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THE DEFENSE BUDGET FOR FISCAL YEAR 2018 

AND ONWARDS 

HEARING 

BEFORE THE

COMMITTEE ON ARMED SERVICES 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

TUESDAY, JANUARY 24, 2017 

Printed for the use of the Committee on Armed Services 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

COMMITTEE ON ARMED SERVICES 

JOHN MCCAIN, Arizona, Chairman 

JAMES M. INHOFE, Oklahoma 

ROGER F. WICKER, Mississippi 

DEB FISCHER, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

DAN SULLIVAN, Alaska 

DAVID PERDUE, Georgia 

TED CRUZ, Texas 

LINDSEY GRAHAM, South Carolina 

BEN SASSE, Nebraska 

LUTHER STRANGE, Alabama 

JACK REED, Rhode Island 

BILL NELSON, Florida 

CLAIRE MCCASKILL, Missouri 

JEANNE SHAHEEN, New Hampshire 

KIRSTEN E. GILLIBRAND, New York 

RICHARD BLUMENTHAL, Connecticut 

JOE DONNELLY, Indiana 

MAZIE K. HIRONO, Hawaii 

TIM KAINE, Virginia 

ANGUS S. KING, JR., Maine 

MARTIN HEINRICH, New Mexico 

ELIZABETH WARREN, Massachusetts 

GARY C. PETERS, Michigan 

CHRISTIAN D. BROSE, Staff Director 

ELIZABETH L. KING, Minority Staff Director 

(II)

C O N T E N T S 

JANUARY 24, 2017 

Page 

THE DEFENSE BUDGET FOR FISCAL YEAR 2018 AND ONWARDS .............................. 1 

Wood, Dakota L., Senior Research Fellow for Defense Programs, the Heritage 

Foundation ............................................................................................................ 5 

Mahnken, Dr. Thomas G., President and CEO, Center for Strategic and 

Budgetary Assessments ....................................................................................... 9 

Korb, Dr. Lawrence J., Senior Fellow, Center for American Progress ................ 12 

(III)

(1) 

THE DEFENSE BUDGET FOR FISCAL YEAR 

2018 AND ONWARDS 

TUESDAY, JANUARY 24, 2017 

U.S. SENATE, COMMITTEE ON ARMED SERVICES, Washington, DC. 

The committee met, pursuant to notice, at 9:30.m. in Room SH– 

216, Hart Senate Office Building, Senator John McCain (chairman) 

presiding. 

Committee members present: Senators McCain, Inhofe, Wicker, 

Fischer, Cotton, Rounds, Ernst, Tillis, Sullivan, Perdue, Sasse, 

Reed, Shaheen, Gillibrand, Blumenthal, Donnelly, Hirono, Kaine, 

King, Heinrich, Warren, and Peters. 

OPENING STATEMENT OF SENATOR JOHN MCCAIN, CHAIRMAN 

Chairman MCCAIN. Good morning. 

The Armed Services Committee meets this morning to receive 

testimony on the defense budget for fiscal year 2018 and beyond. 

I would like to welcome our witnesses: Dakota Wood, Senior Research Fellow for Defense Programs at The Heritage Foundation; 

Dr. Thomas Mahnken, President and CEO of the Center for Strategic and Budgetary Assessments; and Dr. Lawrence Korb, Senior 

Fellow at the Center for American Progress. 

As President Trump assumes the awesome responsibilities of his 

office, he has inherited a world on fire and a U.S. military weakened by years of senseless budget cuts. I am encouraged that he 

recognizes these problems. In fact, the White House website now 

features President Trump’s promise to, quote, end the defense sequester and, quote, rebuild our military. I know the President will 

find many allies on this committee who share these goals. 

The world order that America has led for seven decades, which 

has benefited our people most of all, is now under unprecedented 

strain. We have entered a new era of great power competition even 

as we continue to face an enduring global conflict against violent 

Islamic extremist groups. Too many Americans seem to have forgotten that our world order is not self-sustaining. Too many have 

forgotten that while the threats we face may not have purely military solutions, they all have military dimensions. In fact, too many 

have forgotten that hard power matters. It is what gives our Nation leverage to deter aggression and achieve peace through 

strength. 

The epitome of this forgetfulness is the Budget Control Act of 

2011, which cut and arbitrarily capped defense spending for a decade. At a time of growing threats, this law led to a 21 percent reVerDate Nov 24 2008 10:25 Mar 12, 2018 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\28837.TXT WILDA
2 

duction to the defense budget from 2010 to 2014. Across the board, 

the military got smaller and, worse, less capable. Critical investments in new technologies were deferred, which helped adversaries 

like Russia and China to close the gap. At the same time, the combination of rising threats, declining budgets, aging equipment, 

shrinking forces and high operational tempo produced a military 

readiness crisis. In other words, President Trump is now Commander-in-Chief of a military that is underfunded, undersized, and 

unready to meet the diverse and complex array of threats confronting our Nation. 

That is why every member of the Joint Chiefs of Staff has testified to our committees that years of budget cuts have placed the 

lives of the men and women of our armed forces at greater risk. 

Despite the damage done to our military over the last several 

years, there are still those that argue we should not be so concerned. They say America’s military is still the greatest fighting 

force ever known, that our military capabilities are still, quote, 

awesome, that we spend so much more than Russia or China or 

that we spend roughly the same amount as we did during the Cold 

War. 

True as these statements may be, they say little or nothing about 

whether our military can achieve the missions assigned to them 

and at what cost. In fact, the testimony of our military leaders in 

open hearings and closed briefings leads me to believe there is real 

reason for concern. We do not fight wars by comparing budgets. 

That is why this kind of happy talk is not just unhelpful, it is dangerous. It breeds the kind of complacency we cannot afford with the 

world on fire. 

It is time to change course on America’s defense budget. We have 

to invest in the modern capabilities necessary for the new realities 

of deterring conflict. Our adversaries have gone to school on the 

American way of war, and they are investing heavily in advanced 

capabilities to counter it. After years of taking our military advantage for granted, we are now at serious risk of losing it. We cannot 

just buy a bigger version of the military that won the Gulf War 25 

years ago. We have to invest in the new technologies and capabilities that will allow our military to prevail in a conflict 25 years in 

the future. 

We also have to regain capacity for our military. Put simply, our 

military today is too small. It does not have enough ships, aircraft, 

vehicles, munitions, equipment, and personnel to perform its current missions at acceptable levels of risk. Adding capacity alone is 

not the answer and any capacity that we do add must be done deliberately and sustainably. Add we must. 

Of course, rebuilding our military must be done smartly. We 

must seek to make our military better not just bigger. We must 

continue our reform efforts to make the Department of Defense 

more effective and efficient, while cutting wasteful spending. 

We must also be clear about the challenge of rebuilding America’s military will not be cheap. In my estimation, our military requires a base defense budget for fiscal year 2018, excluding current 

war costs, of $640 billion, which is $54 billion above current plans 

and sustained growth for years thereafter. It will not happen overnight. The harm done to our military over the past eight years will 

3 

not be reversed quickly. The longer that we wait, the worse it will 

get and the longer it will take to fix it. 

It will not be easy. Rebuilding America’s military will require 

spending political capital and making policy tradeoffs. That is why 

national defense must be a political priority on par with repealing 

and replacing Obamacare, rebuilding infrastructure, and reforming 

the tax code, indeed, more so because national defense is job one 

for the Federal Government. 

None of these challenges should obscure the fact that rebuilding 

America’s military is the right and necessary thing to do. 

I look forward to the testimony of our witnesses on the way forward. 

Senator Reed? 

STATEMENT OF SENATOR JACK REED 

Senator REED. Well, thank you very much, Mr. Chairman, for 

holding this hearing to consider funding levels for the Department 

of Defense and to maintain our Nation’s military forces. 

I welcome our distinguished witnesses this morning. Thank you, 

gentlemen, and I look forward to your testimony. 

Last week, Chairman McCain issued a White Paper [‘‘Restoring 

American Power’’] detailing his spending priorities for the new fiscal year and beyond. As this committee begins its work on the defense authorization process, the chairman’s proposal includes many 

policy objectives that deserve capital consideration by this committee. 

In addition to the chairman’s budget proposal, the committee will 

also be considering the upcoming fiscal year 2018 budget request 

that will be submitted by the Trump administration. President 

Trump has stated repeatedly that he will focus on rebuilding our 

Nation’s military, but there have been few specific details on what 

that will include. 

Furthermore, as this committee has done in the past, we will 

have several posture hearings with senior civilian and military 

leadership to hear directly from the Department regarding their resource requirements. 

Finally, like today, we will have hearings with outside defense 

experts that will help provide an alternative view for this committee to consider. 

I am very proud that this committee has always worked in a bipartisan fashion during this process, and I look forward to working 

with the committee and the chairman and all that are here to continue that process. 

While there has been a change in administration and administration priorities, this committee is still governed by the funding constraints enacted under the Budget Control Act, the BCA. President 

Trump has stated that he will end the defense sequester. As my 

colleagues on this committee are acutely aware, current law restricts both defense and non-defense spending. Many of my colleagues will maintain that the defense bill is not a vehicle to discuss the fate of domestic spending. However, for the past several 

years, I have argued that when it comes to questions of adequate 

funding, we need to consider all of the security responsibilities of 

4 

our Nation not just those that are executed by the Department of 

Defense. 

For example, as numerous witnesses have testified over the 

years, our Nation’s fight against ISIL [Islamic State of Iraq and the 

Levant] consists of nine lines of effort, only two of which are controlled by the Department of Defense [DOD]. Increasing the BCA 

caps for DOD alone will not support the State Department’s diplomatic engagement with the Government of Iraq. It will not support 

State and USAID’s [U.S. Agency for International Development] 

delivery of humanitarian aid to refugees and displaced persons. It 

will not support the Treasury Department’s disruption of ISIL finances, and it will not support Department of Homeland Security, 

the FBI [Federal Bureau of Investigation], and the Justice Department in their efforts to protect the Homeland by thwarting terrorist threats. 

I would further argue that protecting our country goes beyond 

funding our national security agencies alone. Domestic agencies 

need funding to ensure the resiliency of our electrical grid, the 

safety of our food, water, and medicine, and the protection of all 

of our cyber networks. From those that regulate dams to those that 

are used during our elections, the cyber infrastructure is critical to 

the country and is not within the strict purview of national security 

agencies. 

One of the military and diplomatic tenets of combating extremism is to provide the populations with security and basic needs. 

While we help the Afghans build roads, schools, and clean drinking 

water systems for the villages, I believe we should do the same for 

the American population. 

While we are deploying troops to Poland and Eastern Europe to 

support our NATO [North Atlantic Treaty Organization] allies 

against aggressive Soviet actions, we also need to provide the funding necessary so that Americans feel safe in their neighborhoods 

and on their computers. 

As we examine what funding requirements are necessary to the 

safety and security of our country, we need to look at our federal 

budget in a much broader context recognizing our strength also depends on the health of our economy, reliability of civilian institutions, our scientific preeminence, and the health and education of 

our citizens. 

The BCA delineation between defense and non-defense spending 

has had the unfortunate effect of pitting each category of funding 

against the other. Instead, we would be better served if we considered the needs of our Nation holistically. 

I would also like to note that President Trump has not provided 

many details on what our defense posture will be under his administration. He has stated that eliminating ISIL is his top national 

security priority, which is a continuation of present policy. However, other public statements, from calling NATO obsolete to developing closer relations with Russia, could counteract that goal and 

suggest a critical program such as the European Reassurance Initiative may be rolled back or eliminated. Such policy changes will 

have an effect on strategy, force structure, and funding. 

Therefore, as our witnesses discuss their recommendations for 

military funding, I hope they frame their proposals, first, in the 

5 

larger context of what they believe American strategy should be 

and, second, what force structure will be necessary to achieve the 

specific goal of that strategy. 

Finally, like Chairman McCain, I believe it is time to repeal the 

BCA’s arbitrary spending caps. The BCA has not made this country 

safer and it has not resolved our fiscal challenges. 

