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Pete Hegseth: Good afternoon. My name is Pete Hegseth and I want to welcome you to the Defend & Reform Policy Luncheon hosted by Concerned Veterans for America. Im the CEO of Concerned Veterans for America and were very fortunate to have an impressive lineup here today to discuss the future of Americas defense spending. I want to first thank the Weekly Standard, who has graciously agreed to co-host the event with us. Terry Eastland, Nick Swezey, as well as Bill Kristol, who will be moderating, had been fantastic in helping bring about this event to further the conversation about the future of defense spending. So if you would drum in a round of applause for Weekly Standard. Were also fortunate to have Michael OHanlon here to give our keynote address. I first met Michael when I readI didnt meet him. I met him through the pages of the New York Times when he wrote an op-ed called A War We Just Might Win, which you probably remember in July of 2007. Which was the first, sort of, glimmer of hope in those pages about a surge strategy and a new strategy in Iraq and since then has continued to do great work about our defense and defense spending. Weve got Senator Lindsey Graham coming as well. Tim Griffin, congressman from Arkansas, was going to join us. However, he has bronchitis and cant make it. So instead weve got Congressman Mike Coffman from Colorado, whos also from House Armed Services, will be here filling in on the panel. We also have the good fortune of Russell Rumbaugh and Steven Bucci from Stimson Center and Heritage Foundation and our event will close out with a look ahead from Senator Kelly Ayotte, Republican from New Hampshire. So weve got a great lineup. I also want to thank the Willard Hotel for hosting us today. Shelley Himes, Shelley raise your hand, for putting the event on for us today and also the whole Concerned Veterans for America team. Joe Gecan is around here somewhere, hes our director of operations. Kate Pomeroy is our communications director. Justin and Kevin for putting it together and then Tal Coley, who if you open up the booklet that was on your chair, was the co-author with me in putting together some of the case studies and thinking weve been doing about defense spending. Let me tell you a little bit about Concerned Veterans for America. Were a 501C4, nonprofit, nonpartisan organization. A military veterans and military families advocacy organization. It was founded earlier this year and our mission is very simple, to fight for the freedoms, prosperity and liberty here at home that we fought for overseas. We fundamentally believe that when you raise your right hand and swear an oath to defend the constitution, that service and obligation does not stop. And Concerned Veterans for America wants to be the place here, not just in DC but across the country, where young veterans, old veterans and everyone in between come together to advocate for responsible policies. We want to find, educate and activate veterans, supporting policy and policy makers that advanced liberty, that advance free enterprise and advance government reform and fight for a strong America and a strong military. So we encourage you to go to concernedveteransforamerica.org to check out more about us. Like I said, were in the field, weve got field directors across the country, weve got a robust media effort trying to spread the message, not just amongst veterans but from veterans to population at large and then also here in Washington, DC. In our constituency, we dont have a bunch of lobbyists, were not in it for a particular industry. Our constituency is that E4 and that O3, that junior NCO, junior officer, enlisted men who doesnt necessary have a voice and is coming back looking for answers, looking for opportunities, looking to fight for the future of their country. We want to be the home for them. So this is a great event at the Willard Hotel but thats who we remember, thats why were doing what we do. Were also hoping to be a little bit of a different type of veteran service organization. Were going to talk about traditional veterans issues but also advocate on a broader array of issues like our debt as a national security threat, like out of control spending and what the implications are of that. Hence, the Defend & Reform event weve got today. I do want to point you to the report on your chair, its a culmination of the case study series weve been doing for the last five months where Tal Coley and I and others took a couple of examples of things that work well, things that didnt work well and try to draw lessons out about the future of American defense spending. We looked at the closure of JFCOM, Joint Forces Command. We looked at the fielding of the MRAP and whether there was lessons for procurement on that. We looked at the value of auditing the Pentagon and understanding where our spending is going. Green Fleet and Grocery Stores is the name of another one. What is the future of these initiatives in light of our fiscal realities? And then also the defense system MEADS and comparing it to alternatives in our, sort of, in an age of austerity to quote the name of Michael OHanlons book. So that report is not meant to be comprehensive. We certainly dont have every answer in there. We know healthcare cost, personnel cost, strategy are all included in the future but Concerned Veterans for America is trying to start a conversation from veterans pragmatically to talk about how we get where we need to be, $16 Trillion in debt, trillion dollar annual deficits and a fiscal cliff pending. We want to step back and proactively say, Veterans need to be a part of the discussion and a part of the solution. Anyone whos served knows that theres fat to be cut in the military. Lets talk about it. Lets proactively talk about and clean out our own house, the spending we know and