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76–219 2012

[H.A.S.C. No. 112–158] 

DEPARTMENT OF DEFENSE PLANS FOR 

SEQUESTRATION: THE SEQUESTRATION 

TRANSPARENCY ACT OF 2012 REPORT 

AND THE WAY FORWARD 

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

SEPTEMBER 20, 2012 
(II) 

HOUSE COMMITTEE ON ARMED SERVICES 

ONE HUNDRED TWELFTH CONGRESS

HOWARD P. ‘‘BUCK’’ MCKEON, California, Chairman 

ROSCOE G. BARTLETT, Maryland 

MAC THORNBERRY, Texas 

WALTER B. JONES, North Carolina 

W. TODD AKIN, Missouri 

J. RANDY FORBES, Virginia 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

MICHAEL TURNER, Ohio 

JOHN KLINE, Minnesota 

MIKE ROGERS, Alabama 

TRENT FRANKS, Arizona 

BILL SHUSTER, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DOUG LAMBORN, Colorado 

ROB WITTMAN, Virginia 

DUNCAN HUNTER, California 

JOHN C. FLEMING, M.D., Louisiana 

MIKE COFFMAN, Colorado 

TOM ROONEY, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

SCOTT RIGELL, Virginia 

CHRIS GIBSON, New York 

VICKY HARTZLER, Missouri 

JOE HECK, Nevada 

BOBBY SCHILLING, Illinois 

JON RUNYAN, New Jersey 

AUSTIN SCOTT, Georgia 

TIM GRIFFIN, Arkansas 

STEVEN PALAZZO, Mississippi 

ALLEN B. WEST, Florida 

MARTHA ROBY, Alabama 

MO BROOKS, Alabama 

TODD YOUNG, Indiana 

ADAM SMITH, Washington 

SILVESTRE REYES, Texas 

LORETTA SANCHEZ, California 

MIKE MCINTYRE, North Carolina 

ROBERT A. BRADY, Pennsylvania 

ROBERT ANDREWS, New Jersey 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

MADELEINE Z. BORDALLO, Guam 

JOE COURTNEY, Connecticut 

DAVE LOEBSACK, Iowa 

NIKI TSONGAS, Massachusetts 

CHELLIE PINGREE, Maine 

LARRY KISSELL, North Carolina 

MARTIN HEINRICH, New Mexico 

BILL OWENS, New York 

JOHN R. GARAMENDI, California 

MARK S. CRITZ, Pennsylvania 

TIM RYAN, Ohio 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

COLLEEN HANABUSA, Hawaii 

KATHLEEN C. HOCHUL, New York 

JACKIE SPEIER, California 

RON BARBER, Arizona 

ROBERT L. SIMMONS II, Staff Director 

JACK SCHULER, Professional Staff Member 

WILLIAM (SPENCER) JOHNSON, Professional Staff Member 

LAUREN HAUHN, Research Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2012 

Page 

HEARING: 

Thursday, September 20, 2012, Department of Defense Plans for Sequestration: The Sequestration Transparency Act of 2012 Report and the Way 

Forward ................................................................................................................. 1 

APPENDIX: 

Thursday, September 20, 2012 ............................................................................... 43 

THURSDAY, SEPTEMBER 20, 2012 

DEPARTMENT OF DEFENSE PLANS FOR SEQUESTRATION: THE SEQUESTRATION TRANSPARENCY ACT OF 2012 REPORT AND THE 

WAY FORWARD 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

McKeon, Hon. Howard P. ‘‘Buck,’’ a Representative from California, Chairman, Committee on Armed Services .................................................................. 1 

Smith, Hon. Adam, a Representative from Washington, Ranking Member, 

Committee on Armed Services ............................................................................ 2 

WITNESSES 

Austin, GEN Lloyd J., III, USA, Vice Chief of Staff of the Army ....................... 6 

Dunford, Gen Joseph F., USMC, Assistant Commandant of the Marine Corps 9 

Ferguson, ADM Mark, USN, Vice Chief of Naval Operations ............................. 7 

Hale, Hon. Robert F., Under Secretary of Defense (Comptroller) ....................... 4 

Spencer, Gen Larry O., USAF, Vice Chief of Staff of the Air Force .................... 8 

APPENDIX 

PREPARED STATEMENTS: 

Hale, Hon. Robert F., joint with GEN Lloyd J. Austin III, ADM Mark 

Ferguson, Gen Joseph F. Dunford, and Gen Larry O. Spencer ................ 51 

McKeon, Hon. Howard P. ‘‘Buck’’ .................................................................... 47 

Smith, Hon. Adam ............................................................................................ 49 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Bartlett ....................................................................................................... 67 

Mr. Brooks ......................................................................................................... 67 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Franks ........................................................................................................ 71 

Ms. Tsongas ...................................................................................................... 73 

(1) 

DEPARTMENT OF DEFENSE PLANS FOR SEQUESTRATION: THE SEQUESTRATION TRANSPARENCY ACT OF 

2012 REPORT AND THE WAY FORWARD 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Thursday, September 20, 2012. 

The committee met, pursuant to call, at 10:02 a.m., in room 

2118, Rayburn House Office Building, Hon. Howard P. ‘‘Buck’’ 

McKeon (chairman of the committee) presiding. 

