a parent, I certainly share that, it is important. But I have to believe that most private individuals are getting to the point where they look at this as an army of occupation, and that is not the message that America wants to send.

    Getting back to the sea hut that I stayed in with Colonel Tadamie and Joe Gratowski from the Army Liaison Office, it really hit me in that barracks of 8 people, 3 blacks, actually 4 blacks when you include the staffers, 2 Hispanics, a hodgepodge of America. I think we can send no better message to the people of Bosnia that a multiethnic society can and does work to allow those kids to go into town together, go to the restaurants together, go to the market together. Let the Croatians and the Serbs and Muslims see, yes, we have people from every continent and every walk of life who work together on a daily basis, and it can and does work.

    If we are there to change those people's hearts, and apparently that is the mission now, I think that is the way you send the message.

    So thank you, Mr. Chairman.

    Mr. SHELTON. If I could just make one response, Mr. Chairman, first of all, thank you, Congressman Taylor, for your testimony about the great troops that you saw there. There are two key things that I think jump out in that. The first is, you commented on the 10th Mountain Division. That is, when we tried to lower the OPTEMPO, we used our total personnel, not just rotations out of Europe. And you saw quite a few reservists there, and as a matter of fact, there is an initiative underway right now, I believe it is the 49th division of the—the National Guard will take a rotation. I don't remember now if it is the next one or the one after that, but they are on tap.
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    They have been given time to get ready and deploy. And as you saw there, we make quite a use of our Reserve components. Some of the specialists we have there are only found in our Reserve components. So it is a total force effort, both Active Guard, Reserve, and we are going to be leaning on them more heavily in some of the other—taking the leadership role for the rotation. Thank you.

    The CHAIRMAN. Thank you, General.

    Mr. Talent.

    Mr. TAYLOR. If I may, Mr. Chairman——

    The CHAIRMAN. Yes.

    Mr. TAYLOR. I am curious, Mr. Secretary, getting back to my request on the health care, it is not going to go away. And it would be so much easier to solve, if you or the Joint Chiefs or all of you could sit down with the President and see to it that it is included in the budget request. We all know the President's budget is not going to become law, but a lot of the parts of that budget will. And I would think if it started with the Joint Chiefs, if it started with the Secretary, if it started with the President saying, ''Yes, we are going to fulfill that promise,'' it would be a heck of a lot easier for Congress to solve. I wish you would comment on that.

    Mr. SHELTON. Sir, as you know, that is one of the four core competences that the chiefs have spelled out: pay, retirement, health care, and adequate housing. DOD, as you know, probably added $445 million in fiscal year 1999, and they put another $2 billion across the 5-year plan into health care to try to provide for greater access and greater quality of care.
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    The good news is it has been a painful, somewhat painful experience for all of us that are in TRICARE in the startup. As you know, there are 12 different regions they, in fact, started up one at a time. There were lessons learned, and we learned each time. And we finally got the whole plan under TRICARE, that the final was done last June. And the last surveys, the last couple or three, over the annual surveys have shown an improvement each year both in terms of access as well as quality.

    So I think it is coming up. It still has got a ways to go. But we have seen improvement in both of the two key areas that our people have complained about the most. And we feel like we have got to continue to push to provide the quality of care that our people, both active and retired, deserve.

    Secretary COHEN. Congressman, I can't really add much to that. As you pointed out, we do have six demonstration projects underway in terms of the Medicare subvention. And we also have the demonstration projects dealing with the Federal Employees Health Care Plan, as to whether that could be made available to the entire retirees. We are looking at the demo projects. And I will continue to talk to the Chairman of the chiefs to see whether or not enough progress is made on the TRICARE to satisfy the problem, or we have to have a different health care system.

    The CHAIRMAN. Mr. Talent.

    Mr. TALENT. Thank you, Mr. Chairman. I would like to thank you, all three of you gentlemen, for sticking around. I thought I would be much further down the queue than I am. But I see my colleagues have other commitments, so I do appreciate the opportunity to ask some questions.
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    I am going to go, if I can, to the broader issues of how much we are spending, because I remain deeply concerned that we are not doing justice either to the Nation's security or to the interests of the men and women in uniform. And I know that those are the top concerns you have, Mr. Secretary, as well.