know well. Because Washington is full of people, good, bad, and otherwise, pointing to the other guy and saying, If the other guy just did that, this would all be fixed, If the other guy just raised taxes, If the other guys just cut spending. We want to say, were going to look inward first as responsible citizens, as those who have served and say, how can we look at what we know well, defense and look at reforming it to make it solvent to contribute to solving the budget woes our country faces, which are ultimately a national security crisis. And I think youll hear a lot from our speakers about that. Admiral Mullen first addressed that when he talked about our debt as the single largest threat that we face and as it reached pass 16 trillion and almost hits 17 trillion, that could not be more stark, hence, the reason for the event today. Obviously sequestration is looming. The fiscal cliff is looming. These are all pertinent issues. This is a very timely event. Were happy it worked out that way. But its not just about this and theres no set of backroom deals now that will solve the larger fiscal avalanche you might say, coming down the line. If were not able to both reform the way we spend money, not just in the defense department, so much of this for us is about creating incentives for real deeper reforms in the largest drivers of our debt and deficit, which are entitlement programs that are not solvent and wont be into the future and are driving most of the debt woes that we face. So we want to raise serious questions. We dont want to just have it be an academic discussion. We want to include a Boots On The Ground political perspective. What can be done? How can it be done? What is the future of defense spending? How do we reform defense spending and entitlement spending? What are the political inhibitors to defense reform, to overall spending reform? And what are the consequences of inaction? And I think weve got a great list of speakers today, many of which have served. Senator Graham was a colonel in the air force. In fact, I had the opportunity of seeing him in Afghanistan just last year when he came through with the counter insurgency training center. Senator Ayottes husband served a career in the military as well. So weve got speakers here who are not just elected political leaders but also have experience in the defense field. So I will sit down now so you can hear from the folks you actually came to hear from. But on behalf of Concerned Veterans for America, were happy youre here. We appreciate you being here. We hope you will reach out to us, consider us a resource on defense related issues as advocates and as educators, not just amongst veterans but also to the population at large. Because veterans and those who served have a credibility that has been earned, that can also be leveraged responsibly, to responsibly move the discussion forward and solve some of the big problems facing our nation. So without further ado, I want to introduce the moderator for todays program, who has graciously agreed to co-host. Bill is the editor of the Weekly Standard, frequent commentator on Fox News and most wouldnt know but his son, recently returned from a deployment in Afghanistan, is actually on AMU with the marines right now. So hes got some skin in the game and has for quite some time. Were honored to have him here today, Bill Kristol. William Kristol: Thanks Pete and thank you all for coming and on behalf of the Weekly Standard, were happy to co-host this event with Concerned Veterans for America. I will get right to the substance since this is, actually we have an opportunity to hear from people. I wont bother with their bios, its in the little book that you have. I think almost everyone actually whos speaking today and on the panel today is a serious analyst of foreign policy and defense policy. Theyve all shown the ability to go beyond the obvious partisan shots that we all sometimes take in Washington and cross their own parties or their own constituencies at times and try to tell the truth about whats necessary for our national security. We all would agree, Im sure, of what that is. But I think the best thing about this event from my point of view is we can have an hour and a half discussion honestly about the defense budget, defense reform, what we need for our national security, what we can achieve for our national security, the risk we will pay if we go down certain paths. And so I think this will be, I look forward to learning a lot from this event and so without further ado, well beginso the way it will work is Michael OHanlon will speak for about 12 minutes. And lets just say he can read his intro, one of the defense experts I respect the most. Lindsey Graham, one of the senators I respect the most, who has a deep knowledge of these issues will then speak, and then well go to a panel discussion with several figures who also, I think, have a lot to contribute. So I think well have a very goodand then Kelly Ayotte after that. So its a star-studded cast and I will get out of the way and ask you to welcome Mike OHanlon from The Brookings Institute. Michael OHanlon: Good afternoon everyone. Thank you Bill and thank you Pete and thank you for the opportunity. I know we all will have the opportunity and the privilege of speaking here. Were all thrilled to be part of this and look forward to the conversation. Let me kick things off. We have a lot of issues were covering. Im going to make one particular set of observations about the defense budget and Im sure others will and maybe take different approaches in the next hour and a half. The basic idea that I want to address in my just very brief remarks, is to ask, how much deeper can defense cuts responsibly be? And thats a question were all thinking about and were all going to come to different answers because its inherently a judgment call. Its inherently