Likewise, I am deeply concerned that the Trump administration 

plans to pursue massive tax cuts for corporations and the well-off 

while simultaneously seeking to increase military spending without 

working to develop any new revenue that we need to invest in our 

country. It could lead us into a situation where the deficit becomes 

significantly encumbering of our whole economy. 

Let me be clear. I am not opposed to increasing military spending. In fact, I think we have got to do it. It is the duty of the committee to carefully review the proposals to ensure the men and 

women we are sending into harm’s way have the resources necessary to complete their mission and return home safely. It is a 

duty we all take very seriously here. We have to act responsibly in 

terms of the Nation’s entire fiscal health. 

I look forward to our testimony today and to continuing this important work with the chairman. Thank you. 

Chairman MCCAIN. Mr. Wood? Welcome to the witnesses. 

STATEMENT OF DAKOTA L. WOOD, SENIOR RESEARCH FELLOW FOR DEFENSE PROGRAMS, THE HERITAGE FOUNDATION 

Mr. WOOD. Thank you, Mr. Chairman. Chairman McCain, Ranking Member Reed, distinguished members of the committee, I deeply appreciate your invitation to appear before you today to discuss 

the defense budget for fiscal year 2018. 

The views I express in this testimony are my own and should not 

be construed as representing any official position of The Heritage 

Foundation, where I am a senior fellow. 

This committee has already fully explored defense budget cuts in 

real terms over the last several years, so I do not think it worth 

this committee’s important time for me to dwell on the details of 

that topic. The military Service Chiefs have repeatedly testified before you describing the condition of their services, how budget cuts 

and sustained high operational tempo have affected them, the challenges of carrying out their mission in such a budget-constrained 

environment, and their forecasts of the future condition of the services if current trends are not altered. 

The military budget was certainly increased following the attacks 

of September 11, 2001, but those increases were immediately consumed by the operations in Afghanistan, Iraq, and elsewhere. What 

was not addressed was the baseline force and all the things that 

make it possible to organize, equip, train, deploy, and sustain combat power. 

As Chairman McCain has noted in his just-released White Paper, 

the combined effects of nearly $1.5 trillion of cuts over a decade 

have been devastating to our military. It seems odd since we spend 

more than $600 billion each year on defense, and the military appears to do what is asked of it. The military’s dedication to accomplishing the current mission has come at a substantial cost and 

6 

there is an increasingly worrisome cost to the Nation in strategic 

terms. To sustain current operational readiness for deployed forces, 

all of the services have sacrificed readiness and capability in all 

other areas of military affairs, to include preparing for the future. 

For reasons already well known to this committee, Congress has 

been unwilling to make investing in the defense of the United 

States and its interests a high enough priority among the many 

competing interests within the federal budget. Consequently, defense spending has steadily declined since the end of the Cold War 

to a point of historic lows for the modern era. 

Rather than rehash budgetary details, I would like to share some 

thoughts on what the fiscal year 2018 budget represents for the 

United States, its friends and competitors, and those sitting on the 

fence somewhere in between. 

The news has certainly been awash in reports of degraded unit 

and material readiness: ships unable to get underway, aviation 

mishaps, ground combat units that are under-strength, at low levels of readiness, and so few in number that servicemembers and 

their families are being worn out as quickly as their equipment. 

Both our friends and our enemies can count the number of units, 

squadrons, and ships the U.S. maintains abroad. They pay close attention to service testimony that has increasingly highlighted growing risk in the military’s ability to perform its functions. They read 

the same headlines and watch the same news programs we do reporting the consistent message of a U.S. military that is understrength, aging, and challenged to defend U.S. interests at an acceptable level of risk. They track the reports of problematic acquisition and modernization programs stemming from poor program 

management but also the now routine shortage and variability of 

funds that has driven the military to be smaller, older, and less 

ready than at any time since the 1930s. 

A robust investment in defense, via the fiscal year 2018 budget, 

will not only be an important first step in rebuilding the U.S. military, but it will also send a profoundly important message to the 

rest of the world that America is once again serious about protecting itself and its interests, standing with those who choose to 

align with it in common cause, and to serve as a bulwark against 

forces of disorder. 

It is not a matter of figuring out what problems need to be addressed or where additional funds can be best spent or savings obtained. My personal observation is that the Military Services have 

done this analysis. They know what they need and have prioritized 

those needs for every additional dollar that might be provided. In 

my judgment, their analysis is, by and large, right on target. 

What they fear is imbalance. They are concerned about having 

too many people and too little equipment, or the reverse: too much 

equipment and too few people. They understand the difficulty of 

generating new units, the time it takes not only for individuals and 

small units to become tactically proficient, but also for commanders 

and staffs to become operationally competent. 

Stability is important in buying new equipment that is critical to 

keeping the force relevant in future years, while repairing aging 

equipment to keep it in the fight until the new equipment arrives. 

7 

Stability over time is also essential to building and maintaining 

a healthy and diverse industrial base that enables the government 

to leverage competition to get the best product at the best price. 

Highly constrained and unpredictable budgets inevitably lead to 

consolidation in the manufacturing sector, which results in fewer 

companies able to produce the tools needed by our military. Sometimes this leads to a single manufacturer, a government-driven monopoly, if you will, that effectively eliminates the government’s 

ability to compete a project for best price and innovation in design. 

The point here is that the fiscal year 2018 budget represents an 

absolutely critical opportunity for the United States to tell itself 

and the world where its priorities are and can serve as a much 

needed first step toward rebuilding the military we need. It will 

put our potential adversaries on notice that the U.S. intends to operate from the position of strength, and it will give assurance to 

our allies that we will fulfill our commitments to them. 

Once again, I thank you for this opportunity to speak about the 

health of our military, and I look forward to answering your questions. 

[The prepared statement of Mr. Wood follows:] 

PREPARED STATEMENT BY MR. DAKOTA L. WOOD

Chairman McCain, Ranking Member Reed, and distinguished members of the 

Committee, I deeply appreciate your invitation to appear before you today to discuss 

the defense budget for fiscal year 2018. 

The views I express in this testimony are my own, and should not be construed 

as representing any official position of The Heritage Foundation. 

This committee has already fully explored the extent to which the U.S. defense 

budget has been cut in real terms over the last several years, so I do not think it 

worth this committee’s important time for me to dwell on the details of that topic. 

The military Service Chiefs and senior members of their staffs have testified before 

you on numerous occasions, describing the condition of their services, how budget 

cuts—combined with sustained, high operational tempo—have affected them, the 

challenges of carrying out the tasks assigned to them in such a constrained budget 

environment, and their forecasts of the future condition of the services if current 

trends are not altered. To be fair, the military budget was certainly increased following the attacks of September 11, 2001, but those increases were immediately 

consumed by the operations in Afghanistan, Iraq, and elsewhere. What was not addressed was the baseline force and all the things that make it possible to organize, 

equip, train, deploy, and sustain combat power. That includes the institutional elements of the services: the physical infrastructure of bases, air stations, and maintenance facilities, training ranges, and so forth. 

As Chairman McCain has noted in his just-released White Paper, the combined 

effects of nearly $1.5 trillion in cuts over a decade—which includes Secretary of Defense Robert Gates’ $200 billion in ‘‘efficiency cuts’’ during roughly the same tenyear period—have been devastating to our military. I realize this may seem odd to 

the public and even to many in Congress, since we spend more than $600 billion 

each year on defense, and the military appears to do that which is asked of it. But 

the military’s dedication to accomplishing the current mission, their ‘‘can-do’’ spirit 

if you will, has come at a substantial cost that is less well known or understood. 

There is a growing and increasingly worrisome cost to the nation in strategic 

terms—a situation that perhaps is even less well known or understood. To sustain 

current operational readiness for deployed forces, all the services have sacrificed 

readiness and capability in all other areas of military affairs. This has taken a toll 

among programs to modernize their forces, to prepare for the future, and to maintain their physical infrastructure. 

For reasons already well known to this committee, Congress has been unwilling 

to make investing in the defense of the United States and its interests a high 

enough priority among the many competing interests within the federal budget. 

Consequently, defense spending has steadily declined since the end of the Cold War 

to a point of historic lows for the modern era. 

8 

As mentioned, it is not worth the committee’s valuable time for me to rehash 

budgetary details it already knows so well. Rather, I would like to share some 

thoughts on what the fiscal year 2018 budget represents for the United States, its 

allies and friends, its competitors and enemies, and for countries ‘‘on the fence’’ 

somewhere between friend and foe. 

The news has been awash in reports of degraded unit and material readiness: 

• Ships unable to get underway, delayed getting out of the repair yards, or suffering engineering casualties while deployed; 

• Aviation mishaps resulting from both equipment failures and pilot or crew error 

due to lack of adequate flight hours for training, aging planes; and 

• Ground combat units that are understrength, at low levels of readiness, and so 

few that service-members (and their families) are being worn out as quickly as 

their equipment. 

Both our friends and our enemies can count the number of units, squadrons, and 

ships the U.S. maintains abroad. They pay close attention to the Service Chiefs’ testimony provided to Congress that has, for the last several years, increasingly highlighted growing risk in the military’s ability to perform its functions. They read the 

same headlines and watch the same televised news programs we do, reporting the 

consistent message of a U.S. military understrength, aging, and challenged to defend U.S. interests at an acceptable level of risk. And they track the reports of canceled, truncated, and delayed acquisition and modernization programs stemming 

from problematic program management but also the now-routine shortage and variability of funds that has driven the military to be smaller, older, and less ready than 

at any time since the 1930s. 

A robust investment in defense, via the fiscal year 2018 budget, will not only be 

an important first step in rebuilding the U.S. military to the size, modernity, and 

readiness essential for it to perform its function in protecting America and its interests, but it will also send a profoundly important message to the rest of the world 

that America is once again becoming serious about protecting itself and its interests, 

standing with those who choose to align with it in common cause and prepared to 

lead like-minded nations in the effort to preserve peace, enhance stability, and expand freedom and opportunity, and to serve as a bulwark against forces of disorder. 

It isn’t a matter of figuring out what problems need to be addressed or where additional funds can be best spent or savings obtained. Nor is it a matter of quantifying shortfalls and their impact on military operations. My personal observation is 

that the Military Services have done this analysis; they know what they need, and 

have prioritized those needs for every additional dollar they might be provided. 

They have analyzed their forces and institutional ability to generate and sustain 

those forces and how they would spend additional funding to generate near-term 

readiness and longer-term preparedness in a balanced manner. In my judgment, 

their analysis is, by and large, right on target. 

What they fear is imbalance, usually driven by spending decisions imposed on 

them. They are concerned about having too many people and too little equipment 

or the reverse: too much equipment and too few people. They understand the difficulty of generating new units, the time it takes not only for individuals and small 

units to become tactically proficient but also for a commander and his or her staff 

to become operationally competent. 

They must balance repairing aging equipment to keep it in the fight (while awaiting replacement items) with buying new equipment that is critical to keeping the 

force relevant in future years. Rebuilding a force, especially one that has been depleted over so many years, must be done in a balanced way. 

Stability over time is also essential to building and maintaining a healthy, diverse, and innovative industrial base that enables the government to leverage competition to get the best product at the best price. Highly constrained and unpredictable budgets inevitably lead to consolidation in the manufacturing sector, which results in fewer companies able to produce the tools needed by our military. Sometimes this leads to a single manufacturer—a government-driven monopoly—that effectively eliminates the government’s ability to compete a project for best price and 

innovation in design. 

The point here is that the fiscal year 2018 budget represents an absolutely critical 

opportunity for the United States to tell itself and the world where its priorities are 

and can serve as a much needed first step toward rebuilding the military we need. 

It will put our potential adversaries on notice that the U.S. intends to operate from 

a position of strength, and it will give assurance to our allies that we will fulfill 

our commitments to them. 

Once again, I thank you for this opportunity to speak about the health of our military and I look forward to answering your questions. 

9 

* * * * * 

The Heritage Foundation is a public policy, research, and educational organization recognized as exempt under section 501(c)(3) of the Internal Revenue Code. It 

is privately supported and receives no funds from any government at any level, nor 

does it perform any government or other contract work. 

