William Kristol: Weve heard from Pete Hegseth and Michael OHanlon, so let them sit here quietly for a minute and listen to our three new entrants to the discussion. Well just come right down the line here with Steve Bucci and then Russell Rumbaugh and then Congressman Coffman and give us your quick reaction or comments yourself, things that havent been raised that shouldve been raised or terrible errors that Michael OHanlon or Pete Hegseth have made, feel free to comment. Steve Bucci: I will comment on that. Actually its--Michael and I have done this before and we came to the conclusion that this is an issue where, strangely enough, Heritage and Brookings actually agree on a lot of things, which I think lends some credence to what were talking about, because its not partisan. I do want to say that with such an esteemed group as this I kind of feel like a guy who came to a gun fight with nothing but a knife but fortunately Im a Special Forces guy so Im actually pretty good with the knife [Laughter] Steve Bucci: I have to tell you I joined the military a long time ago and, you know, saw the downturn after Vietnam and how we tried to save money from there and then we kind of hollowed out the army. I saw the downturn after the fall of the Berlin Wall and the changes there and we had to build up again after Desert Storm, we thought, were the greatest military in the world and no worries at that point and we started to let things slide. Historically we do this all the time and the idea of trying to take money from defense to get a peace dividend, it hasnt worked before and now were doing it and as we kind of established--at least the majority of people raised their hands when they asked, you know always at war, were trying to do it now when were not even done with the war, thats a problem. Now clearly if you cut defense, are we going to be less ready for the next overseas situation when that comes? Yes, I mean Ray Charles can see that, alright. But one aspect that has not been raised here that we need to understand that is if you cut DOD more than the trillion dollars plus whats already been cut between the gates, efficiencies in the first half of the VCA, theres going to be an effect domestically as well. The Department of Defense, I was the Deputy Assistant Secretary of Defense for Homeland Defense for a couple of years, so I was DODs cog in the all of domestic stuff that they do. DOD is the responder of last resort for everything in this country, whether its pandemic influenza, whether its hurricanes, any of those things at a certain point DOD gets the control of the common contribution, whether its through the National Guard, which is the biggest part of it or directly with Title 10 Federal Forces or even the DODs civilians, they play a role in that, they support the Department of Homeland Security, they support all the other domestically oriented agencies and they are not going to have the discretionary funds or capabilities to do that if these additional cuts go into effect. To be honest with you Im not sure they have that capability today or at least not enough of it. Bottom line is sequestration and I think Senator Graham said this, sequestration is dumb, alright, it was bad policy, everybody who signed it made a mistake when they signed that part of the VCA. Its just a bad way to do policy, weve got to do it better than that and to address those, okay, a DOD guy talking now, alright? I spent 30 years in DOD. Is there a lot of fat in DOD that needs to be cut? Yes, the acquisition system alone, if you could fix that, you would save so much money the average citizens head would spin. Sequestration is not going to touch that, alright, its going to make everybody feel good that they cut something from Defense because that seems less apparent than cutting Social Security but its going to have a negative effect and its not going to affect the efficiency of the department. So when we do this stuff, you know, from my colleagues who say, lets just cut defense, it will make it be more efficient. They obviously have no clue on how the Department of Defense does business, because it wont make them more efficient, it will just hurt their readiness and Ill stop there and let us go to my brethren in here and then well pick it up in the discussion. William Kristol: Thanks Steve. Russell. Russell Rumbaugh: Thanks for having me here and I think theres two points that havent been brought up and Ill play off Steve a little bit. One, lets talk about the need for a lot of Defense men. Were a nation at war, were facing a situation in Syria, if we send troops in the Syria, should we spend money? Whats been left unsaid in the conversation so far is what if you paid for? What if you raise taxes to increase defense spending, which is what weve traditionally done, the income tax came from World War I, Korea didnt add to the debt because they flipped on all the taxes that have been in place in World War II but have been turned off afterwards. In 1969, at the height of the Vietnam War, we ran a budget surplus because Congress had forced a surcharge down President Johnsons throat. This has been an interesting decade where weve gone to war, spent money on war as we should and not asked more of the American people. Lets not forget theres another way to give and these options are very hard choices then they quickly ran the other way. Im probably a little bit more accepting than many people here of lower Defense spending but thats because, as Steve aluded to, how we spend our dollars on Defense matters too, Senator Graham said that very well, right, its not just numbers, its capability as well. Id like to introduce the idea of interservice rivalry. Its fun talking with veterans, I expect all of you already have your biases, Mr. Kristol already introduced one of the biases. Many people assumed when budgets get tight the interservice rivalry goes up. Thats actually not true. Counterintuitively when times get tight it gets scarier and so the military services basically agree to not attack each other. The archetype of this is the draw down in the 90s where everybody came down by half but they all got to choose how you came down. Thats a great solution if you want to keep a little bit of everything and the futures uncertain so maybe a little bit of everything is a good idea. But if youre confident, our problem is Syria or if youre confident our problem is China, those are very different strategic choices. We actually have military services that are well suited to one or the other but not both. And if we could, if were going to have that conversation, I think we could very profitably have a conversation on the how to come down, more specifically keep our national security high but lower defense bank and with that I William Kristol: Thanks Russell, thats very helpful and I shouldve mentioned when I was introducing Coffman before that he serves on the House Armed Sources Committee so hes actually going first on the stage who can actually decide or help decide how money is allocated and spent has been a very, become a very influential member of that committee and after only two terms in the House, so give us the perspective from House or perspective from