Segment 2 Of 2 Previous Hearing Segment(1)
SPEAKERS CONTENTS INSERTS
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COAST GUARD FY 2000 OPERATIONAL CUTS
Wednesday, June 7, 2000
House of Representatives, Subcommittee on Coast Guard and Maritime Transportation, Committee on Transportation and Infrastructure, Washington, D.C.
The subcommittee met, pursuant to call, at 2:47 p.m., in Room 2167, Rayburn House Office Building, Hon. Wayne T. Gilchrest [chairman of the subcommittee] presiding.
Mr. GILCHREST. The subcommittee on Coast Guard and Maritime Transportation will come to order. We apologize for having you wait for such a lengthy period of time, but we had a series of very interesting productive exchanges of information which led to a number of votes that were very close on the House floor, and democracy was at work. So we all want you to leave this hearing this afternoon feeling good about America, regardless of what happens at the hearing.
We are meeting this afternoon on some critical measures dealing with the budget shortfalls with the Coast Guard. We budgeted just about at the President's request for fiscal year 2000. We now understand, even though the President has not asked for any supplemental dollars for the Coast Guard, that the Coast Guard may have a shortfall of up to about $225 million for various reasons that will be brought out during this hearing. There are two points all of us hope to make during the hearing, both sides of the aisle, that is, to find out in as much detail as is possible, where the shortfalls are right now with the Coast Guard, and the other point and the most important point, so that we can bring to the appropriators specific line items of need, with the amount of money to cover that need so that we either match what the Senate may do or exceed what the Senate may do. But after this hearing today, we want to know exactly where the need is in the Coast Guard operations, and then we will fulfill that need, we hope as early as July, so that there will be no need for any reduction in the Coast Guard operations, whether it is in routine patrols, drug interdiction, fisheries, search and rescue, maintenance area, badly needed C-130 parts, recruitment, retention, medical care, any one of a number of sundry needs that the Coast Guard feels they need right now.
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My last comment is the Coast Guard does great and wonderful and demanding things. Each member of the Coast Guard works about 25 hours a day. They are to be commended for what they do for this Nation, and we want to make sure that that commendation does not go unheard during this hearing today.
[The statement of Mr. Gilchrest follows:]
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Mr. GILCHREST. At that, I will now yield to the gentleman from Mississippi, a former Coastie, Mr. Taylor.
Mr. TAYLOR. Thank you, Mr. Chairman. I do appreciate the Commandant being here. Commandant, I would hope you can address a few things while you are here today. For those of you who haven't followed this for a while, this is not the first time the Coast Guard has ever had to curtail their activities because of shortfalls in the fuel accounts. I distinctly recall in the late 1970's that being something that happened, and I am sure it has happened between now and then.
Commandant, one of the things that I have noticed is a move on the part of the small boat stations away from diesels towards gasoline engines, and again, there is a tradeoff there, you picking up speed, you picking up the ability to change engines very quickly, but I have got to believe that there is a price that is paid in fuel economy. So I would hope if you have any sort of studies on that, I would like to take a look at them.
Lastly, the question that I think is fair to ask is seeing as how there seems to be something every year that causes a shortfall, be it an Muriel-style boat lift or a series of bad storms on the Gulf Coast or the east coast, something that causes an unusual rise in your level of operations, and therefore an increase in your expenses, has any serious thought been given for the next budgetary cycle a contingency fund that you can dip into if necessary and return to the taxpayers, if not at the end of the year, and I realize you were only Commandant for a brief period of time, but would this not be a good practice to begin? Welcome. We welcome you here and want to hear your remarks.
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Admiral LOY. Thank you, sir.
Mr. GILCHREST. Another former Coastie, the gentleman from North Carolina, Mr. Coble.
Mr. COBLE. Mr. Chairman, they are everywhere. You are surrounded by us. I will be very brief, Mr. Chairman.
Good to have you here. Admiral, at our hearing on the Coast Guard's fiscal year 2000 budget request, I think it was in February of last year, you testified that the President's budget request permitted continuation of basic Coast Guard services and addressed the Coast Guard readiness needs. Congress funded the Coast Guard at the level requested by the President for fiscal year 2000, and I am sure you will be able to tell us when you did realize that this request was insufficient to cover current Coast Guard operations? And I have two or three other questions, Admiral, but I will wait and hear your testimony first, but it is always good to have you here.
Mr. Chairman, thank you for having arranged this hearing. I think it is vital that we glean throughout what are obvious problems. Thank you, sir.
Mr. GILCHREST. Thank you, Mr. Coble. The gentleman from Washington, Mr. Baird .
Mr. BAIRD. Thank you, Mr. Chairman. Just briefly, I want to echo your commendation of the Coast Guard's outstanding work, and I am pleased with your commitment to fully fund their operations. We already have mission critical activities I think in the northwest; for example, interdiction of foreign vessels in our fishing area, which probably can use more funding to accomplish, and certainly don't need a shortfall at this critical time. So I appreciate your holding this hearing, and I look forward to the admiral's comments.
Mr. GILCHREST. Thank you, Mr. Baird. Admiral, welcome. We look forward to your testimony, sir. You may begin.
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TESTIMONY OF ADMIRAL JAMES M. LOY, COMMANDANT, UNITED STATES COAST GUARD
Admiral LOY. Thank you, Mr. Chairman. Mr. Taylor, members of the committee, I thank you for the opportunity for the chance to raise directly with the subcommittee, the challenges that unfortunately we have read a little too much of in the press. Mr. Chairman, let me say up front to the degree I could have done a better job in alerting the committee earlier as to these issues beyond the testimony that I gave to the committee the last time we met. I apologize for that and for not keeping you posted directly, and I will certainly design the structure necessary to make sure the staff and the members are kept personally posted by me in the future.