The Heritage Foundation is the most broadly supported think tank in the United 

States. During 2015, it had nearly 600,000 individual, foundation, and corporate 

supporters representing every state in the U.S. Its 2015 income came from the following sources: 

Individuals 75% 

Foundations 12% 

Corporations 3% 

Program revenue and other income 10% 

The top five corporate givers provided The Heritage Foundation with 2 percent 

of its 2015 income. The Heritage Foundation’s books are audited annually by the 

national accounting firm of McGladrey, LLP. 

Members of The Heritage Foundation staff testify as individuals discussing their 

own independent research. The views expressed are their own and do not reflect an 

institutional position for The Heritage Foundation or its board of trustees. 

Chairman MCCAIN. Thank you. 

Dr. Mahnken? 

STATEMENT OF DR. THOMAS G. MAHNKEN, PRESIDENT AND 

CEO, CENTER FOR STRATEGIC AND BUDGETARY ASSESSMENTS 

Dr. MAHNKEN. Thank you. Chairman McCain, Ranking Member 

Reed, distinguished members of the committee, thank you for this 

invitation to appear before you today to discuss the defense budget 

for fiscal year 2018 and beyond. 

Chairman McCain, at the outset, I would like to commend you 

for ‘‘Restoring American Power.’’ It was a thoughtful and much 

needed contribution to the debate over defense strategy and resources. CSBA’s [Center for Strategic and Budgetary Assessments] 

diagnosis of the situation and recommendations accord with those 

detailed in the paper in many respects. 

Now, the bottom line that I have for you today is that the United 

States requires more resources for defense if we are to continue to 

safeguard America’s national interests in an increasingly competitive environment. Specifically, in my view, we need increased investment in both readiness and modernization. 

I had the pleasure of serving on the staff of both the congressionally mandated 2010 Quadrennial Defense Review Independent 

Panel and on the staff of the 2014 National Defense Panel. Both 

of those bodies achieved a bipartisan consensus that the Defense 

Department required additional resources. Seven years on from the 

first and three years on from the second, today’s situation is even 

more dire. 

First, as has already been noted, additional resources are needed 

to restore the readiness of the U.S. Armed Forces. As Dakota said, 

I need not detail the path that has gotten us here. You are aware 

of that, the circumstances we are in today. It is worth emphasizing, 

however, that our drawdown has occurred all the while the United 

States has been at war in Iraq, in Afghanistan, and across the 

world, a situation that is historically unusual, to put it mildly. 

Second, there is growing need to modernize U.S. conventional 

and nuclear forces. eight years ago, when I last served in the Department of Defense as the Deputy Assistant Secretary of Defense 

10 

for Policy Planning, the risk calculus was that we could afford to 

take some additional risk in preparing for high-intensity war in 

order to focus on counterinsurgency. As Secretary of Defense Gates 

frequently put it, we needed to focus on the wars of the present 

rather than the possible wars of the future. 

Eight years on, I believe the risk calculus has fundamentally 

changed. Whereas we have spent the last 15 years focused on counterinsurgency, we are now in a period characterized by the reality 

of great-power competition and the increasing possibility of greatpower conflict. We see China and Russia acting aggressively both 

in their own regions, as well as beyond them. China is busy remaking the geography of the western Pacific, but is also increasingly 

active elsewhere. Russia has not only used force against Georgia 

and Ukraine and threatened other neighbors, but is also waging a 

high-intensity military campaign in Syria. Moreover, both China 

and Russia have been investing in military capabilities that threaten America’s longstanding dominance in high-end warfare. We 

have given them a decade and a half to catch up. 

In other words, the wars of the future may no longer lie that far 

in the future. Moreover, they are likely to differ considerably both 

from the great-power wars of the past, as well as the campaigns 

that we have been waging since the turn of the millennium. 

That is not to say that battling radical Islam will not continue 

to be a priority. However, it has been the focus of U.S. investment 

over the last decade and a half. By contrast, we have neglected the 

capabilities needed to deter and, if necessary, wage high-end warfare. 

That includes our nuclear deterrent. Historically, when the 

United States has drawn down its conventional forces, as it did in 

the 1950s and after the Vietnam War, we came to rely increasingly 

on our nuclear deterrent. In recent years, by contrast, we have both 

drawn down our conventional forces and our nuclear forces. Now 

both require modernization. 

Needless to say, the tasks of improving readiness and modernizing the force will require additional resources beyond those permitted by the Budget Control Act. 

In closing, as we seek to rebuild American military power, we 

need to keep a couple of things in mind. 

First, the Defense Department’s capacity to absorb an infusion of 

resources is limited. The Pentagon today is a lot like a person who 

has been slowly starving for years. There are limits to how effectively it can spend a large infusion of cash. 

Second, that which is available is not necessarily that which is 

necessary. One byproduct of our neglect of modernization over the 

past decade and a half is that there are few programs that are 

ready right now to accept new funds. Rebuilding the American 

military will take time. To take but one example, achieving the 

350-ship Navy that President Trump has pledged to deliver, or the 

355-ship fleet that the Navy now says it needs, or the 340-so ship 

fleet that CSBA believes the Nation needs cannot be accomplished 

in four or eight years. Our analysis, using the Navy’s own models, 

show that it is affordable, but making it a reality will require a 

sustained commitment on the part of the executive and legislative 

branches. 

11 

The capabilities that the United States needs to remain dominant on the land and in the air against great-power competitors 

will similarly take time to field. The modernization of the U.S. nuclear deterrent will require time to accomplish as well. Maintaining 

U.S. military effectiveness over the long haul will, thus, require 

more than a quick, though much needed infusion of cash in fiscal 

year 2018. It will require sustained support for defense investment 

in the years that follow. 

Thank you, and I await your questions. 

[The prepared statement of Dr. Mahnken follows:] 

PREPARED STATEMENT BY THOMAS G. MAHNKEN

Chairman McCain, Ranking Member Reed, and distinguished members of the 

Committee, thank you for your invitation to appear before you today to discuss the 

defense budget for fiscal year 2018. 

At the outset, I would like to commend you for ‘‘Restoring American Power,’’ which 

is a thoughtful and much needed contribution to the debate over defense strategy 

and resources. CSBA’s diagnosis of the situation and recommendations accord with 

those detailed in the paper in many respects. 

The bottom line is that the United States requires more resources for defense if 

we are to continue to safeguard America’s national interests in an increasingly competitive environment. Specifically, in my view we need increased investment in both 

readiness and modernization. 

I had the pleasure of serving on the staff both of the Congressionally-mandated 

2010 Quadrennial Defense Review Independent Panel and the 2014 National Defense Panel. Both achieved a bipartisan consensus that the Department of Defense 

required additional resources. Seven years on from the first and three from the second, today’s situation is even more dire. 

First, additional resources are needed to restore the readiness of the U.S. Armed 

Forces. I need not detail the path that has gotten us here. Nor do I need to detail 

the corrosive impact that sequestration has had on the readiness of the U.S. Armed 

Forces. The members are well aware of that. It is worth emphasizing, however, that 

all this has gone on while the United States has been at war—in Iraq, Afghanistan, 

and across the world—a situation that is historically unique, to put it mildly. 

Second, there is a growing need to modernize U.S. conventional and nuclear 

forces. Eight years ago, when I last served in the Department of Defense, as the 

Deputy Assistant Secretary of Defense for Policy Planning, the risk calculus was 

that we could afford to take additional risk in preparing for a high-intensity war 

in order to focus on counterinsurgency. As Secretary of Defense Gates frequently put 

it, we needed to focus on the wars of the present rather than the possible wars of 

the future. 

Eight years on, I believe that the risk calculation has fundamentally changed. 

Whereas we have spent the last fifteen years focused on counterinsurgency, we are 

now in a period characterized by the reality of great-power competition and the increasing possibility of great-power conflict. We see China and Russia acting aggressively both in their own regions as well as beyond them. China is busy remaking 

the geography of the Western Pacific, but is also increasingly active elsewhere. Russia not only has used force against Georgia and Ukraine and threatened other 

neighbors, but is also waging a high intensity military campaign in Syria. Moreover, 

both China and Russia have been investing in military capabilities that threaten 

America’s long-standing dominance in high-end warfare. 

In other words, the ‘‘wars of the future’’ may no longer lie that far in the future. 

Moreover, they are likely to differ considerably both from the great-power wars of 

the past as well as the campaigns that we have been waging since the turn of the 

millennium. 

That is not to say that battling Radical Islamism will not continue to be a priority. However, it has been the focus of U.S. investment over the last decade and 

a half. By contrast, we have neglected the capabilities needed to deter and if necessary wage high-end warfare. 

That includes our nuclear deterrent. Historically, when the United States has 

drawn down its conventional forces, as it did in the 1950s and after the Vietnam 

War, it came to rely increasingly upon its nuclear deterrent. In recent years, by contrast, the United States has both drawn down both its conventional and nuclear 

forces. Now, both require modernization. 

12 

The tasks of improving readiness and modernizing the force will require additional resources beyond those permitted by the Budget Control Act. 

In closing, as we seek to rebuild American military power, we need to keep a couple of things in mind. 

First, the Defense Department’s capacity to absorb an infusion of resources is limited. The Pentagon is like a person who has been slowly starving for years; there 

are limits to how effectively it can spend an infusion of cash. 

Second, that which is available is not necessarily that which is necessary. Indeed, 

beyond an infusion of cash, the Defense Department requires a sustained increase 

in resources. To take but one example, achieving the 350-ship that President Trump 

has pledged to deliver—or the 355-ship fleet that the Navy now says it needs—or 

the 348-ship fleet that CSBA believes the nation needs—cannot be accomplished in 

four or eight years. Our analysis, using the Navy’s own models, show that it is affordable, but making it a reality will require a sustained commitment on the part 

of the Executive and Legislative branches. 

The capabilities that the United States needs to remain dominant on the land and 

in the air against great-power competitors will similarly take time to field. The modernization of the U.S. nuclear deterrent will require time years to accomplish as 

well. Maintaining U.S. military effectiveness over the long haul will thus require 

more than a quick (though much needed) infusion of cash in fiscal year 2018; it will 

require sustained support for defense investment in the years that follow. 

Chairman MCCAIN. Dr. Korb, welcome back. 

STATEMENT OF DR. LAWRENCE J. KORB, SENIOR FELLOW, 

CENTER FOR AMERICAN PROGRESS 

Dr. KORB. It is nice to be here again, Senator. I was trying to 

reflect about the first time I ever came before this committee. I do 

not even remember how many years ago it was. 

Chairman MCCAIN. It was during the Coolidge administration. 

[Laughter.] 

Dr. KORB. If I can put my prepared statement in the record. 

Chairman MCCAIN. Without objection. 

Dr. KORB. I will summarize it so we can move on to the questions. 

I think the first thing to keep in mind, when you are deciding 

how much to spend on defense, is no matter how much you spend, 

you cannot buy perfect security. There are always going to be risks. 

From my own days in government and in the military, a lot of people always complaining we needed more money for something else. 

Second is that it is not just the Department of Defense that protects our national security. State Department, AID, Homeland Security—these are all part of it. For years, we urged—we could 

never get any administration to adopt it—to have unified national 

security budget so we could see all of these together. 

The third thing is you cannot be strong abroad unless you are 

strong at home. Go back and look at what Presidents Truman and 

Eisenhower began talking about that you could not just do one and 

not the other. 

The next thing is no matter how much you spend on defense, you 

need a strategy. I am not quite sure what the new administration’s 

strategy is. Does President Trump believe, as Chairman Dunford 

said, that Russia is the biggest threat? I am not quite sure. 

Then finally, it is not just us. We have our allies that we work 

with. When we are talking about dealing a threat, we have to take 

all that into account. 

Now, people urging more money for defense usually make two arguments. One is a share of the GDP [gross domestic product] 

should go to defense. Well, again, I think that in fact if the threat 

13 

goes up and the GDP goes down, I would hope we would not be 

bound by that. Or if the economy recovers more, as it has under 

President Obama—recovers very rapidly—obviously, the share of 

the GDP that he allocated to defense did go down. 