Congress or just a perspective from common sense. Mike Coffman: Well thank you. Bill, you know the--first of all let me say that I think this is sequestration would harm national security simply because of the across-the-board nature of those cuts. But let me say that I think that we do need to reform the Department of Defense and in doing so we could have savings without compromising our national security and I want to raise three points that havent been discussed. And the first point is nation-building who are counter insurgency versus counter terrorism and as an Iraq War veteran at first call for veteran as well but Iraq War veteran, Im very proud but I think that the notion that were going to invade, occupy, pacify or administer a whole country is a very inefficient way of achieving our security objectives in a very costly way and I think that we need to move back and I think we are to the notion of aligning ourselves within factions of a given region that share our strategic interests in achieving our security objectives and I think Yemen and Somalia are probably a template for that versus Iraq and Afghanistan. Secondly, I think we really need to look at this 1.42 million people that we have on active duty and we need to say to all those functions need to be perform by active duty military personnel or could they be perform in the Guard and Reserve as well without compromising National Security but being more cost-effective in our approach. Look at Israel and their recent response to their problem with the Gaza Strip, they mobilized their reserves, to me that threat until they are clearly functions that we wouldnt want to have in the Guard and Reserve that they need to be maintain on active duty but theres a lot of things that cant out of fraction on the cost. Lastly, just that this administration when it comes to contracting, things that need to be done whether products or services has gone the route of what they call insourcing and that is taking things that could be competitively done in the private sector but yet bring them in House to be perform by public employees. In my view at a higher cost in a less efficient manner, a friend of mine who still on active duty, the Marine Corps as a colonel was telling me that when he had contractors before performing serve functions he would say, these are my deliverables, this is the day that I need to done and this is what Im willing to pay for. Now he has public employees doing the same functions and he doesnt have that leverage with him and they will be there even when the demand disappears, thats the nature of government. And so I think that theres things that I just wanted to raise issues that had not been discuss but lets see clearly sequester is a problem but I think we ought to see that the physical pressures of today in a positive note that they would push a reform to the Department of Defense reforms that we ought to be advocating even if we have a balance way. William Kristol: Let me ask you this since you are member of Congress, House Armed Services I mean where youd get a hazard prediction about House sequesters which is on the defense side, maybe side, maybe the rest of it, what kind of top one number are we looking at for FY, I guess it would be 2013, right and then how do you see the next two, three years again in a way regardless of what we wish I mean we know what the President is, we know what hes generally said, we know what the composition of Congresses for the next two years, what kind of budget were looking at, you think we have real chance to make progress on the reforms or we try to water for couple of years, whats your sense? Mike Coffman: You know Im a, no doubt were going to have cuts, theyre not going to be as deep as a sequester. I do worry, I have to be realistic with you, its going to be kicking the can down the road that its going to be maybe something buying time like something that the chairman of the committee raised to do some, to buy as do cuts of what would be the first year cuts but buy so youre to find a more intelligent solution as to not doing things across the board but doing specific cuts it wouldnt compromise National Security. I dont see the sequester happening as it is written right now but its going to be shapes of gray its not going to be that people think that if we dont do sequester theres not going to be cost on defense, it will be cost the defense but probably more intelligent we targeted and lesser in dollar amount. William Kristol: Thanks. Would you like to tell us since youre up here and theres a lot of press here who the next Sec that will be or anything else that you [Laughs] William Kristol: You got a private phone call from the President of the United States. Mike Coffman: Its not me. [Laughs] Mike Coffman: Here we go. William Kristol: Well thats a headline, right. [Laughs] William Kristol: Mike, comments on what Steve, Russell, Congressman said or Michael OHanlon: I can pass for now, I just want to admire their brevity and conciseness and provocativeness so look for the questions from the crowd. William Kristol: Yeah. You would really fit in. But thats why [Laughs] William Kristol: Couldnt resist that. What do you think let me ask Mike a question I mean you follow this so closely for a while. Lets say who knows, let us assume at 2016 it get cuts a little bit but not as much as sequester and then it drifts down with a little more that seems to be the way things are going but no radical overall of you as foreign policy of US, National Treaty and Defense Governance, do you think if were sitting here in 2016 that we, well have an adequate defense budget to fulfill our basic assuming the radical re-orientation of US Foreign Policy which redeem not choosing us I think between China and Syria but being willing to being able to deter in Asia and maybe not to at Rock Style Nation building the two some stuff in the Middle East, do you feel that we will be okay or we end up precepts as of being not okay or how close are we now to the edge of really forcing of fairly fundamental we thinking of US Foreign Policy just because the resources wont be there. Michael OHanlon: Thats great question Bill, I guess the way I would begin to think about answering it as suppose to claiming I can really answer it is to emphasize two countries. Senator Graham talked very appropriately about a run and we all know that thats a bigger wild card I mean their big decisions looming and size as early going to be one off thing where its done a week after whatever happens initially occurs. The other thing is where is our relationship with China go and this is an obvious point but its a huge point because I think the amount of administration done a very nice job of re-balancing although just last week at Brookings, Hillary again said pivot which I thought we were not saying anymore but in any event William Kristol: Shes not away out so she can say that. Michael OHanlon: She stayed at home today right to rest instead of going to Morocco so she could be listening in so we should be careful. William Kristol: Okay. Michael OHanlon: But in any event I think that China policy was handled well as an immediate corrective to what had developed over the