Sadly today, across America, maritime services are, in fact, being provided at levels clearly reduced from their intended levels. Reduction levels vary from place to place, but basically it is in the window of somewhere between 10 and 20 percent, depending on the mission and depending on the location.
As a result of those reduced levels, our ability to accomplish our objectives in aids to navigation, drug law enforcement, migrant interdiction, and fisheries law enforcement are correspondingly reduced. And I think, Mr. Chairman, that hits every member of this committee and me very hard. For almost 40 years in my personal time in this organization, the only song I heard being played ever was one of rave reviews for the Coast Guard, getting the job done always, whatever it was at whatever cost, and I am sorry to say that we can't say that today, and it truly breaks my heart to say so, but it is true.
A couple of simple facts. In 1967, we had 35,740 people on active duty. Today we have 35,011, essentially the same array of people to do what we are asked to do for the Nation. And in those years, the array of activities that we have been asked to address have increased dramatically, whether it is counterdrug, whether it is a radically expanded exclusive economic zone with all its intended requirements, whether it is OPA 90 in terms of environmental protection in the aftermath of the 1989 spill in Alaska, and lots of other things that I could mention. Missions have been added to our array of responsibilities.
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During that same time, very systematic budget pressures have eroded our total capability as an organization, if you will, our readiness to do our job. We have acquired hardware many times without the attendant annualization of recurring operating expenses to keep that hardware running. We have engaged in streamlining activities, for example, from 1994 to 1998, very noble work, but I think we probably went a bit too far when we did that. We have now aging hardware with the attendant cost associated both with personnel and the intensive maintenance requirements associated with them, and we are now faced with rapidly escalating people costs as it relates to recruiting and retention and training and paying our force. This year, for example, which is, I think, to the point for the committee's work today and our discussion as you wanted to structure it, we have found medical, fuel, housing, pay-raise issues that were not known to us at the point in time when the President's budget came to the Hill, and even at the point where the committee actually appropriated our monies for the year.
We have encountered the kind of things that Mr. Taylor mentioned, whether it was JFK Jr. or the Egypt Air crash, hurricanes, etc., the kinds of tragedies that force a focused amount of utilization of our assets, to the tune of about $75 million worth of bills have sort of accrued on us unknown at the time the Congress appropriated our wherewithal for the year, and they have, in fact, become simply bills to pay.
I think it is important for us, just for a moment, to keep in mind tomorrow, because at the same time we are worried and discussing supplemental funding for 2000, the Congress has properly given attention to the 2001 appropriation. Next year I already look to things that are going on in the National Defense Authorization Act that have the potential to have significant bearing on my operating budget and my discretionary capability to do things next year. Whether those are about housing, about adjustments in the TRICARE military medical system, reviews of sea pay being undertaken for the first time in many years, discussions about pharmacy rights for retirees that stand to potentially impact the Coast Guard by some $30 million or more.
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So I can already see a window of somewhere between 30- and $60 million next year that has not yet been discussed as it relates to the Coast Guard in the 2001 line. But the bottom line, sir, I think is that too many consecutive years of eroding, the little discretion that used to be part of our ability to do our job, have gotten us to the point where we literally no longer have any discretion at all. Unfortunately, despite the fact that there are many well intentioned people, certainly all those that I see on the dais that are working very hard to end up with supplemental funds for the service this year, I am left in the face of the Antideficiency Act to make certain that I can get us through the rest of this year.
So I am very much concerned about protecting my ability in the summer months. Invariably the fourth quarter, July, August, and September are the busiest months for our organization as it relates to recreational boating and many other things, and as Mr. Taylor has pointed out, the serendipitous nature of what emergency we will face, whether it is hurricanes or whether it is a mass migrant mission or counterdrug requirement is always, it seems, on the horizon, and in that fourth quarter.
I must also, Mr. Chairman, protect crew qualifications, such as aviator qualifications and boat crew qualifications to make sure that when those things happen, we always have people available to do them in terms of emergency response. So let me close with just a couple of simple points.
Mr. Chairman, members of the committee, I worked very, very hard with the sort of senior brain trust of the Coast Guard to exhaust virtually every possibility that I could prior to making the judgments and directing the operational reductions that we have already taken. I desperately need the supplemental relief for 2000 and an adequate appropriation for 2001, and time is very much of the essence as it relates to that supplemental relief because come the 1st of July, or come the 1st of August, I will be faced with not much choice but to further bank against what little time is left in the fiscal year, and perhaps even more egregious cuts would be necessary without the relief in hand.
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Clearly there are significant negative consequences to not having that supplemental relief. I believe there is a significant bipartisan and both administration and congressional support for the relief required. Supplemental bailouts annually, Mr. Chairman, I think are really a lousy way for us to try to run this organization. The real answer is base restoration at the other end of the day so we don't find ourselves in this predicament from year to year.
I thank you for the chance to focus on this enormously important and unfortunate reality. I look forward to being able to provide the committee everything that you need to help us with respect to acquiring the supplemental relief that we need. And I would like to close with just two very short historical anecdotes.