The second is—and I am sure we will be talking about it—the 

current state of our military. As I mentioned in my testimony, I 

was very impressed with the article that General Petraeus and 

Mike O?Hanlon wrote in ‘‘Foreign Policy,’’ as well as their op-ed in 

the ‘‘Wall Street Journal’’ last summer which in fact they said 

there is no procurement holiday. Readiness is getting back to 

where it needs to be. 

The next thing is that no doubt about the fact that the Budget 

Control Act is not the way to run the government. We all agree 

with that. In terms of the caps put on, remember, as a result of 

actions by the Congress, we have given about $100 billion in relief 

since that law was passed. Also—Senator McCain has mentioned 

this several times—the OCO [overseas contingency operations] 

budget has been used as a way to get around the caps. 

All right. Now, in conclusion, basically I do not believe that the 

Department of Defense has a resource problem. I think the resources, the $620 billion that was allocated in fiscal year 2017. I 

believe, as I point out, that it has a management problem. 

I was appalled when the Defense Business Board recommended 

making $125 billion in cuts over 5 years. The Pentagon tried to 

bury it. Had it not been for Bob Woodward from Watergate fame, 

we would not even have known about that. The cost growth in 

weapon systems, which GAO [Government Accountability Office] 

has talked about, $500 billion—and I commend President Trump 

for talking about the cost of the F–35, and I hope that we can do 

something about that. 

Senator McCain, I like the things in your proposal, some things 

that we could do to save money. Conventionally powered smaller 

aircraft carriers, cutting down the buys of the F–35, substituting 

the F/A–18E’s and F’s for some of the F–35’s for the Navy. 

Then finally—and I would urge the committee to take a good 

look at what former Secretary of Defense Perry and General Cartwright have said about the nuclear modernization program, particularly when it comes to the air-launched cruise missile. I noticed 

Secretary General Mattis expressed some concerns about that in 

his confirmation hearing. The land-based and the air-launched 

cruise missile. 

Then finally, if you decide to raise defense spending, as recommended by President Trump and the campaign—and, Senator 

McCain, I ask you to consider how are you going to pay for it. Do 

not take it from other things that make this country strong. One, 

the debt and then, of course, funding for our programs, the infrastructure, education, climate change, all of these things. 

Thank you very much. 

[The prepared statement of Dr. Korb follows:] 

PREPARED STATEMENT BY LAWRENCE J. KORB

Chairman McCain, Ranking Member Reed, and members of the Senate Armed 

Services Committee, I appreciate the opportunity to appear before you, with the 

other distinguished panelists, to discuss the appropriate size and distribution of the 

14 

defense budget for fiscal year 2018 and the defense program for the fiscal year 

2018–2022 period. 

In my view this is the most critical national security issue facing the new administration and Congress because in defense, dollars are policy. In deciding how much 

of our scarce resources to allocate to national security it is important to keep several 

things in mind. 

First, no matter how much this nation or any nation spends on defense, it cannot 

buy perfect security. 

Second, the Department of Defense is not the only federal agency responsible for 

protecting our national security. The State Department, the Agency for International Development, and the Department of Homeland Security all play a vital 

role in protecting this country. If we provide so much of our limited resources to 

the Pentagon that we cannot fund these agencies adequately, our national security 

will suffer. 

Third, we cannot be strong abroad if we are not strong at home. As presidents 

like Harry Truman and Dwight Eisenhower realized a strong economy at home is 

the basis for our military might abroad. Therefore, running up large deficits or not 

providing adequate funds for education, health, or infrastructure as a result of providing too many of our limited resources for defense will impact our national security negatively. 

Fourth, whatever level of funding we provide for national security is not as important as having the appropriate strategy to deal with the current challenges facing 

the nation. Spending large sums of money to deal with threats from a bygone era 

will not enhance our national security. Just as sequester was, is a non-strategic and 

unwise way to limit a budget, increased funding that is not connected to a sound 

defense strategy for the demands we face today will be non-strategic, wasteful, and 

do more harm than good. 

Fifth, in most cases the U.S. does not have to deal with threats to our national 

security by itself. Nor do we have to use military power as a first resort. Whether 

it is dealing with Russia, China, North Korea, Iran or ISIS, the United States can 

work most effectively with allies and partners. The United States-led sixty nation 

coalition fighting ISIS, the buildup of military forces by our NATO allies to combat 

aggressive moves by Russia, and the economic sanctions we and the European 

Union placed on Russia after its annexation of Ukraine, are examples of leveraging 

all the instruments of our own power and the contributions of our allies to protect 

our national security. 

Despite the many contributions of our allies, Republicans and Democrats, including many of you on this Committee and all recent presidents, have expressed dismay about inadequate defense spending by our partners, even calling them free-riders. That kind of behavior is enabled by profligate U.S. defense spending. We need 

to spend wisely as we call on friends to honor their side of our common-security bargain. 

Many of those who advocate increasing the current level of defense expenditures 

substantially make two arguments. First, the Pentagon is not receiving a large 

enough share of the nation’s gross domestic product (GDP). Second, our military is 

not prepared to deal with the current threats because of the limitations placed on 

all discretionary budgets, of which defense represents half, by the Budget Control 

Act (BCA) of 2011. But objective analysis demonstrates that these arguments are 

incomplete and somewhat misleading. 

For fiscal year 2017 the defense budget of about $620 billion will account for 3.3 

percent of the nation’s GDP as opposed to the 4.7 percent it received in Obama’s 

first year in office. But, this decline in the share of GDP devoted to defense is not 

a significant reduction in defense spending, but is mainly a result of the fact that 

Obama’s economic policies have led to an economic recovery in the wake of national 

and global financial disaster. In fact, in real dollars the baseline for the non-war 

defense budget for fiscal year 2017 is higher than it was when Obama took office. 

Giving defense a 4.7 percent share of our $18 trillion GDP or even 4 percent would 

increase current defense spending by over $100 billion. An arbitrary level of defense 

spending is just as non-strategic as sequester. What if we require more than 4 percent in a crisis or war? What if an economic boom makes 4 percent grossly excessive? The budget should be tied to the requirements, not to arbitrary numbers. 

Moreover, analysis by experts, like General David Petraeus and Michael O’Hanlon 

of the Brookings Institution, makes it clear that the current state of our armed 

forces is ‘‘awesome,’’ that we are not facing a readiness crisis and the current level 

15 

1O’Hanlon, Michael and Petraeus, David. (2016, September/October). America’s Awesome 

Military And How to Make It Even Better. Foreign Affairs. https://www.foreignaffairs.com/articles/americas/2016–07–22/america-s-awesome-military 

of defense spending on readiness and procurement is more than adequate 1. This 

does not mean that the new administration will not face challenges but the challenges are not as much monetary as they are management. Even with the limits 

placed upon the Pentagon under the BCA, the amount of funding for defense in the 

National Defense Authorization Act (NDAA), as recently signed by former President 

Obama, amounts to more in real terms than the U.S. spent on average in the cold 

war and more than we spent at the height of the Reagan build-up. This amount 

is three times more than our nearest competitor, the Chinese, will spend this year 

and accounts for more than one-third of the world’s total military expenditures. In 

addition, our allies account for another one-third. In fact, for 2017, the top ten major 

powers will spend about $1.33 trillion on defense. Of these ten countries, only China 

and Russia, which between them spend about $230 billion, can be considered potential adversaries. 

The BCA caps have not constrained defense spending as much as many assume. 

The Congress has provided about $100 billion in relief from the BCA since fiscal 

year 2013, and at least half the Overseas Contingency Operations (OCO) account, 

which is not subject to the BCA caps, has been used for enduring programs that 

have nothing to do with the wars in the Middle East or Afghanistan. In other words 

a significant part of the OCO account is a slush fund that allows the Pentagon to 

get around the BCA limitations. 

Before the new administration and the Congress adds significant funds to the fiscal year 2018 budget, as recommended by President Trump and Chairman McCain, 

they need to take a close look at how the Pentagon is currently spending the large 

amount of funding it currently receives, especially in at least four areas. 

First, as noted in a recent report by the Defense Business Board the Pentagon 

could save $125 billion by cutting the size of its headquarters or administrative staff 

which has grown by 38 percent since 2001. However when this report, which was 

commissioned by the former administration, came out, rather than endorsing it, its 

leaders tried to bury it in no small part because they believed it would never get 

support from the Congress. Congress should be leading on finding savings, not just 

adding dollars to our defense budget. 

Second, the Pentagon needs to curb the cost overruns on its major acquisition programs. In 2015, according to a report by Deloitte, the combined costs overruns for 

the major acquisition programs was $468 billion, something Government Accountability Office (GAO) has been pointing out for years. Chairman McCain himself has 

called these overruns absolutely outrageous. Congress and the new Administration 

should take advantage of their unified political control of the government to get an 

actual audit of the Pentagon and begin a clear process of reform to improve acquisitions. 

Third, the Pentagon should adopt some of the recommendations made by Senator 

McCain in his excellent report, ‘‘Restoring American Power.’’ Specifically, the Pentagon should: develop a high-low mix of aircraft carriers by building smaller conventionally powered carriers rather than simply continuing to build only $15 billion nuclear powered Ford-class super carriers; cut the total number of Air Force F–35’s 

from 1,732, a number Chairman McCain correctly points out is unrealistic; and get 

the Navy to stop production of the poorly conceived and managed Littoral Combat 

Ship (LCS) at 28, as opposed to the Navy’s goal of 52. The Navy should also buy 

more F–A 18 Super Hornets and fewer F–35’s. 

Fourth, the Pentagon and Congress should adopt the proposals put forward by 

former Secretary of Defense, William Perry, and former Vice Chairman of the Joint 

Chiefs of Staff, General James Cartwright, and cancel the new land-based missile 

and air-launched cruise missile portions of the multi-billion dollar nuclear modernization the Pentagon is currently undertaking, something we endorsed in our report, ‘‘Setting National Priorities for Nuclear Modernization.’’ These steps would be 

a good start toward improving the management and stewardship of our defense dollars and should be implemented before Congress approves major spending increases. 

Thanks again for the invitation to once again appear before the Committee. I look 

forward to your questions as you deal with these critical issues. 

Chairman MCCAIN. Thank you, Dr. Korb. I just would like to 

point out that over the last eight years, defense spending, OCO and 

everything included, has declined by some 21 percent. I do not beVerDate Nov 24 2008 10:25 Mar 12, 2018 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\28837.TXT WILDA
16 

lieve that most observers would agree that America is 21 percent 

safer. 

You mentioned President Truman, and I am a great admirer of 

President Truman. It is a fact that we were not ready when the 

Korean War took place. In fact, we were not only not ready, we sacrificed so many brave young people who simply did not have the 

ability to counter the North Korean attack. 

Then, of course, we get back into the 1970s after the Vietnam 

War when the Chief of Staff of the United States Army, General 

Meyer, testified before this committee that we had a hollow Army. 

Well, our uniform military today are testifying before this committee that we are putting the men and women in uniform at 

greater risk. That is the opinion of those who we ask to lead the 

uniformed military. That should disturb all of us. It is our young 

men and women who are now serving in uniform in harm’s way, 

and if their leaders say that their lives are at greater risk, we 

should be taking whatever steps we can to make sure that their 

lives are at less risk. That means, in my view, first of all, repealing 

this mindless sequestration. 

I do agree with you, Dr. Korb. There are other areas of national 

defense. Homeland Security is a major one. CIA [Central Intelligence Agency], all of these other agencies that are not strictly defense, particularly in this new kind of warfare that we seem to be 

engaged in, which I guess brings me to my question. 

We will begin with you, Mr. Wood, and this may be a little bit 

generally. We have a new President, and there are conflicting 

statements being made. This new President has said he wants to 

rebuild the military. Yet, at the same time, he says he wants better 

relations somehow with Vladimir Putin. At the same time, I think 

most of us—I think all of us—would agree we have an outstanding 

national security team and one that has gotten near unanimous 

agreement of Members on both sides of the aisle. Here we are in 

a very interesting time, which is one of the reasons why we had 

this hearing. 