previous years which was of course a perception in the region and we were not as engage and at the amount of administration was a little bit young and inexperienced at first as well and then they spent two years rebalancing pivoting and weve all watched that I think most people have respected the way it was but it doesnt necessarily constitute a long term strategy, the big dilemma, the big choice as we all know Governor Romney, he didnt talk in a hostile way about China he wanted a bigger navy, largely I think to deal with the potential of Chinas rise. President Obama is been more hopeful that with modest changes and this rebalance which are quite modest in military terms that one can sort of remind people of our resoluteness and our firmness and at that will redirect China in the more productive directions we are hopeful to continue but its a big if so I guess rather than claiming I can answer your question I at least try to narrow down the uncertainty, it depends fundamentally on the US, China relationship and that would be my beginning of an answer to your question. William Kristol: Oh thats good answer. Mike Coffman: Well Im very concern that notion that we can rebalance to China I mean to Asia. But I just dont see the resources there today, they give us the capability to do that and I think Chinas growing a particularly naval power with the objective of denying us access should they decide to intervene somewhere in, say the South China Sea on area that they consider within the spears of influence with territorial disputes over Vietnam and the Philippines and with Japan. I think that our very concern about our capability, I know on the Marine Corps side the requirements for 34 amphibs I think were under 30 right now in order to have brigade expeditionary forces and so Im just very concern about not having that there are areas I think was mentioned today where we have a surplus capacity of given the existing threats let say a ground forces, conventional ground forces but I think there are areas that we have deficits and capability and I think Steve powers is a key area. William Kristol: You know friend of mine just got back from China, from the conference in China and was struck by and this is a pretty honest discussion close conference people from you know the government approve think tanks in the university, the province there and he was struck how they serve, there three scenarios that struck China, one is peaceful rise, everything pretty happy to as more aggressive rise need to be deterred and thats weve been talking about. He said he was struck by hundred people were entertaining number three which was some form of crack up or real regime crisis which of course has its own I mean you know has its own foreign policy and National Security implications and theres a lot of history of regimes feeling theyre under pressure, lashing out in various ways and I think this was such a focus on Chinas rise and checking that which is reasonable but less focus is seems to be on possible problems within China which could lead to other great challenges it seems to me in the Pacific so whatevers worth he was struck just at this actual meeting in Beijing people including Chinese participants were talking about this so, Pete? Pete Hegseth: Yeah, to pivot a little bit, its still a word, I think assuming the indispensable nature of US role in the world and I think if that break up word would occur it would reinforce that fact. We named this to defend and reform series provisory to say hey we defend freedom by reforming defense spending you defend our ability and capability project and defend, weve talked a lot about reform, one of the questions frequently come back to us is how do you go about doing that? How do you go about reforming, it was doing some research in advance to this panel and theres an article in foreign policy magazine that talked about since 9/11 setting aside Iraq and Afghanistan spending so additional war spending. Weve spent trillion dollars more on our defense. The budget for the navy went up 44 percent but our fleet declined by 10 percent. The budget of the Air Force went up by 43 percent in our air fleet, combat fleet decline by 51 percent, army funding doubled or funding went up by 50 percent and we only increase by two combat brigade so to me it feels like were adding here and not adding to the muscle so how do you go about reforming it? Weve proposed you know is the Pentagon audit a good idea which had never occur within the Pentagon and theres by partisan legislation to pursue that. Is it the Pentagon proposing its own measures to do that I guess as someone who serve and seen that fact, acknowledging that the fat exist, how do you get out it and how do you get out it in a meaningful way I think is something I love to explore. William Kristol: Let all three of you comment on that Mike and then Mike Coffman: Well you know I, assumed its like too often when we hear from the Pentagon, they tend to be so institutional in terms of defending the status quo that they feel somehow obligated that its like a protection society with each other that theyre not going to, its like ratting on this person over here and that theres fan, now sometimes they do it I think doing why you joined forces command it was obsolete and that was, despite the fact they had members of Congress from Northern Virginia you know cried that you know its a job issue for them but I think that, so I think its not going to come, its got to come from me, I think it has to come from the outside. One of the issues, let me just mention this quickly and that is with or without, we need to demand more from our allies, they need to be force multipliers for us and I look at our European allies where we still have 79,000 troops and when the cold wars been over was since 1991 for US Army Brigade Combat team still in Germany, I was in Germany in the army and during the early 1970s where we had a mission when we went to the West Germany checked us to back in border then patrols with the Warsaw pact forces on the other side, there is no water that border doesnt exist anymore and there is no Warsaw pack and there is no Soviet Union. The only mission is beer I think and so you know I think and theres been less 2 percent of their economy on defend most of them and were at 4.7, South Korea we still have 28,000 troops in South Vietnam on the border and theyre spending 2.7 percent of their GEP, were giving at 4.7 and I think we need to demand more from our allies and for them to be the force multipliers that they can be with us as partners but we shouldnt be carrying them. William Kristol: Yeah, good luck for that. It is shocking but at least we fact into the discussion Im glad you mentioned it was really heading and when I was in the government in the first Bush Administration so 89 to 92 and as Vice President for Staff and were you know above the first call forward you serve. I mean it was not I remember you know looking and I had no professional role obviously no expertise but I was there in the meetings for the last present looking at the war plans and their allocation forces and we had serious forces from NATO allies and they took a substantial part of the fighting