Mr. Taylor and I had the great good fortune of attending the D-Day Museum opening ceremony yesterday in New Orleans. A couple of stories that came to my mind as a result of the Coast Guard's contribution that day I think bear on what we will talk about as it relates to today and tomorrow. As you know, Mr. Chairman, there was a squadron of 83-foot wooden patrol boats working out of England that were part of the Coast Guard's responsibility at Normandy. They were there so as to be a search and rescue force for the entire invasion force, and on the occasion of just June 6, saved almost 500 lives, and over the course of the first 4 or 5 days, saved almost 2,000 lives.
One of the incidents that was related by Secretary Slater in his comments at the D-Day opening suggests the nature of how Coast Guard people over time have approached their work. On that particular occasion, one of those wooden boats was faced with the reality of a burning and sinking LCM with about 35 soldiers, infantry men aboard. They found their way alongside, despite the fact that ammunition and other flammables on that vessel were engulfed in flames and exploding.
They got about 30 of the 35 or so people off the vessel, and there was one gentleman who had lost his leg severed above the knee who was obviously probably not going to make it, and the choice then became do we save for sure the 30 that we have aboard and get them safely back to a troop ship, and one young Coast Guardsman took that into his own hands, leaped into the water, got himself over to that sinking LCM, found a way through hook or crook and God's good grace to get that injured infantryman off of that LCM back to the temporary safety of that wooden vessel and back to the troop ship.
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Frankly, Mr. Chairman, I don't know whether that infantryman lived or died, but what I do know is that the nature of the work undertaken by that Coast Guardsman that day was what everyone in today's Coast Guard would still very much be about, given the opportunity, given the resources, given the training, given the equipment to do the job.
The second story is a bit more upbeat. It goes to a Coast Guardsman who passed away just two weeks ago. At the time he was a lieutenant commander in the Coast Guard Reserve, attached to General Eisenhower's staff. His name was Quinton Walsh. He was given a ragtag group of about 50 people and sent to Sherbourne to secure the port. That was his direction, secure the port. Some of those folks were Navy folks, some of those folks were Army folks.
It was, as I say, a ragtag group. I always have wanted to have Quinton Walsh on my side and in negotiation because over the course of the next couple of days he accomplished his purpose. He secured the port and took about 850 German prisoners back to General Eisenhower's shop when it was all over, literally, having bluffed his way through most of it, but in the middle of a number of firefights in order to get the job done.
So somewhere between the ingenuity of Quinton Walsh and the absolute heroism of that young Coast Guard sailor who jumped over the side, I want the committee to understand that is still very much what today's Coast Guard people are all about. We will go to any length to get our job done for this Nation, and we simply ask for the wherewithal to do it well.
Thank you, Mr. Chairman. I look forward to your questions.
Mr. GILCHREST. Thank you, Admiral.
I think we are all on the same page, and by the time the hearing is over, I think we will come up with, through your expertise and recommendations, and our urgent desire, to ensure every Coast Guardsman out there on the high seas has the backing of his or her country and the resources to do the job that we ask him or her to do. Over the last several weeks, our office gave out about a hundreth medal of—jubilee of liberty from the French government, participants of the Normandy Invasion of 1944, and we heard some stirring stories, and they had the full backing of this country to make that great sacrifice.
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To some extent, though, Admiral, I also realized from a more personal basis, what it is like to not have all of the equipment that you need to engage a hostile enemy, and when I was in Vietnam, I was a rifleman with an M-14, and they then issued us an M-16 that was faulty and didn't work. So the sense of anger and rage and disgust at some group of people making the wrong decisions still boils my blood. That is one of the reasons that I ran for Congress.
Now, your effort as the Commandant of the Coast Guard is to be buttressed by the work we do here in Congress so that you can do the job that we ask you to do, and you were right on the mark when you said 35,000 Coasties in 1967 and 35,000 in the year 2000, when you have got 10 times the number of boats out there, and 10 times the amount of drugs that need to be interdicted, 10 times the amount of search and rescue missions. It is just not going to cut it.
So somehow, Admiral, we have to make more of an effort. I have to make more of an effort. Both sides of the aisle on this committee have to make more of an effort. The committee staff has to make more of an effort so we can reach into your operations and see what the needs are.
The testimony that you gave, I wish you gave that testimony in February, Admiral. I wish you gave that testimony last year. We assume to some extent, this is nothing against you, that the President and that wonderful organization, OMB, comes up with some reasonable figure. We have suspected on this dais up here that we don't always get the correct numbers, that there is a lot of discussing how we are going to balance the budget, how we are going to put some money into more programs, how we are going to make political hay out of something.
And you are also correct when you say another supplemental is not the way to go. We have a shortfall this year of 200 million, 300 million. A year or two ago we gave the Coast Guard somewhere in the neighborhood of 300 million, maybe a little bit more, maybe a little bit less, for drug interdiction and some other things. We just have to sit down together and say this is what we want the Coast Guard to do for the United States, and if that means that we have to budget to do that, which may mean to double the budget of the Coast Guard, half again the budget of the Coast Guard, then we are just going to have to do it. So I think this hearing, to some extent, represents a series of exchanges of information that this committee will have with the Coast Guard, with the appropriators, both the subcommittee and the full committee, and certainly collaborate with the Senate to ensure that the Coast Guard doesn't have this much of a budget shortfall again, even if some of us have to go over and sit down and discuss this directly with OMB and see where their numbers are.
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I am not going to blame this on anybody, not on the Coast Guard, not on OMB. I think we all share in it. The committee staff here, myself, we should have paid closer attention to this. The most important thing right now is that as soon as possible, and I think it can be done by July 1 that this supplemental be put forth so you have the cash to do the things that are necessary. And that when we come around to this budget process next year, that is, if we don't all get defeated in the next election, but when we come around to this budget process next year, we are going to be a little bit wiser and we are going to push as hard for the Coast Guard as many people have been pushing for DOD.