Beginning with you, Mr. Wood, what would you recommend to 

the President as a correct defense strategy? 

Mr. WOOD. Well, I do not think there are internal inconsistencies 

or contradictions. I mean, we think back to the Cold War—you are 

very familiar with that—that even while we tried to maintain a 

very forceful posture militarily—NATO was certainly there on the 

inner German border across from Warsaw Pact countries—you still 

had open lines of communication with Moscow. I think we should 

always be striving to do things diplomatically, economic initiatives, 

those sorts of things to lessen the chance of war. 

Chairman MCCAIN. I would also remind you that the first 

thing—the first thing—that President Reagan—his first priority 

was rebuilding the military. 

Mr. WOOD. Absolutely. Along with that, that does not mean that 

you keep your military depressed. The economic and the diplomatic 

initiatives are amplified. They are made more effective by a strong 

military posture. Where we have declined in that regard, our words 

are taken much less seriously in capitals around the world both by 

competitors in Moscow and Beijing and Tehran, but also by our 

own allies. I think rebuilding the military is the first step to makVerDate Nov 24 2008 10:25 Mar 12, 2018 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\28837.TXT WILDA
17 

ing more effective the diplomatic and economic levers that we 

would have in other areas. 

Chairman MCCAIN. Dr. Mahnken? 

Dr. MAHNKEN. Mr. Chairman, several things. 

I think we need a truly global strategy. We are the world’s only 

global power, but at the same time, we also deal with competitors 

in different regions and beyond. We need a global strategy that 

also deals with regional challenges. I think the new administration 

is going to have to make up its mind as to which of the challenges 

deserve the greatest attention and which lesser attention. I tend to 

believe that great-power challengers such as China and Russia 

really do deserve the greatest attention, and then we should stress 

test our capabilities and our force against regional challengers such 

as North Korea and Iran, all the time acknowledging the need to 

continue the campaign against ISIL and al Qaeda. 

Chairman MCCAIN. Dr. Korb, which would be not only your view 

on the strategy but of priorities? 

Dr. KORB. Well, I think the two biggest challenges we face are 

Russia and China. I think President Obama’s European Reassurance Initiative is the way to go, and I agree with President Trump 

and also the last four Secretaries of Defense that told NATO that 

you have to step up more to be able to deal with it and I think we 

are. 

I think President Obama’s rebalance to the Pacific showed that 

China is a much bigger threat to the United States than what is 

happening in the Middle East. I think we need to add more ships 

to the Navy. I think your suggestion about 18 more ships I think 

would be good over the next 5 years, and also stopping the littoral 

combat ship and getting these smaller aircraft carriers would be a 

way to have the presence. 

I think that basically we ought to not just use military power but 

economic. I think the sanctions were the way to handle what happened in Crimea. They are beginning to have an impact. The Russian military budget is going down. President Putin has had to 

back off from his modernization plan. 

I think the way that we are fighting ISIS with the other 60 countries in the coalition is the way to deal with it. 

I think that the sanctions brought Iran to the table. Now, we can 

debate whether that was a good deal or not, but the fact of the 

matter is we did get a deal that is a step in the right directions, 

and it was without military power. I think the economic thing. 

Then finally, I think North Korea—you are going to have to work 

with China and the countries in the region. I applaud the decision 

to put the THAAD [Terminal High Altitude Area Defense] missiles 

in South Korea because that has got China’s attention. They do not 

like that. Hopefully they will do more to bring North Korea to stop 

their provocative actions. 

Chairman MCCAIN. Thank you, Dr. Korb. You sound a bit 

hawkish this morning. 

[Laughter.] 

Chairman MCCAIN. Thank you. I have enjoyed our exchanges 

over the years, and I think you have contributed a lot to the dialogue. 

Senator Reed? 

18 

Senator REED. Well, thank you, Mr. Chairman. Thank you again 

for holding this hearing because this is going to be one of the most 

significant issues we discuss not just today but in the many, many 

months that follow. 

Dr. Wood, the concept of national security extends beyond the 

Department of Defense—I think you would agree with that—so 

that any relief from the Budget Control Act would logically have 

to extend to at least those agencies. Is that your viewpoint? 

Mr. WOOD. Yes, Senator, it is. I mean, I think the first and foremost responsibility of the Federal Government is to provide for the 

security of the United States. Other things that it does oftentimes 

overlaps with what can be done at the State and local community, 

religious group types of levels. Where you see 70-plus percent of 

the federal budget dedicated to social and economic programs and 

an increasingly smaller percentage dedicated to defense, I think 

priorities are out of whack there. I agree completely with my fellow 

panelists and with yourself that the intelligence community, Homeland Security, activities of the Coast Guard, all those things contribute to the security, and that should be taken in total, not the 

Defense Department specifically as some exclusionary account. 

Senator REED. Dr. Mahnken, your sense? 

Dr. MAHNKEN. Look, I would agree that national security is more 

than defense, and in recent years, because of the incapacity of 

other parts of the national security community, the Defense Department has been forced to step in, whether it was after Katrina 

or in other circumstances. I would also say that unless DOD and 

the U.S. Armed Forces excel at their core mission of fighting and 

winning the Nation’s wars, nobody else is going to be able to do 

that. With that in mind, I absolutely agree. 

Senator REED. Dr. Korb, I think you have said you agree. 

Dr. KORB. I can agree with you. I agree with you 100 percent. 

I think we have got to have a unified national security budget. 

Whatever amount you decide to spend on the Department of Defense, the Homeland Security, the State Department, AID, we have 

got to look at it together so we can make some tradeoffs to make 

sure that things that we would like to do are more important for 

Homeland Security than the military because there is never going 

to be enough money to buy perfect security. It is always going to 

be limited. I think, therefore, you need to make these particular 

tradeoffs. 

The budget, for example, for the State Department and AID together is about $50 billion. Okay. We have got more people in the 

military bands than in the Foreign Service. Is that really the way 

that we want to do things? Those are the things I think we need 

to take a look at. 

Senator REED. I can recall listening several years ago to the 

Chairman of the Joint Chiefs of Staff saying that the number one 

national security problem was the deficit. I am just trying to do the 

math in my head. If we significantly increase military spending, if 

we significantly invest in infrastructure, which is one of the commitments both sides made during the election campaign, and then 

we cut taxes, there is a strong argument that we are going to have 

significant deficit repercussions. How do we avoid that other than 

by trying to find revenue? 

19 

Mr. WOOD. Well, again, I think it is reassessing what your priorities are in terms of what the Federal Government is supposed to 

be doing and where it decides to spend its money. This issue of 

debt, inflation, economic trend lines has been appreciated by every 

President that I can think of. Eisenhower made a great argument 

about the devastating impact of inflation on the U.S. citizen. It is 

not really a matter of decreasing defense spending or defense 

spending at the expense of the intel community, it is really about 

what is the priority of the Federal Government and how does it 

choose to spend the taxpayer monies that are provided to it. To the 

extent that it takes risk in security for the country and its citizens 

and our interests globally, that is a choice that Congress is making 

and the President when he or she submits the budget. 

Senator REED. Dr. Mahnken, quickly. 

Dr. MAHNKEN. No. Look, I would agree. Providing for the common defense is one of the core functions of the Federal Government. We can disagree about other functions, but that is core. 

Senator REED. Dr. Korb? 

Dr. KORB. I think one of the biggest mistakes we made was when 

we went into Afghanistan and Iraq, we did not raise taxes to pay 

for it. Those wars were fought on the credit card, and that created 

some of the deficit problems that Admiral Mullen was concerned 

about when he was on Active Duty and since he has retired. Not 

only did we not raise taxes, we cut them twice, and we are still 

paying for that. The Brown University, the Watson Center in your 

State has talked about the cost of these wars is going to be somewhere between $3 trillion and $6 trillion that we did on the credit 

card. We need to understand that. 

If in fact we decide that the threats are increasing and we need 

to rally the American people to spend more, let us talk about ways 

in which we are going to pay for it because I think that would get 

people much more involved. You may remember that in Vietnam 

when Wilbur Mills got Lyndon Johnson to put a surtax on, that got 

people’s attention about what was happening there. 

Senator REED. Thank you. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. Senator Inhofe? 

Senator INHOFE. Thank you, Mr. Chairman. 

Dr. Korb, I observed the same thing the chairman did. I am a 

little more hawkish. I was ready to talk and to kind of pursue the 

statement in your written record that BCA caps or sequestration 

have not constrained defense spending as much as many assume. 

If you go back and you look at the hearings that we have had before this committee in the last couple years, without exception 

every combatant commander, all the rest of them who have come 

before us have disagreed with that statement. Did I understand 

this right? 

Dr. KORB. What I was saying is that when people talk about the 

BCA caps, they do not take into account the fact that you have 

given them relief. I looked it up going back to when it was passed. 

Roughly about $20 billion a year over the last 5 years. That is 

about $100 billion in relief. For example, the budget in the NDAA 

[National Defense Authorization Act] this year was roughly—you 

added $3 billion more to the number that you had given last year. 

20 

The other is—and lots of people, including Senator McCain, have 

pointed this out—the OCO budget, or the warfighting budget, has 

been used to get around it. The best estimate by the DOD comptroller for fiscal year 2017 is about $30 billion. Therefore, when you 

say the BCA cap was 500 or 50, or whatever it might be, by putting 

that OCO money, you really got more for the base budget. 

Senator INHOFE. Okay. I understand that. 

Dr. Korb, you talked about—you criticized the percentage of 

GDP. When you just look at the raw figures and you see that we 

are spending now 16 percent of our defense spending—on defense 

spending of our total budget, and as recently as 1964, it was 52 

percent—I mean, something has changed. We were wrong then or 

are we wrong now? What do you think, Mr. Wood? 

Mr. WOOD. I think we need to fund defense commensurate with 

our interests and challenges to those interests. I agree that there 

has been some relief given in BCA. The BCA was never intended 

to provide adequate security. In fact, it was the opposite. The 

Budget Control Act and sequestration levels were meant to be so 

painful that it would force the Super Committee to find $1.2 trillion in savings in other areas of the budget. When that failed and 

these painful cuts were enacted, it was supposed to be painful, and 

we are seeing the consequences of that. 

Further, the relief was not total relief from BCA cuts, and it certainly does not account for the ongoing cost of operations. Where 

things get worn out, blown up, people are injured, you are using 

fuel and bombs and those kinds of things, a marginal relief on a 

year-by-year basis does not account for that. I think the priorities 

are out of whack. 

Senator INHOFE. That is key right there because people say, you 

know, where is it going to come from? Priorities. I disagreed with— 

I do not remember which one of you said that it is an equal concern. I think defending America is the number one concern. I 

mean, that is the way I have always thought. In fact, the old measure that we should size the posture and fund our military to fight 

and win two major wars in different regions of the world near simultaneously—is that still a good idea? What do you think, Dr. 

Mahnken? 

Dr. MAHNKEN. I do because we always want to have that margin 

of safety, and we also want to have that margin of deterrence. I 

think unfortunately in the last Quadrennial Defense Review, the 

previous administration walked away from that two-war standard 

and I think that needs to be reestablished. 

Senator INHOFE. Yes, I think so. During the last administration, 

it was pretty well decided by the President—and a lot of the Democrats agreed with him—that if you address sequestration for the 

military, you have to do an equal amount for the non-defense 

spending. To me, that tells me that that is not the priority. How 

did you interpret that? 

Mr. WOOD. I agree. I think it was appealing to various constituencies and your prioritizing spending in other areas, social spending, agricultural bills, those kinds of things at the same level as defense of the country. I agree with Dr. Mahnken that defense of the 

country should be the priority. 

Senator INHOFE. Thank you, Mr. Chairman. 

21 

Chairman MCCAIN. Senator King? 