both on the ground and the air and they were really part of, there was enough parody or at least close to parody in each of our ability of the forces that you could actually do things Ive really think that would not be the case today and of course weve seen that both in Iraq which was less of a NATO but even in Afghanistan which is allegedly in NATO effort, I dont know what that means we can just drop our hands and say because Ive from Western Europes got a certain direction we have to you know that we certainly and we got us the Secretary State Defense have implored than to spend more it doesnt seem like those trans are changing. Pete Hegseth: Well Bill I would say its not a question of can they, its do they want to is William Kristol: No. Pete Hegseth: can they I mean you know can you have thats the question do they really have the capability in light of the welfare state and let all these expenditures they have in their physical situation to actually project more, I could tell you in Afghanistan just been there last year, there almost and God bless the Brits and Aussies and the Canadians a lot of which are doing heavy fighting I acknowledged all of that but more of an inhibitor than someone contributing, its nice to have 49 flags Mike Coffman: With all the Cabinets. Pete Hegseth: With all the Cabinets that come with it but I would say that were on the road to that place where pretty soon you decide between a European style welfare state and American style taxes or the way we see ourselves so its certainly a choice theyve made that choice, the question is Mike Coffman: They made that choice but we assume to be enabling them by virtue of having again, 79,000 troops, many of which I would argue are I mean we have naval facilities there that are expenditure forces that are certainly project the power you know in the region and not simply in Europe. But there are forces that are we need to raise and we can demonstrate our support by our allies by doing joint military exercises, by doing mutational forces, do we really need I think we need to raise to the question in the physical environment that do we really need permanent basis or are some of them obsolete historically. William Kristol: Russell, Steve you guys have been involve to defense perform efforts from inside and outside for quite a while, what do you think? Steve: In line with this, you know the idea of us trying to encourage our allies to spend more is kind of a tough argument when were saying well yeah but were going to spend lessen and were going to raise our entitlements, were looking at damning casting stones at their system the whole time were moving in the same direction, its a little hard to sit there and I mean when before, when we werent moving in that direction it was hard to get it removed. Now were speaking with--our direction as a government and as a country is towards the European model not drawing them away from it, Im not saying thats right, I think its totally wrong but thats we were going William Kristol: What about within the Pentagon you guys are served and how far that theyre close I mean how such a headache I mean everyone keeps bringing the needs to be reform and then its very hard to reform, any sense, is it better or worse or is there any one or two things that could actually be leverage to really force some rethinking from within? Steve Bucci: Ill let you make a more reason to answer, Ill give the emotional one. I spent 30 years in either the military or the government and I spent three and a half years in the private sector before and I have to tell you and I told people is I dont know why anyone would do business with the federal government other than you can make a lot of money. It is the most arcane, insane system, it cost companies more money to write proposals to get a federal contract and it does execute most of them and its because theres this pile on of years and years of laws and regulations and policies, all of which individually probably had some reason to be promulgated when they were and now have made essentially not a web but a plug over the efficiency of the system. We have to dynamite that, that has to be change and its going to be painful and its going to be gore a lot of peoples access but if you really want to save money in the Pentagon, thats what you have to do because it is stupid and wasteful and it isnt just because theres you know an army doctor and a navy doctor and an air force doctor thats dumb enough but its, when youre trying to buy, everybody in different uniforms the body still works the same. When youre trying to buy things and it you waste most of your money on the system before you ever get to the product, how the heck are you going to save any money? And those are based primarily in laws and regulations and policies that deal, they cant change on their own. William Kristol: Russell. Russell Rumbaugh: Its always a great question, theres a great study from the Harvard thesis school in 1962, define massive cost growth and acquisition. From with all the suggestions is whos against them, right. Of course we should on at the Pentagon, now I think DOD pretty much knows where their money goes, could we audit it? Sure. Do we have too many regulations? Sure. Is that the primary driver of our growing expense? I dont know. I think theres some systemic problems in there and where you keep, where observers keep going is the incentives within the Pentagon dont point the right way. Hey, Im only standing up here in my suit pontificating but at the end of the day its our military that needs to provide the answer or gone out of our way to retain the military Vice Spoke President and to the Congress and we need to make sure that military advice is coming out its being, its coming out in a public way and more having a debate about what the best capability will best achieve the strategy of the Presidents put forth. Mike Coffman: You know Secretary of Defense Gates so former Secretary of Defense who worn his as he was leaving that and this is one hard truss that were going to have to take on and you said that, first of all I mean just saying on the side I think we are making in most in acquisition reform, we got a long ways to go. But he said personnel cost, the trajectory of personnel cost is going to be even to acquisition cost, in over time we will become a hollow force. And so, and that is the most, so in a way were a microcosm of the problems in the overall budget in terms of how personnel cost are moving and it is fact that you could call it an entire on an issue and so I think what we have to do is to look at reforming the retirement system, reform in a healthcare system, I think you can do it in a way to say people currently in the system were going to leave them in the same system. But for new entrance into the military maybe well have a bifurcated retirement system that will be hard to find benefit, hard to find contribution and with requirement that theyre going to be probably do more cost sharing on their healthcare when they retire. The earlier we obviously define a new policy the better off we going the long run. But I think that political reality is youre not going to change it for current people in