I have some questions, but I will first yield to the gentleman from Mississippi, Mr. Taylor. Take to the point, how much longer will you be commandant, sir?
Admiral LOY. May of 2002, sir.
Mr. TAYLOR. So you will submit—.
Admiral LOY. Two more budgets.
Mr. TAYLOR. Commandant, given what we just know just to be fact, that things happen, and no one can anticipate, and you have no control over that, why not, given the fact that for the first time in many years, the Nation is at least breaking even, I don't buy this argument that there is a big surplus out there. I do think we are very close to breaking even, and given the fact that we at least have that leeway, given the fact that we are pretty close to breaking even, and that does present some opportunities that we have not had in the past, why not establish a contingency fund with the clear understanding that this will be for things above and beyond the normal course of action, even if you have to work with the Secretary of Transportation to outline what that would be, be it a hurricane, another Muriel boat lift, whatever, would that not avoid the need to come back from Congress? If it is in August, they are not in town, much of the month of February they are not in town, things happen and I have got to believe that you just can't wait for this type of relief given the important mission that you have.
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Admiral LOY. Mr. Taylor, I think in terms of a formal structured contingency fund, I for one am not at all adverse to thinking that through very carefully with the committee and sorting out, to whatever degree, there may be some pluses or minuses associated with that and figuring it out amongst ourselves, and carrying that message as appropriate back to the administration as a thoughtful thing to do. I can tell you up front, sir, because of what I expressed in my opening statement about the fourth quarter, seemingly it is always in the fourth quarter that those kinds of things occur, especially hurricane season, obviously predictable, and the summer being the time when at least we have seen migrant floods of the past. It was in the summer and early fall of 1994 when we saw the last major migrant crisis in the Florida Straits dealing with both Haitians and Cubans.
I can tell you that we, as an organization, already have attempted to think in that direction by salting a few dollars away, participating exactly that in the fourth quarter, so in terms of behavior, we have already sort of gone in that direction, to think it through more carefully as a formal structure, sir, I think is something that we should do.
Mr. TAYLOR. Commandant, the other question would be, and I know this is not something that is going to happen overnight, but I do serve on the Armed Services Committee and was very pleasantly pleased to see that the budget for the Armed Services Committee increased by about 19 billion this year. Would the Coast Guard, in the long term, be better off or worse off if you would transfer it under the umbrella of the Department of Defense?
Admiral LOY. Mr. Taylor, I think it is almost an annual question that is asked. The way I have tried to think it through during the time I have had the job, sir, is this way: The very best deal the American people get from our organization is that they have a single overhead to deal with a multitude of activities on the water. About a third of those activities are properly hosted in the Department of Transportation. I would say about a third of them are currently in the justice realm more than anywhere else because of the dent for the moment, at least on maritime law enforcement activities, drugs, fish, migrants, et cetera.
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About a third of them have to do with national defense responsibilities that we have, sir. So the challenge there becomes, to some degree, it doesn't matter which one you go to. Two-thirds of what you do is outside the structural relationships of that committee's natural oversight inclinations. Secondly, I have always been concerned that the $5 billion budget of the Coast Guard would almost be a rounding error in DOD, and I don't know what the implications of that are in the greater scheme of a $300 billion budget.
And in the last piece of, I think, a rather important thing for us to think through is Posse Comitatus. I think that is a very real issue, and we should, with our eyes wide open and the cards face up on the table, make judgments about that with respect to the location of the organization.
In the meantime, sir, I think it is incumbent on me to do a better job inside the administration, and we have taken some, I think, very smart steps in the last 6 months, since we discussed this frankly at the last hearing, to methodically be about the business of having both the Office of Management and Budget and the Department of Defense understand that decisions taken over there, especially entitlements, have a tail that gets waged in my budget.
That is precisely one of the things that is most contributing to the dilemma that we face today, to the one we faced last year, and likely the one that we would face next year, unless it is dealt with upfront. That being, for example, when the compensation package was addressed by the Congress so constructively last year for the four DOD services, and the budget was appropriated accordingly to deal with it, we ended up with the wag on that attempting to, out of the lack of discretionary opportunity that we have, absorb the monetary impact of the pay table reform, the raise in pay, and the retirement adjustment, among other things.
So we have now worked with the Department of Defense, and I have gotten the right people sitting at the table when those judgments are taken so as to have them either reflected inside the Armed Services Committee structure, sir, and/or to have a, if you will, last bite at the apple from OMB, that was the phrase Mr. Lew used when he and I had a meeting with Secretary Slater, to make sure the Coast Guard implications of last-minute thoughtful decisions taken by OMB and DOD that do have impact for us are, in fact, reflected in the President's budget when it comes to the Hill, and as the proper committees on the Hill review those things.
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Longer answer than you probably wanted, sir, but those implications of that must be reviewed as we ponder that question.
Mr. TAYLOR. Brief followup. Commandant, I happened to have been a very young man when the cutters of today first went to sea. They were new when I was, and neither of us are new anymore.
Admiral LOY. Yes, sir, that is correct.
Mr. TAYLOR. I have got to believe their predecessors probably came to the Coast Guard during World War II, since the typical life of a ship is 30 years, most of these came on late 1960's, early 1970's. What I don't see for your Deepwater Project, and I am for it, for a number of reasons I am for it, but it was my understanding that a lot of your 378s and medium endurance cutters were funded through the DOD during the Vietnam buildup. What I don't see is how you are going to get the replacement for those vessels, the Deepwater Project, funded, given your minuscule budget, and I just don't see the clear constituency that we need to get the 218 votes in the House and the 51 in the Senate. That is one of the reasons I asked the previous question that maybe you would help along those lines.