Senator KING. First, I want to commend the chairman for the 

White Paper. It is a very thoughtful and important document, and 

I have always thought that the first person to put pen to paper has 

the maximum amount of power. I appreciate that. I think it was 

a brilliant step to begin this discussion. 

One of the things the White Paper talks about is assumptions 

and faulty assumptions. We have been talking about all strategy 

is based on assumptions. We need a strategy. 

One of the assumptions is—several of you mentioned China. 

Clearly, we can see from the facts on the ground that Russia is in 

a new phase of aggression in the Ukraine and Crimea, in Syria, 

other areas. I am interested in what your assessment is of China’s—what is your assumption of what China wants? Because they 

do not seem to be demonstrating that kind of at least military ambition. Is it economic hegemony in their region? We all know about 

the South China Sea. What are the assumptions about China, and 

are they the same level of threat to the United States from a military point of view as Russia? I see them as distinct. I would be interested in your thoughts. Dr. Wood? 

Mr. WOOD. I think different countries and different leaders in 

different countries, different cultures behave in different ways that 

correspond with their particular perspectives even if they have the 

same objectives. I think Russia and China both have objectives of 

being hegemons in their respective regions, Russia much more in 

a militaristic sense, China in an economic sense. China does not 

have to do the same sorts of things that Russia is doing in Ukraine 

and in Syria to have a dominant influential posture relative to the 

neighbors in its region. If it keeps everybody intimidated, kind of 

cowed, it has economic dominance, it causes its neighbors to account for Chinese interests in their calculations—— 

Senator KING. That is not a military threat. My question is, how 

do we adjust our military in relation to the threat? Other thoughts? 

Dr. Mahnken? 

Dr. MAHNKEN. I would say one common thread between China 

and Russia is that they are seeking to revise the international status quo that has governed for decades. 

Senator KING. It is an economic status quo you say. 

Dr. MAHNKEN. Political and military. I think they are all intertwined. More than what the Chinese Communist Party leadership 

wants, I think, is what they believe they deserve, and I think that 

is an important distinction. We look at building new geographic 

features in the South China Sea, and we see that as kind of creeping expansionism. No. Look, they believe that it already belongs to 

them. They believe that they are merely asserting control over 

what is justifiably theirs. That to my mind poses a much greater 

challenge than a country that is sort of being opportunistic. I think 

whereas Russia is in many ways a declining power—and it has already been alluded to in the economic dimension. It is also true in 

demography and other ways as well—the Chinese leadership at 

least sees China as a rising power and sees this century as being 

theirs. Again, I think that makes them a greater challenge as well. 

Senator KING. Do they have military designs on Korea or the 

Philippines or Japan? 

22 

Dr. MAHNKEN. I would argue that even short of military designs 

on Korea, the Philippines, or Japan, merely what the Chinese leadership sees as theirs, large parts of the South China Sea, Taiwan, 

parts of India—merely that poses a threat to the international 

order. It poses a threat to allies and also poses a threat to U.S. territory, including our territories in the Western Pacific. 

Senator KING. Dr. Korb, I am almost out of time, but your 

thoughts. 

Dr. KORB. I think basically China is trying to assert control, I 

think as Dr. Mahnken said, over what it sees as its proper territory. They are not an aggressive power in the sense that they 

worry about the Japanese. If you go to China, they still have not 

gotten over World War II when it comes to the Japanese. They are 

concerned about their economic growth because they cannot keep 

going like they have, and I think that is why they try and get more 

of these resources in the South China Sea. I think that is why 

President Obama correctly had the pivot to the Pacific, or rebalance, to show them that there is a line if they upset the freedom 

of navigation, that we will take action. 

The other thing is in the long term, these actions that they are 

taking will hurt them. The Japanese are spending more on defense. 

South Koreans are. The Vietnamese are very concerned, and they 

are beginning to work again with us. Unfortunately, the very erratic person that just took over the Philippines is not doing what 

needs to be done. 

Now, I want to say this and it will not be politically popular. Not 

supporting the TPP [Trans-Pacific Partnership], even if you wanted 

to modify it in some way, is the worst signal we could have sent 

to dealing with China because had we done that, I think that that 

would have united a lot of the countries in the region against them 

and would have got them to modify some of their behavior if they 

wanted to be part of it. 

Senator KING. Thank you. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. I agree. 

Senator Ernst? 

Senator ERNST. I agree as well. 

Thank you, Mr. Chair. 

I would like to start with a fairly small program that I believe 

has significant impact overall. To you, Dr. Mahnken, I know that 

while you were serving as a Navy reservist, you deployed to 

Kosovo. I want to thank you for that service very much. 

Kosovo is important to me personally but also to the State of 

Iowa as well. Iowa’s National Guard and Kosovo worked together 

through the State Partnership Program, a program that was started to strengthen our security in that region after the fall of the Soviet Union. I believe it is a great, great program with a lot of impact in that area. 

Last year I was pleased that my efforts ensured the program was 

permanently authorized, and going forward, I want to make sure 

that it is properly funded. 

To you then, Dr. Mahnken, would you agree that we need to ensure our budget properly funds programs like the National Guard 

State Partnership Program? Then if you could in regards to Kosovo 

23 

specifically, can you talk about how important it is to have those 

relationships in that area for their own security? 

Dr. MAHNKEN. Thank you, Senator. Good catch on my bio. That 

seems like a lifetime ago, but I do appreciate you bringing that 

back. 

Look, I do think that programs like that are very important, and 

I think they really leverage expertise in the Reserve component 

and they also build enduring relationships. 

I think one of the problems that we have encountered, one of the 

challenges that has come with our operational deployment pattern 

over the last 15 years is a lot of habitual relationships have been 

disrupted. I mean, traditionally it was not just National Guard but 

special forces we relied upon to develop habitual relationships with 

partner militaries across the world. In an era when, for good reason, many of those relationships have been disrupted, I think 

things like the National Guard partnerships really have filled a 

key role. I think going forward, establishing and maintaining those 

relationships with not just our allies but our partners is going to 

be all the more important. I am fully behind programs like that. 

Senator ERNST. Thank you very much. 

I know, Dr. Korb, you had stated that we do need to involve more 

partners. I think this is a way of developing some of those partnerships with nations that really share a lot of our same values as 

well. Do you have any input on that? 

Dr. KORB. Well, I do and I think, as Dr. Mahnken pointed out, 

this is very critical. We are not in this alone. Threats that we face 

are global. We work with various countries at different times. At 

the beginning of the Obama administration, the United States 

worked with Russia to allow our supplies to go through Russia to 

go to Afghanistan. There are areas that we can work on. We have 

had arms control agreements going back to the Nixon administration. 

The other thing I think is important to keep in mind is that the 

National Guard and the Reserves are not just strategic. They’re 

operational. 

Senator ERNST. Absolutely. 

I have fought that for years to get it funded. In fact, before this 

committee, General Kaine and I almost came to blows one time 

when he objected to my saying that. I think that’s so critical because it is a total force. As we found out during the height of the 

wars in Iraq and Afghanistan, even today, those folks can add to 

the capacity that we have. 

Senator ERNST. Thank you very much. 

Dr. Mahnken, just very briefly. I have got about a minute left. 

You are the author of a book entitled ‘‘Strategy in Asia.’’ One of my 

greatest concerns is the Islamic State and its spread into Southeast 

Asia. If you could, talk a little bit about our forces and how you 

would say we should budget and prepare those forces to deal with 

issues like ISIS [Islamic State of Iraq and Syria] in Southeast Asia. 

Dr. MAHNKEN. I think that is just one area where we have some 

very strong partners, non-allies, but countries like Singapore and 

Malaysia and others. I think they have, by and large, been doing 

a very good job by bolstering the identity of their citizens and hardVerDate Nov 24 2008 10:25 Mar 12, 2018 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\28837.TXT WILDA
24 

ening their citizens against influence by groups like ISIL. I think 

working with partners is absolutely key. 

I think we can play a role. I think largely that role is behind the 

scenes, supportive. I think that is as it should be. As I look at kind 

of the global campaign against ISIL, Southeast Asia still remains 

I think largely a success story, and I want it to remain that way. 

Senator ERNST. Fantastic. Thank you, gentlemen, very much. 

Thank you, Mr. Chair. 

Chairman MCCAIN. Senator Warren? 

Senator WARREN. Thank you, Mr. Chairman. 

Thank you all for being here today. 

The debate over defense spending is often about the importance 

of the top line numbers. The efficient distribution of those dollars 

is also critically important. Part of achieving our efficiency is making sure that we are spending money in a way that aligns with our 

priorities and our positions and that positions us to address current 

and emerging threats. While states like Russia and Iran and North 

Korea and others threaten our interests, our military engagements 

today are increasingly low-intensity armed conflicts and cyberbased conflicts against both state actors and terrorist groups and 

other kinds of non-state actors. 

Let me ask you this. Dr. Korb, can these modern threats and 

challenges be fully addressed by large spending increases on traditional military investments like troop levels, ships, planes, and nuclear weapons? 

Dr. KORB. I think you raise a great point because of the fact that 

the Military Services basically have an identity and they always 

try and move ahead with that identity. Threats like cyber, for example, which are seen as nontraditional—for example, the special 

forces would not even have gotten the funding that they have gotten over the years unless Congress set up a separate Assistant Secretary for Special Operations Forces because they were getting lost 

in the budget. 

I think you have to be careful. As I pointed out in my testimony, 

you do not want to deal with threats from a bygone era. Secretary 

Gates said any Secretary of Defense who recommends to a President to send large land armies into the Middle East or Africa 

should have his head examined. Then you ought to say, well, why 

do you need a large land Army? Those are the type of things that 

you need to do. 

I think it is important to keep in mind if you go back and you 

look at the history, in the 1990s the military fought against developing drones. It was the CIA drones that we used in Afghanistan 

after the attacks of 9/11. So, yes, you have to because they always 

want to stay with their traditional missions. 

Senator WARREN. That is very helpful. Thank you very much. I 

appreciate that, Dr. Korb. 

It is easy to talk about spending more. The hard question is 

spending smarter and budgeting our defense resources based on 

21st century threats in a way that enhances our military strength 

and lets our diplomacy complement our military strength. 

Efficient spending is also about eliminating waste. In its annual 

report last April on wasteful and duplicative programs across the 

Federal Government, the GAO identified several areas where the 

25 

Defense Department could achieve savings in areas like acquisition, contract management, and facilities maintenance. According 

to this report, from 2011 to 2016, GAO directed 152 recommendations to DOD to achieve savings, but 95 of these recommendations—that is about two-thirds, 63 percent—remain only partially 

addressed or not addressed at all. 

Dr. Korb, what are some of the major reforms that would be 

most effective toward eliminating wasteful spending? 

Dr. KORB. Well, I think the first thing to take a look at, as I 

mentioned in my testimony, is what the Defense Business Board 

said is the buildup of the administrative part of the Department of 

Defense. The committee last year in the NDAA told them to cut 

back. It is not just civilian, but it is also the military staff I think 

is important. 

The other is—and I commend President Trump for doing this in 

terms of the F–35 contract. I hope that rather than just tweets, he 

really gets involved in dealing with it because I think that is very, 

very, very important. These cost overruns—we have not done as 

much as we should for the penalties. I think that, as I mentioned 

in my testimony, some of the things that Senator McCain recommended in his budget in terms of letting the Navy who for years 

wanted to buy F/A–18E’s and F’s rather than the F–35’s because 

they felt that they could deal with the threats that they would 

face—the littoral combat ship, when it turned out to be a disaster, 

nobody did anything about it. So, yes, I think there are things that 

we can do. 

I have written this several times. Unless you get a Deputy Secretary of Defense like a David Packard or Charles Duncan, who 

came from Coca-Cola, or Don Atwood from General Motors to do 

these things, it is going to be very, very hard. 

Defense—they have not even passed an audit yet. Okay? We 

keep waiting and waiting, and you keep saying, well, when is it 

going to happen? Well, you have got to have it. 

Senator WARREN. Well, I appreciate that. I know there are always push-backs on audits and they cost time and money, but 

there is a lot of cost of not doing an audit as well. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. Senator Perdue? 