the military and know you should you but I think certainly again I think that has to be a factor of a reform. William Kristol: Is that going to happen? I mean you always didnt, President Obama tentatively tiptoeing to this a little bit where in his budget I cant remember because it was year ago or Tricare and all that and Russell Rumbaugh: Its in the Defense Authorization Bill to create the military commission, their military retirement commission so Congress has taken steps and a reminder everybody Congress actually already did it once, they did it in 1986 and did reform military retirement system, we then turn it off in 1999 just as the budget is going up. But Congress has done it before. William Kristol: Mike is this, I mean this is get you real savings or just a little bit that you are talking about earlier? Michael OHanlon: Get you real savings, I guess I would put it in the context also broader physical reform if we can say were not just asking military retirees and veterans to make these sacrifices but the whole country. Mike Coffman: Sure right. Michael OHanlon: Then its a lot easier argument to win and so again it links in to the broader physical debate not just because thats where you have to go for the real reduction of deficit but thats where you go for the political fairness. I think its essential for the arguments to work. Mike Coffman: Oh, theres a separate issue I mean we have such an archaic retirement system where you say if you serve one day less than 20 years I mean you can wind up with nothing and he serve 20 years on the notes at 50 percent on your base pay and then on. It doesnt really allow for somebody who serves in 10 years to be vested in anything and leave so its not a fair system. So if were hard to find benefit, hard to find contribution and maybe with investing at a different level then somebody could leave at a certain point and not feel obligated in doing something maybe that they didnt want it necessarily do just to hit that 20 year mark. William Kristol: Yeah, Russell. Russell Rumbaugh: To underscore the Congressmans point, as Steve said, weve seen this before so I think in interest and weve seen acquisition cost growth before, weve seen personnel cost growth before, whats different this time? And the Congressman actually mentioned 1.4 million people in uniform, the Navy and Air Force are smaller than they were before we started the war and before we started the Defense up turn. The Army in Marine Corp did grow, all of those people about the FY 17 levels which is roughly comfortable nice levels, all of those cost are in war funding. There is no savings are returning to the late 90s personnel levels in the budget anymore, theyre gone. Personal savings have been 6 to 9 percent of where we could the savings in previous draw outs. Where is that coming from this time, heightened by how we pair personnel underneath, its I think the number one driver why this time is different. William Kristol: So we are ready, were anticipating the draw downs since part of the war savings in effect. Russell Rumbaugh: Weve already anticipating the future inner strength were going to get through. William Kristol: Right. Russell Rumbaugh: The President said were going to draw down to about 490,000 in the Army and about 180,000 in Marine Corp, every Mike Coffman: To detail to that level, I mean not drawing them to, right, to get to that level. Russell Rumbaugh: Right. Mike Coffman: We were cutting that. Russell Rumbaugh: Every soldier and every marine who is still serving above that level is paid for in the war budget, not on the base budget. Pete Hegseth: And I think, and heres the question here is what are the pressure points, where do you push in order to make it happen and I think center to that is folks like the Congressman and others who have served, who can stand up and make a credible argument about reforming military retirement, about reforming, boy, veterans benefit, any of these delivery systems that are so politically contentious, nearly impossible to talk about if you havent served without being a demogogue I think thats why were trying to do this, thats why its good to see more and more young veterans getting elected to Congress coming around who can say, I saw it, I lived it, its not going to work and if we dont fix it nothing changes. So but I ask you Congressman and others is the main pressure point Congress, is it the Secretary of Defense, is it the White House? Where should groups seeking to advocate on this, spend their time attempting to move the ball down the field on reform, particular committees, that some Mike Coffman: I think its a great question, I think its the Veterans Service Organization, I mean that have tremendous influence in the Congress particularly in the Armed Services Committee and the Veterans Committee. I think if you can influence if any their members here to influence the Veterans Service is organizations to sort of open up and to look at you know alternatives and again to be open a change I think that that would damage a tremendous impact on the Congress. Pete Hegseth: Would you also acknowledge that in some sense a lot of VSOs in Washington become interest organizations like every other Veterans Organization. Mike Coffman: Oh there other Pete Hegseth: Sure I mean, so thats something weve conferred to two is trying to new on the scene trying to make a difference, how do we make that difference without becoming cozy and comfortable like many who are just asking for more as oppose to attempt Mike Coffman: You know I think that, obviously somebody transfer from the Marine Corp, from the Army to the Marine Corp hasnt probably they have the highest test score [Laughs] Mike Coffman: not youre critically assigned here. But you know I think you can write some of these stuff to where its really beneficial for instance if you know you got, let say you reform, you wrote a reform and let say it didnt impact current members of the military and youre reforming the retirement system then say, this going to be part to find contribution like a 4-1K with a match and part to find benefit and theres going to be investing in such a period of time and then you could be eligible in, but youre not going to be else before till maybe 60. What would happen is I think you would then make an optional, make a mandatory for people entering the service, make it optional for people in the service, I think it had a lot of people in the service wanting to move from that define benefit plan that says you got to be there for 20 years to get anything to move over to that define contribution plan and I think that that will begin the process of reforming into cost savings and the retirement system which again just as one element of the cost we need to look at. I really think that the biggest cost savings we could do is when I talked about earlier and look at that 1.4 million people in active duty and really say, how many people really need to be on active duty versus the guard reserve where we maintain our capability but we have an extraordinary cost savings in terms of personnel cost. William Kristol: Let me, final words for Steve and then Ill Steve Bucci: Just real quick, just to remind everybody this is focus on defense reform, its a necessary discussion. Defense needs to be reform but in the climate in this town, this is not going to solve the fiscal problem, alright, this is not the biggest problem. We need to do it, we have a responsibility to do it and we should do it correctly but this is not going to fix the problem. We need to open up the lens completely and really take on all the entitlements not just the one somehow the fine around. William Kristol: This is a few 10 civilians at maximum and that probably Australian dollars. Steve Bucci: Right. Mike Coffman: We are threading water by in the Congress on this debt stuff because I mean you think about it, only 38 percent of our spending is discretionary and half of that is defense and quite frankly weve got folks quitting one of the White House, it doesnt seem they want to cut on the mandatory side of the equation which is entitlement spending. 