Admiral LOY. Sir, I think the reality of the DOD or the defense portion of what becomes the funding stream associated with the Deepwater Project is something that needs to be absolutely addressed upfront. Certainly it is my intention to open that dialogue with Admiral Clark when he sits down as the new Chief of Naval Operations. However, just as a quick reference, about 18 percent of the 378-foot cutter total cost came from the Department of Defense funding stream. Frankly, about 90 percent of the 110-foot patrol boat funding stream came from the Department of Defense. We just built the Coast Guard cutter HEALY in large measure through the Department of Defense, not only the funding stream, but also the actual contracting process that we dealt with building that ship.
So there is, without a doubt, in terms of weapons systems, in terms of all the things that we asked of Admiral Borda before we put the specs package together, an acknowledgment that in today's national fleet for this country, not John Layman's 600-ship Navy, but today's 300-ship Navy with 116 combatants, a far different view of the 40 to 50 hulls that are Coast Guard, but properly equipped, in fact, become very, very valuable to the Nation during contingencies that can be expected to use those attributes.
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All of that is cranked into the RFP that is on the street being discussed and being developed by the three competing consortia for the project. Do I imagine there absolutely must be a portion of the funding stream that will go into the Deepwater total package from the defense—from 050? Yes, sir. We need to reason that out very carefully, and I think the 2002 budget cycle is the proper window for us to have a good hearty discussion about that.
Mr. TAYLOR. Thank you. Thank you, Mr. Chairman.
Mr. GILCHREST. Thank you, Mr. Taylor.
Mr. Coble.
Mr. COBLE. Thank you, Mr. Chairman. Admiral, good to have you here. Admiral, you may remember about a year and a half ago, it was either you or someone from the Coast Guard, whom I admonished in this manner. I said the Coast Guard, unlike these other services, come up here and they will say, oh, yeah, sure, the President's budget is fine. We can live with that.
These other services come up here and they say, oh, no, the President's budget authorizes 5 million. We need 9 million, probably hoping to get 7 million, and inevitably, they end up getting 7 million. Mr. Chairman, you are right, we can point accusatory fingers at all of us, but Admiral, we can only do what you all tell us, and I don't mean to be taking you to the woodshed, Admiral, but back in February a year ago you told us that you thought your budget would be adequate. I am told now that before this fiscal year concludes, that you are going to be about $225 million shy. I think you just now said this was not in your written statement, but I think you said there was 75 million in bills outstanding now. That is a long way, Admiral, from your saying to us earlier that you thought you could live with it. And I realize the gasoline, for example, but that is not 200 million bucks. That is probably 5, 6, 7 maybe.
Admiral LOY. Seven.
Mr. COBLE. I understand how those things happen but I guess if I were you, I would come up here, raise a little cane, I might be relieved of command when I went back to the office, but you all do a doggone good job, as the chairman pointed out. I want you to puff your wares like these other services do. By George, let it be known that 5 million is insufficient. Let the chairman know what is sufficient, and I guess what I am saying to you is I see no other way, Admiral, because of the fact that your missions will continue to be increased, I think it is inevitable that the increase will continue.
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I don't see any decrease or any diminishing of the assignments or missions assigned to you all, and I guess, Mr. Chairman, what I am asking the admiral, let us know, let the chairman know what you need, even if it means trashing the President's budget request, and at least try to get more money because, am I right, Admiral, when I say 225 million shy at the end of this year?
Admiral LOY. Let me if I could put that in context, sir. Last year the Congress made every attempt to provide a $200 million readiness relief to this organization. It was, in fact, appropriated. What occurred in the aftermath of that action was a recognition of about $40 million worth of bills that needed to be paid, and, in fact, in 1999, we were provided those monies to pay those bills.
$160 million of the $200 million, which was clearly reflected as a readiness requirement, akin to what Mr. Taylor is describing, occurred for the DOD services. $160 of the $200 million was simply rolled forward to become part of the appropriation for 2000, which, in essence, rolled the $200 million of readiness requirements forward into this fiscal year, and that is exactly what we are facing today. Today those same readiness challenges exist. The billpaying associated with what has occurred since the appropriations went down and are enacted is in the $71 million total. So those are things like medical costs that have soared since we had our appropriation enacted.
Fuel, basic allowance for housing, Continental U.S. COLA adjustments, pay raise deltas from what was originally appropriated, and as Mr. Taylor mentioned, hurricane relief and absolutely significant recruiting and retention demands in order to stay competitive, not only in terms of keeping our own service up to snuff or get it back up to snuff in terms of the total billet strength, but to be competitive with our counterparts, not only in DOD, but in Federal Government and the economy in general.
Those things today add up to the $71 million worth of bills that I have to pay of the readiness shortfall that has been accrued over time, has just been sort of forwarded to this year, and as the Chairman mentions, the last thing I want to do is forward it to 2001. I want very much to have that solved, so we, in fact, restore the base to the levels that Mr. Taylor is talking about.
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Mr. COBLE. I have already kicked this around and I can't remember who told me this, Admiral, but it was suggested to me that maybe the Coast Guard could have pursued a more bold or a more vigorous effort in reducing administrative and non-critical travel and conference costs, for example, as opposed to cutting back operational capabilities. If that is, in fact, true, I think that needs to be addressed in an appropriate way. Do you want to respond to that?