Senator PERDUE. Thank you, Mr. Chairman. 

Last week now Secretary of Defense Mattis agreed and made the 

comment that the greatest threat to national security is our own 

federal debt. Mr. Wood, do you agree with that? 

Mr. WOOD. From a non-military standpoint, yes, I do. I mean, to 

the extent that the Nation is evermore in debt, $20 trillion, it 

lessens your ability to spend on defense. 

Senator PERDUE. Thank you. 

Mr. WOOD. Debt does not bomb cities. It depends on how you define it. 

Senator PERDUE. Right. 

Dr. Korb, I agree that—and there have been studies that we can 

certainly procure better and smarter. The Federal Government 

does not even have a capital budget, and so it is very difficult to 

plan for a multiyear acquisition. 

26 

I totally agree the Department—I think I agree with our chairman. The Department of Defense does need an audit. I think it 

would help us see a lot of things and actually become more efficient 

in our procurement. 

I want to focus on a couple things that we have talked about 

today. 

We are talking about the needs in the military without talking 

about the missions and the mission requirements from a bottomup standpoint. The last time anyone really did that was Bob Gates 

in 2011, and he made a five-year estimate and for fiscal year 2016, 

his estimate was some roughly $100 billion more in current dollars, 

greater than what even the President was asking for for this year, 

at the very time that I would argue that we are facing threats. I 

agree with my colleague from Massachusetts that we are facing 

various different threats, but they are additive. They are not replacement threats. 

We have a five-plus-one mission today versus a one-plus-one mission through most of my lifetime through a nuclear deterrent. 

When you look at Russia and China being symmetric threats—you 

have asymmetric threats in ISIS and all the terrorist activities. 

Then you have the rogue nations of North Korea and Iran with a 

nuclear threat. Cyber we are beginning to talk about. We are not 

even beginning to talk about the arms race in space yet. 

I would argue that at a very time when our threats are additive, 

we are talking about reducing to the point where today we have 

the smallest Army since World War II, the smallest Navy since 

World War I, and frankly the oldest and smallest Air Force ever. 

I do not know what that size should be, but there are experts. If 

we would do it from the bottom up based on missions, we would 

get there. 

I just have a simple question very quickly. Mr. Wood, do you 

agree that the Budget Control Act today is an inhibiting factor that 

is arbitrary in terms of what we are doing in terms of evaluating 

what we need to spend in light of the fact that we do need an 

audit, we do need better procurement practices and a more efficient 

way to actually run the Department of Defense? Do you agree the 

BCA now should be repealed? 

Mr. WOOD. I do and without reservation. 

Senator PERDUE. Mr. Mahnken? 

Dr. MAHNKEN. I do, Senator. 

Senator PERDUE. Dr. Korb? 

Dr. KORB. I do not think any arbitrary ceiling should be there. 

However, I think that roughly $620 billion for fiscal year 2017 was 

more than adequate to deal with the threats that we currently face. 

Senator PERDUE. Thank you. 

Mr. Wood, at current levels of operational tempo, the concern I 

have is deployments are getting longer, families are being broken 

up. The number is certainly questionable in terms of how many 

troops we actually need in a voluntary military. I am very concerned about the increased deployments and our inability—and I 

can tell you from trips around the world where we are not able to 

fulfill the missions today because either we do not have the equipment—you both talked about balance of manpower and equipment, 

and I certainly agree with that. I am concerned today about the 

27 

shortage of certain pieces of equipment in certain theaters that 

keep us from meeting certain mission requirements today. They are 

very real and they are not yesterday’s war. They are the current 

issue. We saw in Benghazi—that is not a state-on-state war, but 

we had men die there. I am very concerned that we continue to 

look at the operational tempo. 

Do you believe that we can maintain this current tempo at the 

current size without really looking at the mission requirements 

going forward? 

Mr. WOOD. I do not. There is a huge imbalance that you just so 

well described. We are currently in a death spiral where you have 

lack of money to repair things and send it back. That means you 

have fewer end items. Fewer end items means that the things that 

are in the force should then used more, and so you consume the 

life of that end item, whether it is a ship or a plane or a tank, that 

much more rapidly. It just feeds on itself, and unless we get BCA 

relief by getting rid of that and expanding the force—we currently 

have two-thirds the force that we need based on 70 years of experience. That is the only way we are going to get out of this death 

spiral. 

Senator PERDUE. Mr. Chairman, I am out of time, but I fully support this effort to look at this from all angles. I am very concerned 

that over the last 30 years, our history has been that in the 1970s 

disinvested in our military, in the 1980s we recapped it, in the 

1990s we disinvested, in 2000 we recapped it. Now after 15 years 

of war, we need to think about how to replace and recap our military at the very point in time when we have $20 trillion of debt 

and we have our Social Security, Medicare, and mandatory expenses over the next 20 years running away from us. This is a 

time, Mr. Chairman, we have got to get serious about how we look 

at our debt crisis and how we look at our allocation of limited resources across the entire Federal Government and actually be 

smarter. 

I certainly applaud today’s hearing. I hope we have many more. 

Thank you. 

Chairman MCCAIN. Senator Gillibrand? 

Senator GILLIBRAND. Thank you, Mr. Chairman. 

I focus a lot on military families and their wellbeing, and one of 

the things we have heard about from our families is the current 

rules do not accommodate them. If someone gets transferred somewhere, the husband might leave, the family still has school to finish, get a change of job. There is no accommodation for when they 

move. 

We are trying to change that. Senator Blunt and I had a bill that 

was passed by this committee in the NDAA but taken out in conference. 

Just a more general question. We are really dealing with 21st 

century families in a 20th century military personnel system. It is 

really set up for the days when mom and dad did not both work. 

It is set up for the days when mom stayed at home. It is set up 

in the days where a lot of the military personnel were single. 

What can we do to change the system to address the challenges 

military families confront today? 

Mr. WOOD. Anyone in particular? 

28 

Senator GILLIBRAND. Anyone. 

Mr. WOOD. Over a 20-year career and something like a dozen 

moves, my wife certainly has an experience with schools and finding new doctors and what church do you plug into and the whole 

bit. We are very sympathetic to that problem. 

One problem the services have is these continuing resolutions 

where money is put on hold. That is money that can be used for 

PCS, or permanent change of station, types of moves. Under normal circumstances, the military tries to do most of its moves during 

the summer season between academic years, but when you have 

very short notice about how much money is available, sometimes 

you have these interruptions that come in. Then you have unexpected openings for a variety of reasons and a billet just needs to 

be filled. 

The Military Services are extraordinarily sensitive to and sympathetic to the toll taken on personnel policies and the movements of 

these families. They have done a lot to look at that. Stability in 

funding would go a long way to stabilizing these sorts of moves and 

enable families to better prepare with longer lead time. Again, I go 

back to the funding issue. Continuing resolutions, bad; BCA, bad. 

We just need more and stable over time. 

Senator GILLIBRAND. Similarly, we have had a number of hearings about the importance of cyber defense, cyber warfare, cyber 

expertise. We have talked a lot about making sure we are using the 

National Guard effectively because if you have got a guy working 

at Google who is the best computer scientist and he happens to be 

in the National Guard, he should be part of that work. 

More broadly, what is the most effective employment of additional funding in addressing the current needs for the military’s 

cyber needs? How can we more effectively recruit and retain our 

cyber warriors? 

Dr. MAHNKEN. Senator, I think the answer both to your previous 

question and to this is flexibility. I think trying to bring in cyber 

expertise through the Reserve component is part of it, but I think 

more broadly the military, I think for understandable reasons, 

tends to accord rank with seniority with pay. In the cyber world, 

certainly in the private industry, those things do not always align. 

I think what we need to do is think about some authorities that 

give the services greater flexibility to really tap into the deep expertise that we have in our society and bring it into the service of 

our Nation’s defense. 

Senator GILLIBRAND. My last question is about—and, Dr. Korb, 

you can answer this one—this issue of sequestration. I did not vote 

for sequestration. I thought it was a terrible idea, and I knew it 

would end up where we are today. Do you think that if we raise 

the defense budget, we should also raise our domestic budget? 

One of the reasons why I ask that question, there are certain accounts in the domestic budget that very much affect the wellbeing 

of the men and women we are recruiting for the services. If we neglect or ignore those accounts, we will not have the fighting force 

we need. I’d like your thoughts on that. 

Dr. KORB. Yes, Senator, that is an excellent point because you 

want to recruit the best and the brightest to come into the service, 

29 

but if they do not have good education, they are not going to be 

able—— 

Senator GILLIBRAND. Even good nutrition. I mean, we had a 

whole hearing in the Ag Committee [U.S. Senate Committee on Agriculture, Nutrition, and Forestry] about obesity, that so many of 

our recruits are coming in not physically fit and obese because our 

nutrition policy is not supporting fruits and vegetables and healthy 

foods in schools. 

Dr. KORB. Similarly, if you do not fund health adequately, for example, like we do through the Affordable Care Act, you are not 

going to have them come in. So, yes, it does contribute to national 

security. 

I think it is important to keep in mind something President Eisenhower did. When he built the federal highway system that we 

all use, basically he said that will contribute to national defense. 

After the Russians launched or the Soviets launched Sputnik, we 

needed a National Defense Education Act because if you want to 

bring in these people—and I go back to the point that Dr. Mahnken 

made—you are going to have more flexibility of people coming in 

and out of the service or not just coming in and you got to stay for 

20 years if you want to get these people. 

The other thing. You know, your first question about military 

families—I got to tell you something. We have a policy about how 

long you should stay. The services violate it all of the time. They 

move people around. When I was there, I said, you know, you had 

3 years of minimum, and people would come at their retirement 

system, like Colonel Wood said. This family moved around 18 times 

in 20 years. I said what happened to your policy. There are things 

that you can do. 

You can also look at the spouse’s employment. If you have a 

chance to put a Navy person in San Diego or Norfolk and his or 

her spouse is a lawyer in Virginia, you ought to send him to Virginia. I mean, just things like that to try and get them, but the bureaucracy—oh, no. They have got to do more of this for the families 

because given the strain that they have been under for the last 15 

years or so. 

Chairman MCCAIN. Senator Tillis? 

Senator TILLIS. Thank you, Mr. Chair. 

Senator Gillibrand, I am looking forward to serving with you on 

the Personnel Subcommittee because these are the kinds of things 

that we can do a better job of I think. 

Dr. Korb, I wanted to start with you. You said something in your 

opening comments and your answer to Senator Perdue’s question. 

I liked all of your answers, but I liked your answer best. That had 

to do with sequestration. I am curious as to all your reactions. 

I have spent two years and I have spoken with a number of people in uniform who are very capable managers of the organizations 

that they are responsible for. Most of them have more of a concern 

with how they are allowed to spend the money than how much 

money they have to spend. I think a discussion about let us plus 

up defense spending so that we can plus up non-defense spending, 

some of which complements defense, some does not, is not necessarily the best way to start looking at how we do a better job of 

budgeting and executing in a more fiscally sound, sustainable way. 

30 

I think that if we started by looking at sequestration for the person around the kitchen table to understand that sequestration is 

a blunt force object. It is a budgeting technique that would never 

be used in a Fortune 500 company because it would cut evenly your 

programs that are the most promising, most productive with those 

that are the least promising, least productive. Do you all agree 

with that? 

I want to get to something else, though, because I think we can 

only go so far with improving the fiscal execution of the DOD unless we recognize that some of the inherent inefficiencies are a 

product of decisions made by Congress. I remember when the 440th 

was removed from Pope Army Airfield last year speaking with 

someone in the Air Force who said, you know, Senator, we are 

sorry but it was sixth on the list. The question was, well, why not 

one through six? Well, they were protected by BRAC [Base Realignment and Closure] or they were protected by statutory action which 

made it impossible for us to do the thing that we wanted to do 

which was spend the least amount of money while preserving the 

best capability and readiness that we have. 