an issue of not only how one sees the world, how ones own crystal ball seems to portend possible future conflicts or current conflicts getting worse, but also ones view of the role of current American defense policy in our long term security because we obviously have a bit of a trade off here. The question is, can we afford right now to reduce our military capabilities a little bit in the interest of improving our economy for our longer term economic and therefore, military strength? So I view the problem from a national security point of view largely in this calculus of what short term additional risk can we accept if necessary in order to shore up our long term economic foundations? Thats the way I look at the problem. Not everyones going to put it the exact same way. This leads me to a couple of quick points that frame my overall approach and then I want to put three or four ideas on the table very briefly for where I think we still might be able to cut a little more if necessary. Point one however is, and its worth saying right up front, none of these cuts are desirable in and of themselves. I think Pete is right, theres still waste in the department of defense but its going to be hard to find and identify that waste even up to the point where the Pentagon is already counting on it. For those of you who follow this stuff in detail and I know thats many of you in this room, the Pentagon is already assuming that well find $60 billion in 10-year savings from reforms and efficiencies that it cannot yet specify. My good friend and former boss Bob Hale, the comptroller of the Pentagon, when he was between government service jobs about a decade ago, he wrote this paper for Andrew Krepinevichs think tank and it was one of the most sort of, I dont know, low-key but still revealing titles that I ever saw in defense analysis. It was basically Defense Reforms and Efficiencies: Be Realistic but Keep Trying. And then if you read the report, you saw a lot of small ball ideas. How do you save 50 million here and a 100 million there, you know? By outsourcing who cuts the lawns at military bases and things like that. Finding $60 billion in savings is going to be hard and were already counting on it with the first set of cuts from the budget control act of 2011 that is already the basis for future Pentagon planning. Were already counting on those efficiencies and reforms and we havent even identified them yet. So keep that in mind when we get optimistic about finding a lot more waste from which we can cut or save. Second point, the capabilities that I think we can still consider scaling back a little bit, and these are just my judgments; others are going to come to different judgments themselves. These capabilities would be nice to have and they should not be cut because they are inherently unnecessary or undesirable. And some people will say, you know, it would be better that the Pentagon be smaller, less capable because weve been too interventionist and too activist in the last decade or the last 20 or 30 or 40 years and therefore, its just as well that we reign ourselves in. Well I dont come from that point of view in general but I especially dont find that argument convincing today because today we have all sorts of reasons why were going to be looking for ways to do less anyhow. Were tired of war. Our military is deservedly fatigued by its roles in the Iraq and Afghanistan missions. We see Assyria conflict that Im sure many of you like myself would love to find a way to do more about but its difficult to conceptualize. I dont see the American public or Congress or President wanting to intervene just for the sake of intervening. So this argument that somehow we need to restrain ourselves and cutting the defense budget a lot is a good way to do it. I dont think it holds water very well. These cuts and capabilities are going to be painful and risky and I would not do most of them. Maybe not even any of them but certainly not most of them, unless we had to. Next broad point is that this only makes sense in the context of broader national deficit reduction and fiscal reform. The defense cuts have already been substantial. Defense and then the domestic accounts in the discretionary budget as you know have contributed virtually all the savings so far under the budget control act from the first round of cuts. The military has been cut by almost half a billion dollars over 10 years relative to its previous plan or if you do the CBO congressional budget office methodology, its been cut by 350 billion relative to a baseline that would adjust for inflation. Either way, its been cut a lot. And most of those cuts have been really kicking in in the last couple of years and they are not even counting the war savings, the savings from scaling back the military operations abroad. So these savings are above and beyond what were realizing from scaling back military operations and theyre going to be hard. As I mentioned, we dont even know how to make them all yet. Okay so thats the broad framing of what I want to put forth. Now having said all of that, I dont see a case for deep additional defense cuts. Strongly against sequestration, not only because of the abruptness and indiscriminate quality with which it would kick in in a few weeks but because of the magnitude of the cuts in defense that it would require. And for that same reason, for that second reason, Im against the Simpson-Bowles plan. And I know this is something youre not supposed to say in polite company in Washington these days because Simpson and Bowles did a lot of great work. As did Alice Rivlin, my colleague at Brookings and in my opinion, the most accomplished Brookings scholar in the history of the institution but she and Pete Domenici did another report. But these reports all called for deeper defense budget reductions that I think are prudent. And the reason I say that