Admiral LOY. You bet I do. If that was true, I should be fired and the reality is, Mr. Chairman, as you know and Mr. Coble, as you know, there has simply been a depletion of any of the flexibility that we ever had to do those kind of things. Let me argue that in order to make those kind of cuts that you describe, there is only three things in our service that can happen: You cut people because we have 66 cents of every dollar spent in our organization associated with people one way or the other; you cut travel or administrative conference costs, the kind of things you were just describing, sir, and I couldn't agree with you more; or you draw down the supply locker or defer maintenance in some fashion to make up the wherewithal so as to keep the assets running.
Mr. Coble, we have been doing that for 10 years and you can't get there anymore. You can go to what we call our 4 X accounts, our maintenance accounts and they are simply depleted. I can take you to Elizabeth City and show you that we perhaps have maybe three HU 25 Falcon engines on the shelf. That is about a month's supply, when the lead time necessary to refill the locker is 6 months. The same exists for HH 60 engines. The same exists for any maintenance, depot maintenance level facility that you would like to visit in our service. So faced with the simplicity of either having to cut people when I was in the middle of attempting to restore the workforce to deal with the supply locker, which I have just suggested, has already been depleted to the lowest levels that I can recall on record.
And thirdly, the admin in conference, I did that on the 1st of October. As I look forward on the 1st of October, I cut all of that fluff out of our operation right then. So over the course of then arriving at the 1st of January, I said we will no longer operate at a level that cannot be sustained by my training requirements, which enable me to put the right kind of people, the right kind of training in harm's way when I send them parts lockers and maintenance lockers have to be sustainable so as to keep that operational tempo where it belongs, and then only on the 1st of June, looking forward, and having experienced these things that occurred in the meantime, in terms of escalating medical costs, the fuel costs, things that you cited and what have you, did I look forward and say I am not going to get to the 30th of September unless I bank funds against operational realities.
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And so I directed my operational commanders to pull the throttles back adequately to bank funds against what I know will be a busy quarter until I get supplemental relief.
Mr. COBLE. I thank you, Admiral. Mr. Chairman, Mr. Taylor mentioned about the age of the cutters. I was in when Mr. Taylor was still a young pup, and back in those days, we literally took crumbs from the table. We took the rejects that the other services didn't want and Admiral, this organization that you have deserves better than that. If there is a chairman on this Hill who supports the agency over which he has jurisdiction, I know, it's the gentleman from Maryland, so I am putting the pressure on you now. You tell him what you want, we will try to get it for you.
Admiral LOY. Mr. Taylor's thought process is right on target in terms of the timeline of the 378s, the 270s, the 210s, but we are also running around, and just today, replacing 180-foot buoy tenders that are in their 50s, 55, 56, 57 years old, and the cutter with the gold numbers, Mr. Coble, which you remember, means the oldest one in fleet is the Coast Guard cutter Storis, 58 years old working in the Gulf of Alaska.
Mr. COBLE. Thank you, Admiral. Thank you, Mr. Chairman.
Mr. GILCHREST. Thank you, Mr. Coble. Admiral, I want to run through a list of things that it is my understanding your staff and the subcommittee's staff came up with, as far as shortfalls are concerned, for the remainder of this fiscal year: 18 million medical costs; 15 million basic housing allowance; 5 million military pay; 2 million COLAs; 1 million aviator retention bonuses; 7 million for increased fuel costs; 15 million for recruiting and retention bonuses; 8 million for aircraft spare parts; 103 million to correct critical maintenance and casualty repairs on aircraft; 28 million to restore maintenance funds that were previously used to cover operating costs; 15 million to restore Coast Guard military and civilian work force; 8 million for costs incurred from 1999 hurricanes.
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I didn't add that up, but I assume that probably comes to about 225 million. The question is, is there anything that I need to add to that list and is a supplemental for the remainder of this fiscal year of 225 million adequate to cover your needs for 2000?
Admiral LOY. Yes, it is.
Mr. GILCHREST. What would you suggest, and I am saying this with a great deal of earnest, that we do in preparation for fiscal year 2001 so that we don't have this situation again.
Admiral LOY. Mr. Chairman, first of all, let me say that there are clear priorities within the list that you just provided, and I think those are clear as it relates to this 71 million figure I gave you just a minute ago. Those are bills that need to be paid, the balance restores readiness to the organization, and hopefully gets us to the point that it is not a recurring dilemma.
In 2001, sir, as I look forward, there are several things working in the DOD authorization bill that we were not aware of on the occasion of the President's budget coming forward and being put together for the Coast Guard. So when we talk about the pharmacy provisions that are going to be in the retired pay account for DOD retirees, there are a slew of Coast Guard retirees that will be entitled to that very same entitlement, and that dollar value which we estimated somewhere around $30 million is something that is very important for us not to have to find results, having had an appropriated and enacted budget to deal with later. There are things associated with medical care, the adjustments frankly to something called TRICARE Prime Remote, which is an enormously important issue for our service, because Coast Guard families find themselves distributed in such a fashion as to be well away from the military treatment facilities that can otherwise provide those services if they were all around Bethesda Naval Hospital or all around Walter Reed.
I took a trip to Alaska 2 years ago, Mr. Chairman, and found that our people in Homer, in Seward, in Ketchikan, and Valdez had two options: They could pay out of their pockets to pay the exorbitant rate the doctors were charging them in those communities, or they could pay out of their pockets and get on a plane or train and go to Anchorage or Fairbanks where there was a military treatment facility and pay the travel and overnight accommodations, neither of which are very thoughtful ways for us to treat our people.