OPENING STATEMENT OF HON. HOWARD P. ‘‘BUCK’’ MCKEON, 

A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED SERVICES 

The CHAIRMAN. The committee will come to order. 

Good morning, ladies and gentlemen. The House Armed Services 

Committee meets today to receive testimony on the Department of 

Defense planning for sequestration, the Sequestration Transparency Act of 2012 and the way forward. Thank you all for being 

here. 

This will be the last week the House is in session until midNovember. Today’s hearing will provide Members a final opportunity before the lame-duck session to inform themselves and their 

constituents about how sequestration will be implemented and how 

those decisions will affect our men and women in uniform and our 

national security. 

We had hoped that the President would provide this information 

in the report required by the Sequestration Transparency Act. Unfortunately, he failed to comply with both the letter and the spirit 

of the law. Not only was the report late, but the report submitted 

to Congress merely paid lip service to the dire national security implications of these cuts after the President has had over a year to 

consider this crisis. 

Moreover, the White House has even gone so far as to instruct 

the Department of Defense not to make preparations for sequestration. Nevertheless, as previous testimony of this committee has 

provided, many of our military leaders believe initial preparation 

for sequestration must occur well in advance of the January 2, 

2013, implementation date. 

For example, when the Secretary of the Army John McHugh was 

asked this spring if plans for sequestration were underway, he stated, ‘‘We are not doing as yet any hard planning. That would probably happen later this summer.’’ Today, we are following up with 

the Department to review and understand the mechanics of sequestration, how would they implement it, and the timelines necessary 
2 

to develop a comprehensive and complete strategy if sequestration 

were to occur. 

This morning, we will hear firsthand from the Honorable Robert 

F. Hale, Under Secretary of Defense, Comptroller of the Department; General Lloyd J. Austin III, Vice Chief of Staff of the Army; 

Admiral Mark Ferguson, Vice Chief of Naval Operations; General 

Larry O. Spencer, Vice Chief of Staff of the Air Force; and General 

Joseph F. Dunford, Assistant Commandant of the Marine Corps. 

Let me make one final observation and appeal to our witnesses. 

As the recent violence throughout the Middle East has reminded 

us, we are living in the most dynamic and complex security environment in recent memory. The decisions we make with regard to 

sequestration will have a tangible and lasting effect on that global 

security environment. 

Last month, in testimony before the committee, the White House 

budget director stated, and I quote, ‘‘The impact of sequestration 

cannot be lessened with advance planning and executive action.’’ 

He misses the point. Planning can’t resolve sequestration, but the 

lack of planning and the failure to exercise leadership now can 

make a dire situation worse. 

Gentlemen, we understand that there are no easy choices here, 

but now is not the time for ambiguity. In your testimony, I urge 

each of you to be as clear with us as you possibly can about what 

the road ahead portends for the implementation of sequestration. 

This could well be the last opportunity for our military to get these 

facts on the record before the deadline for a legislative remedy has 

passed. 

With that, I look forward to your testimony and again thank you 

for your service and thank you for being here today. 

Mr. Smith. 

[The prepared statement of Mr. McKeon can be found in the Appendix on page 47. ] 

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM 

WASHINGTON, RANKING MEMBER, COMMITTEE ON ARMED 

SERVICES 

Mr. SMITH. Thank you, Mr. Chairman. I appreciate that we are 

having this hearing. I think sequestration is unquestionably the 

most important issue facing our Government, figuring out how to 

deal with it, and it is important that we learn more about it. 

And it is clear, and I believe the President, the Secretary of Defense and numerous other executive branch officials have made it 

clear that they see sequestration as having a devastating impact on 

defense. That was the point, I believe, of the OMB [Office of Management and Budget] director’s remarks—was ‘‘Don’t think that 

you can somehow, you know, make this work in a way that is not 

going to have a huge negative impact on our national security.’’ 