57 percent right now of all of our spending is entitlement spending and that trajectory is really growing and so you cant balances on the back of the discretionary budget particularly defense you know despite the fact obviously Id be fighting for the issue reforms because I believe them. One thing that Congress says we have to I mean the constitution says that we have to do, it grants Congress a lot of powers but one thing is that is maintain a common defense and thats what weve got to do and even when you look at this quadrennial review and how thats you know being compromise is to where its now, its about resources where it supposed to be about threats and then you figure out how it matched you know the resources to counter the threats and thats been reverse under this administration and so weve got, we will never resolve this problem, never resolve it even if you do the sequestration this time around is not going to be resolve without entitlement reform, it wont happen. William Kristol: Thank you Mike. I want to thank this panel, very interesting, generally interesting discussion both on the defending defense side and on the reforming defense side and maybe I will, we could all, we can leave the stage here and to have dessert while on coffee while Senator Ayotte sums everything up and gives us words of wisdom from the Senate, so thank you all very much, its really interesting discussion. Thank you Michael [Audience claps] Mike Coffman: Thanks for helping, I really appreciate it William Kristol: Thanks Mike, youre welcome, we will be in touch, thank you. And so, on the principle of ending with the best, not to put much pressure on her and not to insult on our earlier panelist and luckily Lindsay Graham has left already so I can say this, its a great pleasure and privilege to have Kelly Ayotte with us to make some remarks and take some questions and shes, the initial introduction, its her values in the brochures so I wont waste time with that and Ill let her, she really took time out from the busy schedule on the Senate, despite with Lindsay Grahams says some people on the Senate are actually doing some work I think so. So thank you very much Kelly for coming [Audience claps] Kelly Ayotte: Thank you so much Bill, really appreciate what you do at the Weekly Standard and for hosting this event, I of course also want to thank Pete Hegseth for everything that he does with the Concerned Veterans for America and most of all, all of you who have served our country and continue to serve our country, God bless you and thank you from the bottom of our hearts. I wanted to also echo what Representative Griffin just said up here, lets put this in a perspective of where we are with defense spending. So if you look at just what were spending on the defense of our nation he said something very important, what is that we owe fundamentally that the American people of all the things that we do in the government, of all the things if we look at the constitution, what is foremost and that is to make sure that we defend our country and that America is safe and so with all the difficult challenges that we face right now, we cant lose sight of that and we also cant lose side of the fact that if you look at what were spending on defense roughly 631 billion dollars and that breaks down about 525 to the base defense budget plus 88 million of course of OCO funding, much of that going to support our men and women who are still serving us in Afghanistan as we stand here today. We could take all of it, right, and when youre running trillion dollar deficits each year, its just its not even get us halfway there, right? Barely gets us halfway there, so we have to put that in perspective when we think about the larger picture, physical picture of the country given the responsibilities we have to the American people to make sure that our country is safe and so one of the things Im going to talk about a number of things today, but I wanted to leave with the notion of so how do we get here I think we all understand impart how we got here because clearly the debt crisis does threatened our country, our economic strength and certainly our National Security and living beyond our means, the United States is of course accumulated 16 trillion dollars in debt and when I thought about running for the Senate, the thing that drove me to get off my couch and run for the Senate which was no light decision in our family was the debt because Ive got two children, I clearly see, Im sure as every person sees in this room and as Michael OHanlon who is on your panel in his book wrote, no great power can remain great if the economic under pinning of its strength erode and thats where we are right now with the debt. When we look at last years base defense budget and war spending, the US spent approximately 4.7 percent of its GDP on defense spending which if I put a chart up here that showed you the history of our defense spending from 1946 moving forward to where we are today, its average about 7 percent of our GDP. Now of course there have been times post leading up about when were in World War II other conflicts when its been greater than others, but we are by no means right now in terms of the percentage that we are spending on defense as a percentage of our gross domestic product spending in ordinate amount if we were to look historically of what were spending and not only as defense spending actually somewhat at a lower range if you look at the average of the share of our Federal Budget. Lets think for a minute of where weve been, in 1963 the defense spending accounted for 48 percent of all Federal spending. Today is about 19 percent of our Federal spending, in 1963 if we went back, entitlement and mandatory spending, entitlement programs in particular thinking about Medicare, Medicaid, Social Security, other mandatory spending was about 26 percent of Federal spending and today its close to 60 percent of Federal spending. So weve seen a real shift of how we are spending our Federal dollars and if we do not take on the entitlement programs in terms of reforming them, two things happen, we cant get there from here, we cant get there if we take all the defense spending and where do suddenly say that were not going to spend anything on defending our nation in terms of