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Mr. GILCHREST. Admiral, part of what you are discussing is what Mr. Taylor raised.
Admiral LOY. Absolutely.
Mr. GILCHREST. Basically what happens with DOD is essentially supposed to happen with the Coast Guard, but DOD is in Virginia, Transportation is over here in Washington, D.C. We sit on the Coast Guard committee. Not too many of us, with the exception of Mr. Taylor, sits on the Defense committees, so I guess maybe when it comes to those kinds of budget questions, it might be suitable, and I am just thinking off the top of my head, that we have a joint hearing on those issues with DOD.
Now that we are into this situation, we really need to do a better job to track those kinds of issues. I really don't expect you to come up here right now with all the details of how we can resolve this issue.
Admiral LOY. First and foremost, sir, I agree 100 percent. I think it is incumbent on me to keep that from being a huge problem for you, Mr. Chairman. I need to find a better way to have that reflected properly in the budget that comes to the Hill, such that that interchange with OMB, with DOD, and with the Department of Transportation, has taken place, and judgments taken about those issues that can be reflected in the budget are already there when it comes to the Hill.
Mr. GILCHREST. As a result of what you just said, the DOT appropriations has passed the House at the level of the President's request?
Admiral LOY. Yes, sir.
Mr. GILCHREST. It has not passed the Senate yet. Is that a sufficient appropriation for fiscal year 2001 given what we know right now?
Admiral LOY. The appropriation or the mark that the House has passed would be a terrific budget, if there were none of these changes that would take place after we got that enacted and signed. All I am saying to you, sir, is that looking forward, waiting for the DOD authorization bill to work its magic, there will be things that happen there that will have an impact on our budget as a result.
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Mr. GILCHREST. And in years past, DOD appropriation has also benefited the Coast Guard because Bill Young would always stick something in there for the Coast Guard, but we can't rely on that kind of charity in the future. And another thing that Mr. Taylor said and Mr. Coble alluded to, anticipating some of these problems, whether they are with increased illegal aliens on the high seas or hurricanes or some other particular problem, we, and I am not a betting man, last time I lost money was 75 cents in a poker game on the boxer in the Caribbean after we left Santo Domingo in 1985, and I haven't bet a dime since because that was three quarters of a day's pay, but I would be willing to bet a year's salary, my salary, that if we just passed the President's request, we are going to need a supplemental next year.
I think we all know we are going to need a supplemental next year. So we have got to get into this thing, get our hands dirty in the mud and the dirt and the saltwater and the oil in the engine and pass what we believe, and work hard to get it enacted, is an appropriate Coast Guard budget for the year 2001. I just very quickly, the figure, so I can be sure on the House side, that I will take from here to the chairman of the Appropriations Committee is about $225 million. Is that a pretty solid figure?
Admiral LOY. As it relates to the supplemental?
Mr. GILCHREST. As it relates to the supplemental for the remainder of this year.
Admiral LOY. That would again deal with $71 million worth of bills I have to pay, and it would sure make a terrific downpayment on the readiness shortfalls we have on the organization.
Mr. GILCHREST. We don't want to carry any of that over into fiscal year 2001. That is just for this fiscal year.
Admiral LOY. That is precisely what we did last year which provoked the problem we have this year.
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Mr. GILCHREST. One other question, and I think Mr. Taylor might have another question. In the Coast Guard right now there is somewhere in the neighborhood of 35,000 Coasties?
Admiral LOY. Yes, sir.
Mr. GILCHREST. To do, in your judgment, the job that this country asks you to do, what would be the appropriate figure of Coast Guard personnel?
Admiral LOY. Mr. Chairman, I don't have a hard number for you but I would be happy to research that and get it for you for the record.
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Mr. GILCHREST. Would it be more than the number of police on the New York City Police Department, I would guess, which is, one of your men told me last year on a flight back from, I think, the Antarctic.
Admiral LOY. There are more than 35,000 people in the New York City Police Department, that is correct. But the reality is, Mr. Chairman, we need to be challenged as it relates to the technology and the capability of the day to optimize our efficiency and effectiveness. I want to be held to whatever standard there is around, to do that as best as I can for the Congress and for the United States.
Mr. GILCHREST. And we understand that. We know that you are doing a good job on little money, old ships and tired Coasties, but for our purposes, it is very difficult for us to go to the appropriators who are sometimes happy to see us; most times they are not, but it is a relentless pursuit every single day, 434 Members of Congress go to some appropriator asking for something, and we have to go with some very specific things. Otherwise, their eyes glaze over, and it goes right over their head. So we would appreciate your judgment on the number of Coast Guard personnel that would be sufficient to do an adequate job. Mr. Taylor.
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Mr. TAYLOR. Thank you, Mr. Chairman. Commandant, if you could help me clarify a few things. Is a part of your shortfall the fact that Congress spent more money on last year's budget than the President authorized on things like medical care, the .5 percent increase over the President's request on the pay increase.
Admiral LOY. 4.4 to 4.8, yes, sir.
Mr. TAYLOR. What you are saying is that you budgeted at the President's request level. When Congress goes over that, you somehow have to make up the difference; is that correct?
Admiral LOY. Yes, sir.