That is the main point that has been made by countless witnesses and folks in a very bipartisan way. I don’t think there is any 

disagreement whatsoever on that. Even if you think that savings 

can be found in the defense budget, and I do, this is not the way 

to do it. It is going to be a $57 billion cut at the absolute last 

minute, in the middle of fiscal year 2013, after all kinds of planning was done to try to set it up. 
3 

It is also, you know, across the board. Every program has to be 

cut by the same amount, for the most part—so the very limit in 

terms of any flexibility in terms of handling this. So we have established beyond a shadow of a doubt that this is not good policy and 

no one has claimed that it is. 

As for the issue that somehow the Pentagon and the White 

House has done nothing to plan for it, I don’t think that is at all 

accurate. We had Under Secretary Ashton Carter here about a 

month ago. He went for about, I don’t know, 5, 6 minutes chapter 

and verse right down the line of the programs that were going to 

be cut and how they were going to be cut. 

The executive branch has said which programs, in their interpretation of the law, will be exempt. Personnel programs are going to 

be exempt. They have said specifically this is going to be, and I 

may be off on the number here, a 9.6 percent across-the-board programmatic cut in everything. 

So I don’t think it is accurate to say that we have not been planning for it. We have been planning for it. There is a limited amount 

that you can do. There is some ambiguity in the law. We have 

heard a variety of different interpretations as to how you can sort 

of work with that ambiguity in terms of what programs count and 

what programs don’t. The President has said now here is what it 

is. 

So we know what it is. The challenge is trying to stop it from 

happening. And the only way to do that is to pass a comprehensive 

plan to reduce the deficit. That is what the Budget Control Act required—find savings so that we don’t have a deficit that is uncontrollable; that we get it under control. The requirement is $1.2 trillion over 10 years. 

There have been various plans out there to get us up as high as $4 trillion over 10 years, and we simply have to choose to do that. 

I have said it before. I will say it again. I think revenue has to be 

part of that equation. If you are absolutely committed to the need 

to provide for the national security of this country; if you are deeply concerned, and I share the chairman’s views about the complexity of the threat environment and our need to be prepared for 

it, then you ought to be prepared to raise the revenue necessary 

to pay for that national security that we want so badly. 

Thus far, we have been unwilling to do that. That puts us in the 

box that we are in. I think it will be interesting to hear from all 

you gentlemen about, you know, how you are working out the details of that, but I don’t think it is the huge mystery that some 

have portrayed it to be. We know how much is going to be cut; 

roughly, we know what it is going to be cut from; and a number 

of different studies both, you know, in the Government and outside, 

have attempted to assess the damage that will be caused by that. 

And there is a variety of different opinions on that, but it is not 

something that has gone unexamined, let us put it that way. 

What I would like us to do is spend the time trying to make sure 

that we stop this thing that just about everybody agrees is bad policy from happening. And the way to do that is to be realistic about 

our budget deficit. Stop pretending that we can bang the table 

about how awful the deficit is and then shy away from any of the 

steps necessary to cut spending or raise revenue to deal with it. 
4 

That is the fundamental denial that we have to deal with to prevent this problem from becoming very, very great come January. 

So I look forward to the testimony from the witnesses and trying 

to deal with this very, very difficult issue. I yield back. 

[The prepared statement of Mr. Smith can be found in the Appendix on page 49.] 

The CHAIRMAN. Thank you. 

Mr. Secretary. 

STATEMENT OF HON. ROBERT F. HALE, UNDER SECRETARY 

OF DEFENSE (COMPTROLLER) 

Secretary HALE. Thank you, Mr. Chairman, members of the committee. Thanks for the opportunity to discuss the drastic effects 

that sequestration would have on the Department of Defense if it 

goes into effect, as well as the recently released report required by 

the Sequestration Transparency Act. 

I am joined today by the vice chiefs of staff of our armed forces. 

We submitted a joint statement. I will summarize that briefly and 

then the vice chiefs will present some oral statements of their own. 

As Secretary Panetta has repeatedly said, sequestration would 

have devastating effects on the Department of Defense. A few days 

ago in response to the requirements of the Sequestration Transparency Act, the Office of Management and Budget transmitted a 

report that spells out the dollar consequences of sequester. Our testimony today provides you some high level assessment of the impacts. 

These consequences really can’t be avoided or even substantially 

mitigated by planning alone. The reason is simple: Sequestration 

was designed by law to be inflexible. It was never intended to be 

implemented. It was enacted as a prod, as I think you all know, 

for both Houses of Congress to devise a comprehensive plan to reduce the Federal deficit. And the only way to avoid these bad consequences now is for Congress to enact a balanced deficit reduction 

plan that the President can sign and that halts sequestration. 