    Now, General Shelton testified before this committee quite recently, and I think we are all in agreement that we need $148 billion over the next 5 years to meet minimum requirements for readiness. I have in my time in the committee consistently heard different Secretaries, including you, Secretary Cohen, and Chairman of the Joint Chiefs testifying that the budgets which were submitted year after year after year were adequate to fund readiness.

    Why is it that those budgets were adequate and we now have what we all have to agree is an extremely substantial shortfall? What has happened in the meantime?

    Secretary COHEN. There have been a number of things that certainly we have come to appreciate that we did not a couple years ago. When I first came to testify before you, we had the QDR, which set certain levels in terms of what we were going to likely spend in the coming years. You may recall that they had—Congress had just agreed to a budget agreement with the President and took the highest amount recommended by the President and that by the Congress.

    It was my judgment at that time that absent a major confrontation, we were not likely in the few weeks' time to see Congress, either the Congress or the President, reverse that position and say now we need more. So what we did was try to work within the budget agreement. Starting last year, we started to see that we couldn't measure up to the operational tempo and the pressures that they were operating under at that time.
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    We started to see more readiness complaints and problems. The Chairman of the committee was particularly vocal on this, reminding me, not only in these open meetings but privately in communications, that he was picking up information that was more than anecdotal. I wanted to satisfy myself that what he was hearing was correct. The Chairman, myself, we went out to visit the forces in the field, meeting with the CINCs, meeting with all the component commanders, et cetera, and came back and said, there is a problem, and we ought to address it. And that is what we did with the President back in August.

    And we brought all of the CINCs and the service chiefs together, and said, here are the problems. We have got a robust economy, we didn't anticipate. We didn't anticipate, none of us anticipated we would still be in Bosnia. That was a $1.9 billion problem for us that we had to address. It is in this year's budget, but last year we had to get a supplemental in order to pay for it.

    So we had a robust economy. We had people who were leaving. We had an operational tempo that was too high. So a number of factors were contributing to the issue of readiness which we believe that we have started to address in this budget. It doesn't meet all of the Chairman's, of the CINCs' and service chiefs' requirements. But it is a major step forward.

    Mr. TALENT. Mr. Secretary, wisdom is always welcome, even if it comes late. And I recognize also that this has only been your watch for 2 years. And perhaps within your timeframe, you have acted expeditiously. You mentioned, for example, the Chairman. The Chairman has been sounding those warnings for a long time, ever since he has been Chairman, and before; others have as well.
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    I mean, I was a freshman in 1993 and I gave speeches, and it was a result of Mr. Skelton's hearings. It was perfectly obvious that we were going to have this kind of a shortfall. As I said, I am glad that we have reached that conclusion, albeit late, what I question is whether our response is adequate.

    Now you mentioned the budget agreement. We all passed that budget agreement. I imagine some here voted for it and some didn't. I voted for it. It seems to me that we ought to get away from letting the budget drive our recommendations regarding national security.

    I mean, if the caps are too low, let's say the caps are too low and recommend increasing them. I mean, is it your opinion we should increase the caps?

    Secretary COHEN. If you look at the chart that was up earlier, you will see that we need to increase the caps. And that is going to have to come back through a budget agreement with the President this year.

    Mr. TALENT. Let me ask you, have you recommended that to the President, that we have to have an increase in the caps?

    Secretary COHEN. We have recommended a significant increase in the top line for the military, yes. And that will come about with this budget agreement. If we don't get a budget agreement, then we have got a major problem. But the caps have to go up, yes.

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    Mr. TALENT. And this is—it is important beyond this one committee hearing and beyond even this particular budget. So let me press you a little bit on that. Are you saying that the Administration is now of the view that we have to increase these caps?

    Secretary COHEN. The Administration has committed to a significant increase over and above what we have planned in the past, a $112 billion increase over the next 6 years. That is predicated upon a budget agreement which will allow for an increase in spending to go to defense. I indicated before, I thought it was 11 percent, but that is 11 percent for all domestic spending as well as defense. So I don't want to mislead anyone. We need to have a budget agreement so we can in fact increase that top line.

    Mr. TALENT. All right. But the President then would be willing to support a budget agreement that increased the caps?

    Secretary COHEN. I believe, yeah.

    Mr. TALENT. Your answer is yes?

    Secretary COHEN. Yes. Otherwise we can't pay for—outline what we need.