Has there been much work done over, say, modern history to say 

if you really want to set people before this committee and tell them 

to be more efficient and use the dollars more wisely, that you need 

to go back and relook at constraints that Congress has placed on 

them in Republican and Democrat administrations so that you can 

truly achieve the efficiency we would like to? I open that up to anyone. 

Dr. KORB. Yes. I think very definitely. People do not understand 

why you need a BRAC to close bases. Up until the late 1970s, the 

Pentagon could decide what bases it wanted to open, to close. Then 

the Congress put an amendment on that said before you did that, 

you had to basically do all these studies. They brought the process 

to a halt. I worked with the late Senator Goldwater to deal with 

this thing and that led to the setting up of the BRAC. We have not 

had a BRAC since 2005, and the Pentagon estimates about 20 percent excess capacity. Just think what you could do with some of 

that. 

Senator TILLIS. My time is limited. Unless you all disagree with 

that—to me a part of what we have to do is transparency in these 

decisions. You know, when a decision is made that has a material 

effect on the presence of any area of the DOD, if it comes down to— 

while I recognize that maybe we are optimizing training, readiness, 

et cetera by moving here, a decision or a constraint that was placed 

on us is going to require us to sacrifice some of that because of the 

congressional mandates that you have on factors that have nothing 

to do with that. I think that our process really needs to start looking at that. 

I will fight for North Carolina when it makes sense for North 

Carolina. I would never advocate for a change in the recommendation from the DOD if I am completely convinced that that is a dime 

better spent in some other State. 

Do you agree that we have some work to do there as Members 

of Congress to really recognize that we are impeding some of their 

progress? 

31 

Dr. MAHNKEN. Senator, absolutely. When it comes to infrastructure, when it comes to acquisition, when it comes to a whole host 

of areas, I would agree. 

Senator TILLIS. Dr. Wood, I?ll let you finish. 

Mr. WOOD. For a long time, sir, for the best of intentions, Congress will mandate some increase in pay raises, or what have you. 

The services realize that they have to take that burden for years 

and years and years, and they would much rather get an airplane 

back onto the flight line. Flexibility and accounting for service priorities where trying to execute the mission that the country is telling them to do I think would be greatly appreciated. 

Chairman MCCAIN. I would just like to say to the Senator that 

Senator Reed and I are seriously considering the issue of BRAC, 

and obviously, we want to talk to the now Secretary of Defense 

about it. It is a little bit like sequestration. It is an act of 

cowardess. We cannot make the decisions ourselves. We leave it up 

to a commission. Frankly, the last commission made some very bad 

decisions, for example, closing Naval Air Station Cecil Field in 

Florida. Now we only have one base on the whole east coast, and 

that is Naval Air Station Oceana. This whole issue of Walter Reed. 

We need to talk about it and I think it has to be considered, as all 

things should be on the table. Like sequestration, it is kind of a 

cowardly act because it is authentication that we cannot make the 

tough decisions ourselves. 

Senator Peters? 

Senator PETERS. Thank you, Mr. Chairman. 

Thank you to our panelists for very interesting testimony about 

an incredibly important topic as we are grappling with how to use 

taxpayer money as efficiently as possible and provide for, without 

question, the number one role of government, which is to keep us 

safe. I appreciate your thoughts on that. 

I would like to take a look at the future. I know several of you 

have mentioned how we prepare for future wars and that the landscape is changing. It is certainly a very dangerous world, but we 

are going to see a different type of war five, ten years from now 

than we see right now. 

When I had the opportunity to spend some time with General 

Mattis, I was struck by a comment that he made in which he said 

that he knows—when he was a battlefield commander, that he was 

really benefiting from decisions that were made 10 years prior to 

him being on the battlefield and investments that were made and 

equipment and personnel and strategic ideas that came up during 

that time. 

I would just be curious. As we are talking about budgeting, I do 

not want to ever fall in the trap that too many folks throughout 

history have, which we always prepare for the last war and spend 

a lot of money to fight the last war which never comes. There is 

always a new war. If each of you would tell me where you think 

we should be focusing for a war in the next 10 years where we are 

simply not spending the type of money we should in a particular 

area. If you have an idea, I would certainly appreciate you sharing 

it. We can just go right down the panel. 

Mr. WOOD. Senator, thank you. I think that the operative word 

here in all of this is ‘‘additive.’’ I know we are in the 21st century, 

32 

but if you look at what is going on in Ukraine, very non-21st century in many ways, multiple launched rocket systems, some of the 

warheads, artillery, armor, anti-armor fires. The idea of contests on 

the battlefield—your opponent figures out where you are strong 

and then does something different. You do not want to meet 

strength with strength. Right? You attack a vulnerability. It has to 

be additive. 

I think as we move forward, the military has to retain conventional capabilities while also improving its ability in cyber, hypervelocity munitions, directed energy types of systems, the ubiquity 

of everything from social media and information types of campaigns to how you use satellites. I think it is additive. 

What I am driving at is the capacity within the force that is uncommitted to current operations so that they can do the types of 

experimentation that reveal the insights that you are looking for. 

Right now, the military is 100 percent committed to current ops 

and it has no capacity to do the sorts of things that you are looking 

for. It is additive, be called upon to do more. 

Senator PETERS. Thank you. 

Dr. MAHNKEN. I would agree but also add that for decades the 

United States, U.S. military has enjoyed a unilateral advantage in 

being able to identify, track, and strike targets with precision, both 

fixed and increasingly mobile targets. That capability is spreading, 

and that which we have been able to do to our adversaries our adversaries very soon will be able to do to us. We will be subject to 

our adversaries’ precision strike, whether from drones or from missiles or other means. That is a very different world. Not only will 

our forces be vulnerable, but increasingly the U.S. Homeland will 

be vulnerable not only to nuclear attack, which we have been for 

decades, but to precision conventional attack and cyber attack. I 

would say that that is a very different world, and even to the extent that many leaders will acknowledge that we are entering that 

world, as Mr. Wood said, we have not as a defense community, as 

a defense department really systematically thought through the 

deep implications of that not just for U.S. forces but for U.S. national security. 

Senator PETERS. Thank you. 

Dr. KORB. Senator, I would take a look at what is called the 

Third Offset strategy, which I support as a strategy, but make sure 

that you fund it adequately. The Under Secretary of Defense for 

Acquisition has said, well, I do not have enough money to do it. I 

would give that a priority because, as Dr. Mahnken said, you want 

to maintain your technological edge. 

Cyber is something where you have to invest more in. It is not 

as expensive as some of the more traditional areas. I think you 

need to build a new generation of nuclear-powered submarines. I 

would not go with as many as they want, 12. I think you can do 

with eight or nine. I think you also need to build a new bomber 

because it has both a conventional and a strategic role. 

Senator PETERS. Thank you. I am out of time. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. Senator Sullivan? 

Senator SULLIVAN. Thank you, Mr. Chairman. 

33 

Gentlemen, thank you for your testimony. I very much appreciate the different issues you are focusing on. 

I want to kind of take an earlier focus when you were talking 

about the debt and the deficit and touch on a related topic with regard to our national security that I do not think often kind of gets 

tied into national security, and that is the strength of our economy 

just in general. 

The last 10 years, we have had a lost decade of economic growth. 

We have not had 3 percent GDP growth, which is not even that 

great for America. Our traditional rates of growth have been closer 

to 4 for the last 200 years. We have not had 3 percent GDP growth 

in almost 15 years, not 1 year. 

Can you just tell us from your perspective—obviously, that would 

help on the deficit, on the debt. Just as a symbol of American 

power—you know, in the Reagan years, we were growing at 5.5, 

even 6 percent; the same with the Clinton years. Can you explain 

just how that helps us in terms of getting our national security objectives, not just our economic objectives, the attractiveness of a robust American economy which, to be honest, we have not had in 

well over a decade? I will offer that to anyone. 

Dr. MAHNKEN. Senator, well, I would say two things. 

The first is like Dr. Korb, I am not a fan of pegging defense to 

GDP, but certainly the more your economy is growing, the more affordable defense becomes. The more your economy is growing, the 

more vibrant it is, also the more innovations that that economy is 

producing. 

Senator SULLIVAN. Does it not also give us power to get things 

done when we are strong economically, particularly in Asia? 

Dr. MAHNKEN. It also I think gives confidence. You know, it gives 

the American people confidence in the United States in our international role, and it also gives our allies and our friends confidence 

in the United States as well. Conversely, I would say part of the 

questioning that we have had of America’s international role has 

domestic roots because people do not feel confident in our economy 

at home. 

Dr. KORB. Senator, I think it is very important. You mentioned 

the 1990s. At the end of the decade of the 1990s, the Republican 

Congress and President Clinton had come up with a budget plan 

that not only balanced the budget but gave us a surplus and predicted that in the first decade of this century, the debt would be 

wiped out. Then we had the attacks of 9/11, the wars, as I mentioned early, we did not raise taxes to pay for. We ran up a big deficit. Then, of course, you had the economic collapse because of some 

decisions that were made in the 1990s in terms of some of the regulation of the banks. That is what we are recovering from right 

now. 

You are quite right. Go back. I mentioned about President Eisenhower said, you know, it is a robust economy that is going to enable us to eventually undermine the Soviet Union. We are not 

going to end up fighting them on the battlefield. It is important to 

keep in mind that it is very hard to be strong abroad if you are 

not strong at home. If you have a larger GDP, it allows you to do 

things. 

34 

There are problems that you know better I do in terms of dealing 

with things like the age for Social Security. When I worked for 

President Reagan, we were able to move it up a couple of years. 

Maybe we ought to think about doing that again, for example, for 

certain people, or raising the amount that you pay Social Security 

taxes on that would help that. 

There are a lot of things that I think that the Congress, working 

with the new administration, can do to get our economy back up 

again. I happen to believe—free trade. I think the TPP and a lot 

of these others, North American Free Trade Agreement—that was 

the way to go. We should not be backing off from those. 

Senator SULLIVAN. Let me ask just one other question on another 

element of strengthening our national security, and that is our allies. As you all know and you have testified, we are an ally-rich 

Nation. Most of our adversaries or potential adversaries, whether 

it is Russia, China, Iran, North Korea, are ally-poor. 

Fortunately, I think a number of the Trump administration’s 

cabinet officials, certainly General Mattis during his confirmation 

hearing testified about the importance of allies. I think Rex 

Tillerson has. The President in his inauguration address talked 

about deepening our traditional allies. 

Can you just talk briefly about just how important that is? Because I think there are some of our allies who are questioning our 

commitment, but to Americans, how important that is to strengthening our national security and what a great strategic advantage 

it is that we have these allies all around the world. Again, most 

of our adversaries do not have any. 

Mr. WOOD. I would say the more allies you have, the more legitimacy you have in taking actions, the more access you have to regions, the expanded amplifying capability set that you have where 

the U.S. can bring some capabilities to bear. Our allies might have 

things that are more uniquely positioned in a given region. It allows you to shape an environment economically, diplomatically not 

only at the international level like U.N. [United Nations], et cetera, 

but even regionally in these regional consortiums of sorts of agreements, you know, in trade and access to resources and movement 

of people. You would much rather have more friends on your team 

than lacking friends, and I think the American people appreciate 

that. I think that money spent in ways that go to other countries 

are often criticized, but it is such a very small percentage of the 

budget and we reap such great benefits, you know, pennies on the 

dollar, so to speak, that this alliance structure should not only be 

appreciated but matured and expanded over time. 

Dr. MAHNKEN. Yes. I think if we start with the premise of your 

first question, just thinking about economic weight, I mean, our allies are not—it is not just numbers, but these are some of the biggest economies in the world. They add to our economic weight. 

We have allies because we have common interests, and we have 

allies because we share common values. I think it is worthwhile to 

keep both of those in mind. Where we have common interests and 

where we have common values, we have very deep alliances that 

are not only additive but I think in many cases also multiplicative 

of American power. 

35 

Chairman MCCAIN. I thank the witnesses. This has been very 

helpful, and we look forward to working with you and appreciate 

your being here today. 

This hearing is adjourned. 

[Whereupon, at 11:03 a.m., the hearing was adjourned.] 

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