addressing our debt and those programs that many people in our country rely on, Medicare goes bankrupt in 2024, insolvent and Social Security in 2033. In fact one of the most enlightening things is that last year when the trustees of Medicare and Social Security issued their reports, Social Security insolvency was peg at 2036 and were now at 2033 so these programs if we do not reform them are going to eventually consume every Federal dollar and every choice that we want to make in terms of defending our nation, making sure that our men and women that serve have the support that they deserve and need for having made the ultimate sacrifice for us many of them and the sacrifices that their family have made and where are we today in terms of the security around the world? Would anyone think here that we are in a position if we look at whats happening around the world that it is time for us to back off in terms of the strength of America, our capacity, what we need to do when we think about the challenges we face around the world right now. I dont think anyone here would say that this is a safe time around the world that we suddenly could take a very large piece dividend given what we see happening in many areas around the world of course in the Middle East, the investment at China is making the challenges that were facing countries like Syria, of course Iran marching towards the capability of having a nuclear weapon, we have of course the activity of Al-Qaeda in Mali and other areas so there are many challenges that we still face that could bring threats and do bring threats including cyber threats to this country. And so heres where we are, Im going to talk about some of the reforms I think we can make to defend some certainly not someone that thinks that we shouldnt reform defense spending, I absolutely think that those of us who care most deeply who are here today about making sure that we have a robust defense of this nation and protect our nation are the ones that should come forward and offer constructive ways that we can reform defense spending because right now were subject to that approach, right? Not right now, sequestration is basically--where everything gets cut, we do everything insufficiently and therefore we arent making choices on how we handle things, so I want to applaud Concerned Veterans for America for some of the work that this group has been doing to identify areas within the Pentagon where we can do better, where we can save money. An example is lets stop spending money on programs that are never going to come to fruition. A weapon system that the Concerned Veterans for America has described rightly so as the quintessential Pentagon program that continues to get money but will never see the field of battle and I could agree more. Last year in the Senate Armed Services Committee we said this is the last funding, the last, the end of appropriations for the Miads program in 2012 and what do we get back? In the 2013 proposal from the administration, they asked for 400 million dollars more for Miads. This is outrageous we have now another amendment in the Senate Armed Services and the defense authorization that passed unanimously from committee, an amendment that I sponsored and yeah, the administration has even threatened to veto the bill over the fact that we wont include 400 million dollars for something will never see any tangible results from at a time when our country faces devastating cuts to our Department of Defense coming. Of course in January already many of them being implemented, add it. Listen, this is another area where Concerned Veterans for America have pushed, something that I care deeply about in fact last years, Defense Authorization I was able to get in a Senate version and amendment it said, Secretary Panetta has said its non-acceptable that we cant fully out of the Pentagon, has set up Mark for 2014 that we were able to do it and statement of budgetary resources. Last year I put that in the law of Ive ask to pave it on amendment, it was pass in the Senate version, they got dropped out in conference, its there again this year, Im hopeful that itll be put in place because heres the thing if we dont lay this out in the law, it even no matter what the Pentagon says, it is hard for us to hold the Pentagon accountable. So this is another area where how are we going to be able to make good decisions about defense spending if we dont have good information if the Pentagon is not in the position to undergo and audit and I want to commend the Concerned Veterans for America for that and for all of the work that youre doing, we need your help, we need your help to find ways that we can do better at the Pentagon, that we can reform acquisition reform. Senator Mc Cain and I have been working on that, there are provisions in the defense authorization bill this year that will deal with cost contracts in the production phase of the contracting to limit those cost plus contracts to very limited examples when youre producing a good after youve gone through the development phase of a weapons program and so if you look at what weve done in acquisition, this is an area that has constantly cried out for reform. According to the Center for Strategic in Budgetary Assessments, over the last decade the Department of Defense wasted 50 billion dollars on programs that were cancelled in the development phase. We have to do better given the challenges and the physical challenges that we face as a nation so I do believe there are ways we can do better at the Pentagon and Pentagon ethos, now has to include an ethos of not just what do we have to do but also how much does it cost and we need to have those conversations from the highest official, from our Secretary of Defense down to every contracting officer in terms of the culture of the Pentagon and how people think of our taxpayer dollars and given fiscal crisis that we face. That said couple of points more than anything right now we need presidential leadership. Our Department of Defense as we look at where we are, we look at the debt ceiling agreement that we reached the super committee failing to come up with 1.2 trillion dollars in savings that the Department of Defense faces sequestration, were already reducing defense spending about 487 billion dollars over the next 10 years, a lot of tough choices by the way in that 487 billion dollar reduction where we keep our naval fleet at 285, 72,000 reduction from the Army and in strength 20,000 reduction in the Marine Corp some of that of course it was going to happen as we draw down in Afghanistan as weve gotten out of Iraq but a lot of tough choices. But coming in January, another 500 billion dollars across the board, not discriminate, not choices made in a budgeting process where were prioritizing in what we need to do based on our National Security needs, based on the strategy for our country to make sure that our country is safe and so at this time, I really hope when were looking at this physical cliff, were looking at the issue of the tax rates for the country that we dont lose sight of the sequestration as it impacts our Department of Defense and there are ideas out there, Im the co-sponsor of a bill that