    Mr. TALENT. Right. And I think all of us are concerned that $110 billion—well, I am anyway—that you have proposed isn't enough, even assuming that we get it. And if you were back on this side instead of where you are now, wouldn't you have a little concern about whether we are going to get that $110 billion? Mr. Hunter raised this point before.
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    And let me tell you why. Because even during the life of this Administration, the Administration has proposed spending levels for several years later, and then we end up without those spending levels. So aren't you concerned that when we get outside this Administration, the next Administration, which none of us are going to have any control, that that money is not going to be there?

    Secretary COHEN. Congressman Talent, I am concerned you have a next Congress that might not be as supportive of the national security 2 years from now that that—those numbers won't materialize. I mean, that is always a predicate we have to rely upon. What the President has said is he needs to have and wants to have a budget agreement dealing with the resolution of the Social Security surplus. That is where this money will come about.

    And I think it has to take place and the sooner, from our perspective, the better. That is where the money would come from. This President has committed to that, that we need it, and I would submit to you that anyone who seeks to succeed him would be hard-pressed to back away from these numbers after the service chiefs have outlined what is required and what our military needs in order to be a first class military system.

    Mr. TALENT. I like the developments of the last few months. Let me say that I like the way your tenure is heading. But let's concentrate for a second, if I may Mr. Chairman, on the——

    The CHAIRMAN. The time is about up, Mr. Talent. As a matter of fact, it has been passed about twice.
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    Mr. TALENT. One more second. Well, then I will just close, Mr. Chairman, and say that I would much prefer, since we are in agreement that these caps have to be increased, that we just come in and attempt to do it this year. This year we have control over it. General Shelton testified that he could use effectively I think about $20 billion this year. And that is the figure I would like to be going for. And if it means increasing the caps—I mean, our men and women out there are putting a lot more on the line than political reputations, and if that is what we have to do get these caps increased, I think we owe it to them and the country to do it. And I am grateful for what it sounds like to me would be your support in trying to accomplish that.

    Thank you, Mr. Chairman. I beg the Chair's indulgence.

    The CHAIRMAN. Thank you. Mr. Abercrombie.

    Mr. ABERCROMBIE. Thank you, Mr. Chairman. Secretary Cohen, and everyone, thank you for coming. I am the only one here, though, that has a real excuse for being late on the Chairman's gavel, because I just flew in 5,000 miles.

    So let me start off on a little different vein. Mr. Secretary, I want to pay particular—give particular credit to you and General Jones for helping in circumstances where it would have been easy to say no, with the production of the film ''The Thin Red Line.'' I don't know if you have had an opportunity to see it yet. I don't know has—if anybody sees it, I think you have an experience with it rather than just seeing it.

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    Well, it is just something I think that your faith in the people who helped put it together was well justified and including taking chances on whether it would be well understood, particularly, because it is such a tough thing to tell. It is not sequential, it is a state of mind.

    And I think it is a credit to you and to the people who are working for you that they were able to help and assist with this. I have no doubt that at Academy Award time, this film will be well represented and justifiably so.

    With that said, I am just—not amused, because that is not really where I am, but it brings a smile to my face that we are now so willing to talk about lifting budget caps, because I think you have made a point in a couple of the speeches that you have been making in some of the venues that are not normal, quote-unquote, right? And I want to commend you for that as well.

    If it wasn't your idea, whoever's idea it was, you can give them full credit; but inasmuch as you are the Secretary, you are the Secretary, you can take credit of this. I guess it is a plan you have, right, to go to various groups, individual context's circumstances that aren't usual for the Secretary of Defense? And that is great. But one of the points that you made with respect to the base closings is that this will save, if my figures are correct, in the neighborhood of $3 billion.

    The points some of my colleagues were making, is that right? The 2001 and 2, is that a reasonable estimate, $3 billion you hope to save?

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    Secretary COHEN. On an annual basis after the completion of the closure, yes, we would expect to save roughly $20 billion in the period between 2008 and 2015.

    Mr. ABERCROMBIE. OK. If I understand as well the Senate proposal on pay and benefits that came floating out all right, I understand the Senate is preoccupied these days with some matter that is a little vague in my mind, but nonetheless they were able to put this plan out. I have an interest in it because I am the Ranking Member on the Personnel Subcommittee here. And I know that the Chairman wants to do a job and the Ranking Democrat on our committee wants to do a job with respect to personnel and pay that will show our intention to take care of the troops.