If that action is not taken, we are faced with the dollar consequences that the Sequestration Transparency Act, STA, report 

spells out. Cut in the national defense function will total $54.7 billion in discretionary and direct spending in fiscal 2013 under the 

assumptions of that report. Of this amount, $52.3 billion would 

come out of the DOD [Department of Defense] budget. 

Each of our nonexempt budget accounts will take a hit of 9.4 percent. The only major exempt accounts involve those that fund military personnel. The President has exercised his authority to exempt military personnel spending from sequestration. 

So what effects will these have on DOD? Let me give you some 

examples. 

Funding for our overseas contingency operations, our OCO, or 

wartime budgets, will be subject to sequestration. We will protect 

the wartime operating budgets to the extent that we can. Support 

of our warfighters is our highest priority. But that will mean greater cuts in the base budget portion, especially of the operation and 

maintenance accounts, and particularly in the Army and the Marine Corps, and that will result in reductions in training. Reduced 
5 

training would affect our ability to respond to a new warfighting 

contingency should one occur. 

Sequestration would almost certainly force us to reduce spending 

for civilian personnel in the Department, which would lead to hiring freezes and probably unpaid furloughs. This could leave us 

without enough personnel to fix our weapons, including the ones 

that are damaged in war, to maintain a strong program of contracting, and to sustain financial management and audit efforts, as 

well as many other support functions. 

Sequestration would also have substantial effects on DOD investment programs. While there would be no impact on prior year 

funds already on contract—and I think that is an important point, 

those aren’t subject to sequestration—there would nonetheless be 

substantial adverse effects. The 9.4 percent cut would affect each 

of the budget accounts that fund procurement, fund research, development, technology and evaluation, and military construction. 

In most cases we would have to buy fewer weapons, which would 

drive up unit costs. In the case of ships and others where you can’t 

reduce the number of weapons, sequester would result in delays. 

Sequestration would adversely affect our military retirees and 

families. We would have to cut family housing maintenance. We 

would have to cut base operating support. We try to protect families wherever we can, but we would have to make some of these 

cuts. 

We wouldn’t have enough funds. There would be cuts in the Defense Health Program that would leave us without enough money 

to pay TRICARE bills in the last month unless we could find a way 

to offset that, and it will be difficult. We are going to be faced with 

delaying payments to providers, which could result in denials of 

service. 

These are the consequences that would come to play in fiscal 

year 2013. But the law that would go into effect on January 2nd 

actually not only imposes sequestration in 2013, it cuts the discretionary caps out through fiscal 2021. In the longer term, the cuts 

would in fact double the reductions already imposed by the Budget 

Control Act, forcing us to make substantial reductions in military 

personnel and units. Otherwise, if we don’t do that, we would end 

up with more units than we have funds to train and equip. 

Over time, sequestration would lead to reduced forces, fewer aircraft carriers, brigade combat teams and fighters. We would have 

fewer options to respond quickly to emerging crises. Inevitably, this 

will require changes to the national security strategy that was put 

into effect last January and which we think remains the right one 

for the times. 

For all of these reasons we believe that a sequestration is a very 

bad policy. We hope that Congress will pass a balanced deficit reduction plan that the President can sign and that halts sequestration. 

Mr. Chairman, this concludes my opening statement, and after 

the vices have completed theirs we would welcome your questions. 

[The joint prepared statement of Secretary Hale, General Austin, 

Admiral Ferguson, General Dunford, and General Spencer can be 

found in the Appendix on page 51.] 

The CHAIRMAN. Thank you. 
6 

General. 

STATEMENT OF GEN LLOYD J. AUSTIN III, USA, VICE CHIEF OF 

STAFF OF THE ARMY 

General AUSTIN. Good morning, Chairman McKeon, Ranking 

Member Smith, the distinguished members of the committee. I first 

want to thank you for the steadfast and strong support that you 

have shown to our men and women and their families. And I appreciate this opportunity to appear before you today on their behalf 

to discuss the potential impacts of sequestration on your United 

States Army. 

I look forward to answering your questions after my colleagues 

have concluded their opening comments. 

As we are all well aware, these are challenging times for our Nation and for our military. Tough choices must be made, and the 

Army stands ready to do its part. Indeed, we are already operating 

under the Budget Control Act, which will cut defense spending by 

about $490 billion over 10 years. However, sequestration would mean another $550 billion cut. 

What is more, sequestration represents a rigid solution that would 

apply these cuts in an indiscriminate and arbitrary fashion nearly 

across the board. And as such, these cuts will adversely affect just 

about every aspect of our Army. 

And of particular concern, cuts will apply to war funding, or 

OCO, which supports training and forces deployed to Afghanistan. 