is I try to identify specific defense savings that I believe we can responsibly make. Yes, theyre a little risky. Yes, theyre a little painful but I think they are additional cuts that we can make. But when I go through my list, I can find ways to save maybe another $100 billion over 10 years, maybe 150 billion in that general range. And so Im doing this in a cautious way. A lot of defense budget proponents, defense budget cutting proponents, theyll say, well our budget is still very high relative to historical norms or relative to China, or relative to the next 15 countries combined. And Ill make these very broad hand sweeping arguments about how we still spend a lot on defense. In one sense they are correct, we do spend a lot but of course our responsibilities are much greater than other countries. And making these arguments, comparing our spending today to the spending under Ronald Reagan or the spending of China or what have you, it doesnt really help you build a force, build a program and develop a detailed defense budget. So here very quickly are the ways that I would. Im keeping you from Senator Graham so I should be brief. Let me just say for the sake of argument and well discuss it more later, areas where again, I dont relish the idea of cuts but I would personally go along with these if part of comprehensive national deficit reduction. Point number one, I think the ground forces could be cut a little bit more. As you all probably know, the ground forces grew about 15% during the wars of the last decade. They are slated to come down but theyre only going to come down to levels still a little bit larger than their 1990s levels. Now some people, probably Bill Kristol, probably a few others of you, would say the 1990s levels were too low and so the idea of using that as a benchmark is debatable. I would agree, its debatable. Again, these cuts are not ones that I want to make but I think we could consider having our ground forces over the next few years go a little bit below 1990s levels on the grounds that our overall threat portfolio as a nation has shifted more towards other kinds of likely conflict, maritime conflict, counter terrorism, cyber issues and the likelihood of large scale classic air ground conflicts is less. Its not zero. We still have Korea to worry about, we have other possible contingencies, but I would be comfortable taking the ground forces down to a little bit below their 1990s levels. Point number two, my colleague Steve Pifer and I just did a book recently on US nuclear force reductions. I think there are more economical ways to maintain a nuclear triad, not because we can unilaterally cut our forces below where Russias are but I think there are ways to be a little bit more economical in how we load up some of our weapon systems. Maybe take the Trident submarine fleet from 14 boats back down to 8 and load up the missiles the way they were originally intended, really just as a cost-saving measure. And I think, you know, you can do thisyou dont save a lot of money, you save a billion, two, maybe three billion a year at most, but its worth looking at that. A third idea I would consider, the navy and governor Romney talked eloquently about this during the campaign. I know a lot of my republican friends are not going to agree with what Im about to say because Governor Romney was, as a centerpiece of his defense plan, advocating a bigger navy. I actually think we can get by with a slightly smaller navy through the concept of sea swap, which is trying to keep ships deployed at sea longer and rotate the crews by airplane so you keep sailors from having to do more than six months at a time at sea. You try to use the ship in a more efficient way. This is not a panacea, maybe well talk about it later. There are a lot of reasons why I wouldnt push this idea too far but I think you can probably keep the navy about where it is or even go slightly smaller if you use this concept more assertively, especially for the large surface combatants. Not for the aircraft carriers. Its very complicated to do it with them. Let me just mention one more and Ill be done. On the F35 joint strike fighter program, I think you know, its a program thats getting a lot of bad press and it deserves some of it but its also likely to become an amazing airplane. Like a lot of other systems that got bad press at certain stages in their development have proved to be ultimately things that performed well and that we really needed. I just think the F35 program is bigger than it needs to be because the most plausible reasons to require it are for contingencies against near pier competitor, like a China and maybe these of the Iran. But if I size the F35 program based on contingencies against Iran or China, I wind up with a calculation that says we need maybe half as many of them as the 2500 that were now planning to buy. If you work through the mathematics of how much this saves you per year and you got to maybe buy something else like refurbished F-16s to keep your force structure going or maybe use drones a little bit more than we are right now, you have to suspend a fair amount of money anyway even for these less expensive systems. They dont come free. And so you wind up saving a little bit less than people might think when they consider the F35 program to be this projected trillion dollar program over the long term, but I do think we can scale back and save. When you add up these numbers, I wind up thinking we can probably save another 100 to 150 billion over 10 years but its going to be hard, its going to be painful, its going to require accepting some risk and it should only be considered therefore in the spirit of a broad national plan to reduce the deficit that also gets revenues, entitlements and other programs seriously into the conversation more than they have been so far. I think Ill stop there thanks very much.