    But am I correct, Mr. Secretary, that you are very hesitant about the possibility of a bidding war getting started here? I am not trying to be sarcastic about using the word ''war,'' but an auction kind of thing gets started, good intentions, but they have got away from us? If I understand it correctly, doesn't the Senate proposal take us around $7 billion already?

    Secretary COHEN. Actually, Congressman, it would take us higher. I haven't been able to really get all of the numbers together. But it would be at least $7 billion, and possibly if the other items on top of the 4.8 percent that would be included, it could run up as high as $10 billion to $11 billion.

    Mr. ABERCROMBIE. So if we are going to be straightforward in this committee, and I know we want to be, and we have to be real careful about just tossing out phrases like ''raising budget caps,'' and presuming that if we were able to get to a base closing round or two. That we would be in the same ballpark as some of the figures that are being tossed around with respect to retention, recruitment, retirement, et cetera, right now; is that correct?
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    Secretary COHEN. Let me be as direct and frank as I always try to be in my dealings with Members. I think that the people that we have in the military aren't paid nearly enough. I mean, you couldn't find people in the private sector who are willing to be on call 24 hours a day, to be deployed at a moment's notice to go into harm's way each and every day, to do all of the things that we ask of them, to train at the level they train. You would be hard-pressed to find anyone in the private sector who would be willing to do that and be paid what we pay our men and women.

    So the statement that was made by Congressman, I believe, Sherwood, that we can't pay our men and women too much, we can pay them too little, that is precisely right. What we have tried to do in terms of our recommendations is put a package together. The package of the 4.4 percent and the REDUX reform and the pay table reform, we thought made sense in terms of the right kind of an incentive, and it was balanced against everything else we needed to do as far as modernization is concerned, all of the other readiness issues.

    I would never be one to object to saying let's pay our people more, provided No. 1, that we pay for it; No. 2, that you don't create unrealistic expectations. So that if someone else says, well, it is not—4.8 percent is not enough; how about 5 or 5–1/2 or 6 percent, what's wrong with that? If we start to go up, what I want to say is, don't take it out of the REDUX and don't take it out of the pay table reform, because we think those are very important. And, by the way, make sure that we can pass it in both Houses.

    Otherwise, everything that we have done to turn around the momentum on this, to say, hey, they are listening to us; 4.4 percent increase, it is REDUX, it is pay table and we still have specialty bonuses and so forth, we are really turning this thing around. And suddenly we have people who are suggesting a much higher level which will be taken out of modernization or readiness accounts or which will not enjoy the support of both houses. Then we have raised the level up here, and we come back to what we have proposed, that we think is responsible, and say, ''really we didn't get very much, did we?''
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    All that we have done to increase morale and to turn this thing around could be rejected and found to be a negative. So it is within that context. Do we pay more? I think we need more.

    Mr. ABERCROMBIE. So the responsible thing to do is not to raise unrealistic expectations, and the responsible thing to do is to make a determination about what we are going to have with regard to budget caps?

    Secretary COHEN. That is correct.

    Mr. ABERCROMBIE. And what we are going to reasonably expect with regard to deployment and what we can reasonably expect to have, and maybe settle some arguments in here ahead of time with respect to procurement and various weapon systems, right—so that we can put the right figures on these things? Nobody is going to dispute trying to raise quality of life or to deal with the three Rs that I have cited: the recruitment, the retirement, and the retention.

    But all of that is rhetorical if you don't put solid figures behind it and have support outside the committees of jurisdiction. It is easy to sit in the Armed Services Committee and make all kinds of rhetorical commitments. It is another thing to get the Congress as a whole to approve some of them, the methodology that is required in order to take the budget where it needs to go. I hope that I am reiterating in effect what you are saying. But this is what we have to do on this side.

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    Let me move very quickly then to a couple of points on being realistic about what we need to do or not do. It is no secret that I am a supporter of submarines and submarine activity within the Navy and increasing the technology abilities in the next generation of submarines and so on. But there is a proposal to convert existing Trident submarines to a missile platform, not a nuclear missile tip, if we go from that. And I think that might have some real possibilities.

    But is that budgeted for? I know that you have received a report, but I am not aware as to whether or not that has been accepted. Or would that be something coming up in another budget cycle?

    Secretary COHEN. That is not something that we have budgeted for.

    Mr. ABERCROMBIE. Will you be making a decision about that or making a recommendation to us at some point during this session?