We will do everything we can to ensure that our deployed and 

next-to-deploy soldiers have everything that they need to be successful. 

We will also do all that we can to maintain support for our soldier and family programs. However, making these necessary adjustments will require even deeper cuts to be made within our 

other accounts, and these further reductions will adversely affect 

our readiness, and specifically our ability to respond to contingencies. 

Such mechanical cuts will significantly increase risk in what is 

a most complex and volatile global operating environment, thus potentially requiring us to relook our national military strategy. 

And so, ideally, Congress and the Administration will work together to halt sequestration as soon as possible. If not, and if sequestration goes into effect, we must be afforded the necessary 

flexibility to adjust resources in order to avoid wasteful penalties 

and inefficiencies and to focus appropriately on our highest priorities. 

Indeed, we must continue to work together to ensure that our 

battle-tested Army remains our Nation’s force of decisive actions, 

ready today and prepared for tomorrow. 

Mr. Chairman, Ranking Member Smith, members of the committee, I thank you again for your continued support and demonstrated commitment to the outstanding men and women of the 

United States Army and their families, and I look forward to answering your questions. 

[The joint prepared statement of General Austin, Secretary Hale, 

Admiral Ferguson, General Dunford, and General Spencer can be 

found in the Appendix on page 51.] 
7 

The CHAIRMAN. Thank you, General. 

Admiral. 

STATEMENT OF ADM MARK FERGUSON, USN, VICE CHIEF OF 

NAVAL OPERATIONS 

Admiral FERGUSON. Chairman McKeon, Ranking Member Smith 

and distinguished members of the committee, good morning. It is 

an honor to represent the men and women of the Navy and discuss 

sequestration with you today. 

Based on our preliminary review, sequestration will reduce funding for the Navy in fiscal year 2013 by nearly $12 billion. Should 

sequestration occur, it would force the Navy to make difficult 

choices in the second half of the fiscal year across three broad categories: fleet operations and maintenance; procurement; and force 

structure. 

The immediate impact of sequestration will be to our operations 

and maintenance account, with a reduction of over $4 billion. This 

account funds our fleet operations; maintenance; spare parts; civilian personnel and training; and directly supports fleet readiness. 

These reductions will translate to reduced flying hours for our air 

crews, fewer underway days, and training for our ships and submarines, and less maintenance for the fleet. 

This will impact our industrial base and the expected service life 

of our platform. 

We will prioritize expenditures to ensure that our forward-deployed forces continue to be properly manned, trained and 

equipped. As a result, non-deployed forces will see a disproportionate share of reductions under sequestration. 

We will make every effort to preserve quality-of-life and family 

support programs for our personnel. However, we may be forced to 

make selective reductions in base support services and infrastructure sustainment. 

These reductions will have cumulative effects to our readiness in 

fiscal year 2014 and beyond. 

Sequestration will also reduce the fiscal year 2013 shipbuilding 

and aircraft procurement accounts by over $4 billion. It will require 

adjustments to major acquisition and modernization programs and 

will reduce funding for research laboratories and technology development centers. 

At this point it is difficult to assess the impact on any individual 

program or family of programs since each contract contains unique 

and complex provisions, dates and pricing. Also, a change in one 

program may have cascading effects on investments and other 

interrelated programs in the future. 

We will carefully examine each of our programs to understand 

the full impact. In some cases, our assessment will be we are unable to execute a procurement action. In others, we will face delivery delays and higher unit costs as we negotiate reductions in 

scope and quantity. 

While we will work to sustain our shipbuilding and procurement 

programs, the prescriptive and mechanical nature of sequestration 

affords limited flexibility to mitigate the impact of these budget reductions. 
8 

Our fiscal year 2013 budget submission already reflects difficult 

choices beneath the Budget Control Act. Our request balances our 

investments in infrastructure, future capability, operations, maintenance and training to sustain a ready force. 

The potential reductions to the Budget Control Act beyond those 

reflected in our fiscal year 2013 budget submission will translate 

over time to a smaller force, with less presence, longer response 

times, and reduced ability to provide surge forces in support of our 

major operational plans and other emergent needs. 

Under these reductions we will be unable to execute the requirements of the current defense strategy. 

Mr. Chairman, last month I visited Central Command region. I 

had the opportunity to visit both of our aircraft carriers, Enterprise 

and Eisenhower, our minesweeper force, our patrol craft and other 

ships in the region. I talked to over 10,000 of our forward-deployed 

sailors. 

At every forum, sailors from the most junior to our operational 

commanders expressed concern regarding what sequestration will 

mean to our Navy and their service. The uncertainty of our fiscal 

future is increasingly on the minds of our force. 