through Federal Work Attrition and also a Federal Pay Freeze we could get enough to cover it for year on both sides. But Mc Cain has a bill on the House that similar, so there are ideas out there and how we could address sequestration and come up with alternative savings. But we need leadership on this issue when we cant just roll over and think that sequestration is the right direction for our country to take. I think that their probably is some additional savings we could find from defense in responsible ways but this across the board need as approach just to put one issue on the table here, think about our naval fleet. Our naval fleet many think should be up at 313 and some experts said they have look at that in fact I want to know from our Navy what we really need and so one of the amendments I have in the defense authorization this year is have them actually tell us how many ships do you need particularly giving our focus on the Asia Pacific region right now. And so if sequestration goes in the impact what weve been told by the Navy its not just maintaining your fleet at 285 that we could go down to 230 or 235 in terms of our naval fleet. So thats just one area when we think about the challenges we face right now in the world, the threats that still remain, the investment from China and their Navy. That just one aspect of our protection and our safety around the world, so my hope, heres what Im going to leave you with my hope. Its a challenging time in Washington, weve got tax rates, weve got extenders, weve got sequestration, weve got an extension of Pfizer, weve got a lot on our plate right now. My hope is that, A, we will finally get some Presidential leadership, I havent yet seen it unfortunately, theres been so much focus on this tax rate issue that frankly have you heard anyone talking about sequestration lately? Not a lot of it. We finally need to do a large debt deal and in my view, this is my opinion, Kelly Ayotte, tax reform, entitlement reform, we should address sequestration to make sure that we dont create a National Security crisis on top of our debt crisis. There may be additional savings we can find from defense but we by no means can find 500 billion dollars and still look each other and say that we can meet the threats to our country and to the world that could threaten America or our allies. So weve got to do it now, Im remain hopeful despite the acrimony in Washington and listen, if we could just show one iota of the courage that many of you have shown in this room in terms of addressing our debt crisis then I have great hope for America and Veterans are going to lead the way on this. You want to know what the role of Concerned Veterans for America should be and for Veterans throughout this country like my husband, you know he looks to me and he says, you know guys just do it, make a decision, show some courage. I know that my constituents are not going to like every single decision I make if we do a larger debt deal that actually changes the trajectory of where we are going right now is a country instead of this way, this way, that protects our military make sure that America remain strong. But if I could give everyone a Christmas gift around here or a Hanukah gift it would courage and you all have shown that through your service to our nation and its time for us to take some lessons from you in terms of the courage that we need around here to get some things done for our country and to finally get our country on the right track. And heres the good news, nothing can stop this country, we are one major deficit deal away from the next century really being the American century and nothing can stop us and I dont believe in any of these philosophy that the next century wont be an American century and that the next century wont be America as the strongest country in the world, its all within our power here so were just to get something done. Thank you. [Audience Claps] William Kristol: Let me thank Senator Ayotte, you see why that she deserves a reputation shes built in just two years here as one of our most thoughtful and well respected members of Congress, Senators and not only on National Security issues but especially on these issues so thank you for that eloquent and you know really statesman like I would say presentation. I think we promise we would let you go at 2 oclock and its about 3 minutes to 2 oclock so Im going to ask Pete Hegseth to come up and just close out this lunch which I personally I would not being knowing much less about this and most of all in this room, I find it quite interesting and illuminating discussion and I think we wish maybe more discussions in Washington could be as genuinely in an attempt to solve the problems as suppose to posturing. I wish Senator Ayotte very good luck in her gifting of courage to other members of Congress and to members of the Executive Branch and I hope maybe shell go around and give out these gifts for the next two weeks and everything will be change when we come back after the New Year. But let me ask Pete to come up and close this and thank you all on behalf of The Weekly Standard as a co-sponsor of this for coming too. [Audience claps] Pete Hegseth: Two seconds again, thank you for coming, I do wish this town a heavy dose of courage, its going to require it. When I sat there, when she talked about 500 billion and the scope you know the size of the defense budget and you look at it the annual deficits were running of trillions. The scope of the problem is massive which should underscore the heavy hearts I hope we all leave here with. Understanding the scope of the problem, the need to change it and to bring it out the kind of reform necessary to maintain, to make the next century in American century. I do not 5 percent of Michael OHanlons book proceeds but I should because if you havent read his book, The Wounded Giant, you should. It talks about the thread of debt, it talks about declining countries and why they decline because of their debt burden. Ultimately our fiscal House, without putting our fiscal House in order without getting our economy back on track, our ability to project military power and defend our interest around the world, it will have to be curtailed. So I recommend this as to read, I hope you take a look at the report we produced and we look forward to locking arms with you, I made a comment about VSOs up here, I want to clarify we want to work with the American Legion, with the VFW, groups in this room and in this capital that have been doing yeomans work on stuff like this for years. We want to re-energize debate, re-energize the discussion, bring the Veterans voice to the table that incredibly talk about how we clean our own House so that Washington can help get its fiscal House in order and make that next century an American century the way it should be. So were honored to have you here, we hope you, weve stolen your information so we will continue to be in touch with you and we hope you let your friends and fellow Veterans know about Concerned Vets for America and charge forward with us boldly into the future. Thank you very much for being here. [Audience claps]
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