    Secretary COHEN. Well, it is a Defense Science Board recommendation only at this point. So it will come to me and I will have to review it.

    Mr. ABERCROMBIE. Well, then as time goes by, we will take up the question of the benefits package and the pay package. And just from my side of things and my commitment, Mr. Secretary, is that we are going to try to work something through that does right by our troops and does not then get in a war of each against all with respect to who and what gets proper funding.
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    Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you, Mr. Abercrombie.

    Mr. Skelton.

    Mr. SKELTON. First, thank you for your excellent and informative testimony. I have one historical footnote for you, Mr. Secretary. When I first came to Congress, I was faced with the closure of a base south of Kansas City, probably in my district, which affected the district I represented, brand new Richardson Air Force Base, under the old law which I have in front of me, and it appears to reflect what it was back in 1977. And I know of your desire to have a Base Closing Commission or two rounds of it.

    Have you considered using what turns out to be section 2687 of what is the base closure procedure?

    Secretary COHEN. Of the old law? I am sorry.

    Mr. SKELTON. Yes; which evidently is in effect now.

    Secretary COHEN. We have legislation that we are going to be submitting, if it hasn't been submitted already.

    Mr. SKELTON. No, I mean—there is a way to do it now as Harold Brown, your predecessor, did in 1977, which I felt very strongly about; however, it was done.
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    Have you considered that, sir?

    Secretary COHEN. The Comptroller advises me and reminds me it was the ineffectiveness of that particular procedure that lead to the creation of BRAC.

    Mr. SKELTON. Sadly, it was very effective insofar as the Richardson Air Force Base was in Missouri. Thank you.

    I would direct your attention to the section nonetheless. I thank you for your comments. We are certainly headed in the right direction. I feel very strongly that you are working very hard at it to do it, then take too many visits with young people in Bosnia or elsewhere is to see that the operational tempo, or the personnel tempo is extremely high. And I remember back in January 1996, when Lieutenant General Ted Stroop, a highly respected head of the Army personnel, testified that the correct size of the Army should be 520,000. And, of course, it has gone down actually below 40,000 from that figure. I don't know what we can do about that, if anything, except create the better package for them and in some way handle their deployments better.

    It seems that the predictable services are the Marines and the Navy, because they know the day they are leaving, the day they are returning. It is interesting to note that when I have asked for the shortage of officers and enlisted regarding three aircraft carriers as of today, the Enterprise, which just came back from Desert Fox, is 469 sailors short of its basic allowance, which is not a wartime requirement, but its basic allowance; the Vinson is 286 sailors short; the Kitty Hawk is 264 sailors short.
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    Hopefully the recruitment and retention will allow corrections on this, and hopefully this can be done by the benefits package that you have. My only suggestion is that we do a better job in the area of the operational and personnel tempo. I know the Air Force is working very hard at that. And I am not sure what you can do with the other services, because frankly it appears that the Army is just too short of people.

    But I commend you to those subjects, and I thank you both. And, Bill, thank you for all of your hard work. We are really proud of you.

    Secretary COHEN. Thank you very much, Congressman Skelton.

    The CHAIRMAN. Thank you. And I would like to add my thanks too, again, for your time and being with us so long. It has been a long day already, and you have got a long day to go, and we have too yet.

    I would just end up by saying that we appreciate the efforts you put into this thing, we really do. And as I indicated in my remarks, Mr. Secretary especially, you are due a lot of the credit for helping turn this thing around. There are a good many of us who think we just need to do more, and it is going to be difficult to do more. There is no question about it. You have given us all the reasons out here today, the caps and the surplus and the other demands on the surplus and all of these kinds of things.

    But if we are going to be able to do more, and I think we can justify the need from what the chiefs have told us the needs are, we are going to have to have the help, further help of you and the Administration. We can't in the Congress do it by ourselves. It takes more than just us wanting to do it. If we renegotiate caps, if we use some of surplus, all of these things have to be with your concurrence. And so that is why we are taking the position we are taking. We want to do more, but we have problems to work through. And we need your help in doing it, and we appreciate what you have done so far, and hope we can do more.
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    Thank you again.

    Secretary COHEN. Thank you.

    The CHAIRMAN. The meeting is adjourned.

    [Whereupon, at 2:15 p.m., the committee was adjourned.]


February 2, 1999
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