Mr. Chairman, Ranking Member Smith and distinguished members of the committee, we appreciate the continued support of Congress and this committee for the men and women of our Navy serving around the globe. On behalf of them and their families I appreciate the opportunity to discuss this important issue and look forward to your questions. 

Thank you. 

[The joint prepared statement of Admiral Ferguson, Secretary 

Hale, General Austin, General Dunford, and General Spencer can 

be found in the Appendix on page 51.] 

The CHAIRMAN. Thank you, Admiral. 

General. 

STATEMENT OF GEN LARRY O. SPENCER, USAF, VICE CHIEF 

OF STAFF OF THE AIR FORCE 

General SPENCER. Chairman McKeon, Ranking Member Smith 

and distinguished members of the committee, good morning and 

thank you for the opportunity to share the Air Force’s perspective 

on sequestration. 

As we built our fiscal year 2013 President’s budget submission, 

we carefully balanced risk across all mission areas while protecting 

readiness and essential future investments and proposed the minimum force structure required to support the defense strategic 

guidance within the resource provided by the Budget Control Act. 

It was difficult, but doable. 

Further reductions through sequestration would affect this balance and our ability to execute the strategic guidance as currently 

defined. 

More than two decades of sustained combat operations and routine missions at home and around the world have stressed our 

force, decreased our readiness and limited our ability to replace our 

old aircraft and invest in advanced capabilities. 

Further reductions in readiness, such as in training programs 

and maintenance, would not only affect our ability to fulfill current 
9 

wartime deployments, operational requirements and defense of the 

homeland, but it would also significantly impact our ability to prepare for future operations. 

The same is true for investments in modernization. Sequestration would also drive us to reevaluate and in some cases curtail our 

contracts. This could drive unit cost increases and inefficiencies. 

We don’t know to what extent because we have not yet had those 

discussions with industry partners. However, these factors would 

impact the future of vital aerospace technology, one of our key competitive advantages. 

Mr. Chairman, and committee members, our Nation is fortunate 

to have world-class people who work hard to produce world-class 

air power every day. 

Sequestration will leave the Air Force with people who are not 

adequately trained, who lack the equipment they need and who 

must make do with weapons systems that are not fully equipped, 

representing a hollow force unable to support the current defense 

strategic guidance. 

The United States Air Force and our sister services comprise the 

premier fighting force on the planet. And our Air Force leadership 

team is fully committed to ensuring we do our part to remain the 

world’s greatest air and space force for the future. 

Thank you, Mr. Chairman. I look forward to your questions. 

[The joint prepared statement of General Spencer, Secretary 

Hale, General Austin, Admiral Ferguson, and General Dunford can 

be found in the Appendix on page 51.] 

The CHAIRMAN. Thank you, General. 

General. 

STATEMENT OF GEN JOSEPH F. DUNFORD, USMC, ASSISTANT 

COMMANDANT OF THE MARINE CORPS 

General DUNFORD. Chairman McKeon, Ranking Member Smith, 

members of the committee, thank you for the opportunity to appear 

before you today. And thanks for your efforts to highlight the impact of sequestration in attempt to halt its implementation. 

Much has been said about how sequestration would affect both 

the budget and the strategy. For the Marine Corps, we would experience similar challenges to the other services. 

We would suffer a significant degradation in readiness. We would 

be unable to properly support our military strategy. We would 

incur costs and scheduled delays across our investment account 

and would be unable to properly maintain our infrastructure. 

We maintain readiness by balancing the allocation of resources 

across our pillars of readiness. To remain ready we have to recruit 

and retain high quality people. We have got to maintain the capabilities and capacities necessary to support the strategy. 

We have got to sustain high levels of unit readiness for both 

those units that are forward deployed and those at home station. 

We have got to properly maintain our infrastructure. 

And we have to be able to modernize in a way that allows us to 

remain relevant in the context of future security challenges. 

If the inflexible cuts associated with sequester are implemented, 

because of the nature and the relative size of our budget we will 
10 

not be able to maintain balance across those pillars. We will not 

be able to do what you expect your force in readiness to do. 

In fact, in fiscal year 2013 we will begin to set the conditions for 

a hollow Marine Corps. 

I am prepared to provide more detail on the implications for the 

budget and strategy during your questions. But I share the perspective previously offered by the Secretary of Defense, the Commandant and other senior leaders. 

Sequestration will have a chaotic effect on the force during a 

time of extraordinary challenges to our Nation. 

But before I close, I would like to share another concern that I 

have about sequestration. For the last 10 years our Marines, soldiers, sailors and airmen have done all we have asked them to do. 