Mr. TAYLOR. As someone who sits on the Armed Services Committee, I am curious, and I realize we are in the minority, but I was on personnel, have been the Ranking Member of personnel, I am on MILCON Ranking Member, I don't ever recall anyone from your organization after you see the DOD authorization pass, and you have an idea what is going to happen, and as the conference is going on, I have never had someone from your organization come to us during those summer months when we are reconciling those differences and say, hey, this is going to have a budgetary impact on us, and you need to budget for us.
Now, I am not scolding. I am just saying if we want to prevent this in the future, I think it is going to be very important to start doing.
Admiral LOY. Exactly right, sir. I think those structural realities have not been dealt with adequately in the past, either within the administration as the budget went together to become the President's request, or as it relates to the interplay between committees up here that, in this instance, make a judgment about entitlements that, as I say, if that is the dog over there, the tail is getting wagged over here, and over time, I think the Coast Guard is an organization, has almost taken a perverse pride in being able to suck it up and get the job done anyhow, and I am of the mind that that is not only wrong, it puts me at a point where I actually jeopardize my sailors, let alone the customers out there who are depending on someone to show up that is adequately trained and equipped to get them out of trouble when they are in trouble.
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So you are right on, sir. We need to develop that better.
Mr. TAYLOR. Commandant, to the point, something that the committee, I think, takes some pride in is that we have passed some fairly significant improvements to military health care. That is going to include your retirees.
Admiral LOY. Yes, sir.
Mr. TAYLOR. One of them is a pharmacy benefit and the cost associated with it. The remote care provisions. I would strongly encourage you and interestingly enough, the budget that became law did budget for about a $50 million increase in additional DOD health care benefits for retirees. It is already in the budget. The Medicare subvention portion that we passed is going to use about low $20 billion worth of that. I am sure the pharmacy benefit is going to take a portion of it. I would really strongly encourage you to get with the authorizers and the appropriators now to make them aware of how this is going to impact you so that in the 2001 budget cycle, as we go to conference with the Senate, to address this properly so that we don't find ourselves in the same condition next summer.
Admiral LOY. Counsel accepted, sir. Thank you.
Mr. TAYLOR. The one part that I don't quite understand is, I can see why everything else is an unintended consequence. Was a conscious decision made within the Coast Guard to move some money around to give you the $15 million for recruiting and retention bonuses?
Admiral LOY. We consciously went about the business of attempting to refill the workforce. For 2 years, sir, I think we can trace back pretty carefully in my testimony that one of my absolute goals when I took the job was to make up the difference of about 1,000-person shortfall we had in the enlisted structure of the organization. It occurred simply in the 1994 to 1998 streamlining window, we overshot that mark and woke up, so to speak, as we approached the 1999 year, about 1,000 people short.
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If I am at a lifeboat station, although we certainly attempted to keep operational units full, and supply and support units suffered, but if you are there and the guy that is supposed to be here on your left is missing, the challenge associated with getting that work done was certainly a burden that I thought inappropriate for my people.
So my first and foremost priority was to refill that workforce. So, yes, we went consciously and borrowed from maintenance accounts and spare parts lockers in order to produce those recruiting bonuses and put more recruiters on the street and do what was necessary to refill the workforce. Having that now—blessed is the word I will use in terms of its actually being funded properly in the President's request for 2001, that monster is sort of behind me. My challenge can now be to address adequately in terms of getting the readiness back where I want it to be, the spare parts lockers and deferred maintenance decisions that we took then to enable us to refill the workforce. All my projections suggest, sir, that we will have a filled workforce by the end of 2000, and I have actually already made a judgment to not bring a couple of hundred recruits on board before 1 October in order to have those dollars if, in fact, we need them as part of this buttressed bank that I will need for fourth quarter of this year.
So your thought as well as your inference is right on target. We consciously went about the business of refilling the workforce at the expense of most of the other accounts that we had, any discretion at all to move money from, yes, sir.
Mr. TAYLOR. Commandant, my only question would be of everything else I can see, how these are unintended consequences. In that case, what I don't understand is why you didn't ask for this back in February, since apparently this is not something that happened overnight.
Admiral LOY. The only thing I can say, sir, is in February, and I have reviewed my testimony pretty carefully in February, because I thought that it would be appropriate for it to come up today. In February I talked about basic services and about restoring readiness, and this was all about restoring readiness, both as it relates to the workforce people piece of readiness, and the spare parts deferred maintenance pieces of readiness, and I clearly stated at that time that my priority within that priority of restoring readiness was to get the workforce back to where it belonged, simply because it was absolutely wrong of me to demand 18- and 20-hour days out of those kids out there simply because they didn't have their colleague beside them that should have been there with them getting the job done. Conscious decision made by me.
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Mr. TAYLOR. Thank you, Commandant. Thank you, Mr. Chairman.
Mr. GILCHREST. Thank you. Mr. Taylor.
Mr. Coble?
Mr. COBLE. No more questions. Thank you, Mr. Chairman.
Mr. GILCHREST. One last question, Admiral. We have seen reports that availability of your C-130 aircraft has, dropped 10 percent in the last 4 years. Is the funding contained in the Senate military construction appropriations bill sufficient to restore C-130 hours?
Admiral LOY. It is, sir.
Mr. GILCHREST. Thank you very much. Admiral, you have done a great job. We look forward to working with you in the days ahead to ensure a speedy resolution to this problem, I mean, real speedy, and then we look forward to working with you to ensure, and I think we can do that, that there is sufficient resources for the Coast Guard, both from the President's request and from the authorization, and the appropriations process up here on the Hill.
Admiral, thank you very much. The hearing is adjourned.
[Whereupon, at 3:55 p.m., the subcommittee was adjourned.]
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