The competence, responsiveness and flexibility of our force was 

seen again last week when Marines responded in hours to reinforce 

embassies in the Middle East and North Africa. That type of response has occurred so often over the last several years we might 

take it for granted. 

The majority of our young men and women in uniform, like those 

in the Fleet Antiterrorism Support Teams that deployed last week, 

or those that are in Afghanistan, are too busy doing their jobs right 

now to worry about the exact details about how we develop and 

pass budgets. 

They care about and they are affected by what we do in Washington, but they actually don’t think about much about us on a 

daily basis, nor should they have to. 

Frankly, given all they do for us, they have a right to expect that 

whatever it is we are supposed to be doing to properly support 

them, that we are actually doing it. 

Our ability to provide our young men and women with the 

wherewithal to accomplish their assigned tasks is the very foundation of the special trust and confidence that they have in us. And 

that trust and confidence is the foundation of their spirit, their 

mettle and their combat effectiveness. 

One of my greatest concerns about sequestration and all the associated second and third order effects is that we will lose the trust 

and confidence of the All-Volunteer Force that we have worked so 

hard to build. 

My point is that this is not just about quantifiable impacts on 

budget and strategy as significant as they may be. Equally at risk 

are the intangible qualities that make our military the very best 

in the world. Should we lose the trust and confidence of the force 

by failing to properly support them, it will take a very long time 

to earn it back. That fact needs to be a key part of the debate as 

we move forward. 

Thank you again for the opportunity to be here this morning. I 

look forward to your questions. 

[The joint prepared statement of General Dunford, Secretary 

Hale, General Austin, Admiral Ferguson, and General Spencer can 

be found in the Appendix on page 51.] 

The CHAIRMAN. Thank you, General. 

Thanks to each of you for your testimonies. 
11 

I am sure everyone in this room understands the Nation is in a 

serious situation. We have a debt now of $16 trillion and growing 

by leaps and bounds. 

In the last election there was, I am sure, people campaigning on 

the idea that we need to get our spending in line with our revenues. We have to get our deficit in order and everything needs to 

be on the table. 

Military leaders have stepped up, and they are all patriotic, and 

said we understand this and we want to do our part. 

The Deficit Reduction Act was passed and that was set up in a 

couple of different tranches of cuts. The first cut was almost a trillion dollars, half of it, almost a half a trillion dollars, coming out 

of defense. 

When defense actually accounts for 17 percent of our budget, 50 

percent of the savings were taken out of defense. I would contend 

that that is probably not fair. And I think it puts our defense in 

jeopardy. 

However, military leaders stepped up and said we can do that. 

We had to change our strategy, strategy that we have had since 

World War II, but over a month’s—over a year’s time, really, our 

leaders managed to work that out in the budget that starts October 

1st. 

The strategy was changed. We agreed we are not going to be able 

to do all the missions that we have done in the past. We can’t answer every phone call that, yeah, we are there. We will be there. 

But they did that without complaint. 

The second part of the deficit reduction said that we would have 

a super committee that will look at other ways to find savings in 

the mandatory spending side. 

If we took all discretionary spending out, eliminated defense, 

eliminate homeland security, eliminate transportation and infrastructure, eliminated education, all Federal spending that we get 

a chance to vote on every year, we would still be running a deficit 

at this point of a half trillion dollars a year. 

Defense is not the problem. We need to address the mandatory 

spending side. The super committee was not able to carry out their 

mandate. We all understand that. We understand the political 

pressures. 

But the fact was it didn’t happen. And so sequestration that was 

supposed to be so terrible it could never be actually put into place 

is getting closer. We are now 3 months away from full implementation. 

I contend that we are already in sequestration. The jobs are already being lost. The decisions are already being made to slow 

things down or cut things off and people are losing their jobs. 

There are two impacts. One is a big cut on our defense, which 

puts our security at risk. The second side is the impact on our 

economy. And the CBO [Congressional Budget Office] said that if 

this thing goes through that we will go right back into another recession, starting next January. 

So this is very, very serious. But the sequestration, the way it 

is outlined, if it should take effect, full effect in January, is another 

$500 billion, $600 billion out of defense and it is without any 
12 

thought or any planning, just you go down every line item and cut 

without any kind of planning. 

A couple of you mentioned training. When I applied for this job 

to our steering committee, I said, ‘‘As I see this job, the requirement is to make sure that our men and women in uniform, when 

we send them into battle, they have all of the training, the leadership, the tools, everything they need to carry out their missions 

and return home safely.’’ 

This cuts into that. It means we will not be able to do it. 

The ports and the camps that I have been visiting recently, a lot 

of emphasis is on IED [improvised explosive device] training. That 

is the biggest problem that we are dealing with in Afghanistan— 

severe injuries and deaths, most of them are coming from IEDs. 

A lot of training at all of these bases was being put into that effort. When you say that we will be cutting back on training, that 

can cost lives and that to me is over the top. We have gone way 

too far. 

The budget year for next year starts October 1st. We have already passed now a continuing resolution [CR] that causes all 

kinds of problems for the Defense Department and other agencies 

of the Government for the first 6 months of next year. And then 

sequestration kicks in January 2nd. 

The CR keeps Government open for 6 months. As far as I am 

concerned, the Defense Department shuts down January 2nd because sequestration will hit on top of that. As I have looked at how 

we have to cut every line item evenly by 9.6 percent—was it, Mr. 

Secretary? 

Secretary HALE. By 9.4 percent. 

The CHAIRMAN. By 9.4 percent. If OCO is also included, which 

it is, that includes ammunition for our troops in Afghanistan. Correct? 

Secretary HALE. Yes. 

The CHAIRMAN. Is that a line item? How is that handled? 

Secretary HALE. The ammunition accounts would be in procurement and if we end up cutting procurement at the line item level, 

yes it would be a line item or could be. I would need to look back 

and see exactly where ammunition is funding in the OCO budget. 

The CHAIRMAN. So nothing has more priority over anything else? 

None of us would agree with that. I mean, that means cutting the 

lawn out at Fort Myer would have the same—— 

Secretary HALE. Right. 

The CHAIRMAN [continuing]. Priority as troops have in Afghanistan. 

Secretary HALE. We will have some opportunity. We budget separately for OCO and the base budget, and you approve each budget. 

When we actually begin executing, the budgets merge. 

So there is one operation and maintenance Army account for 

actives that has both OCO and base spending in there. We would 

have some authority to move money within that account and we 

would use it to try to protect the wartime operating budgets. 

But I don’t want to make that sound easy, because what that 

means is we would have to make disproportionately large cuts on 

the base side, and that will have some of the effects on readiness 

and training that are of such concern to us. 
13 

So we would have some ability and we would move to use it to 

protect the actual wartime operating budgets. 

The CHAIRMAN. I have more questions than we have time, but I, 

again, appreciate your service and all that you are doing to protect 

us from threats abroad. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

I don’t actually have questions—a quick comment. 

First of all, I agree with the chairman, again, on the impact of 

this. Clearly, it limits flexibility. I think all of you gentlemen have 

explained that you are trying to, you know, do it in as commonsense a way as you can within the limitations of the Budget Control Act, but those are fairly severe limitations. 

The main comment I have is how anyone could listen to our 

comptroller and our four vice chiefs and conclude that somehow the 

Pentagon isn’t planning for this is just utterly beyond me. Clearly, 

you are planning for it. Clearly, you are considering on a programmatic basis issues that are a very, very thorny problem to 

deal with. 

So, you know, I appreciate your efforts on that. You know, for my 

part, we will continue to work here to try to make sure that you 

don’t have to do what you are planning now to do. So, we appreciate your efforts and I yield back. 

The CHAIRMAN. Thank you. 

Mr. Bartlett. 

Mr. BARTLETT. Thank you very much. 

I would like to reemphasize what our chairman said and kind of 

put our discussion in context. About every 6 or 7 hours, there is 

another billion dollar increase in our deficit. That drives our debt 

up more than a thousand billion dollars a year, more than $1 trillion a year, our debt increases. 

As the chairman said, if we were to zero out everything that we 

vote on here—if we had no NIH [National Institutes of Health], we 

had no military, we had no homeland security, no Department of 

Transportation—it is all gone; no Department of Education. If we 

zeroed all of that out, we would still have a deficit. 

We borrow about $0.42 out of every $1 we spend. So clearly the 

sequester does not solve our deficit-debt problem. 

If the sequester occurs, defense will be cut something a bit more 

than $50 billion this next year. Defense is a bit less than one-fifth 

of our spending. So if you are going to cut defense and the other 

discretionary programs, let us be fair and cut across the board all 

of the programs. 

That would mean about $250 billion that we would cut from our 

spending next year. That would include Medicare, Medicaid, Social 

Security—across the board, discretionary and nondiscretionary programs. 

These cuts by most people are considered draconian and impossible, so let us put that in context. This $250 billion cut would represent less than a fourth of our deficit next year; closer to a fifth 

of our deficit next year. If you can’t cut a fifth of our deficit, how 

will you ever get there? 

If this sequester occurs, this would represent—and this was the 

drawdown from these wars—after wars, we always have draw-
14 

downs—it would represent about half the percent drawdown that 

we had after the Cold War and after Vietnam. Now, we ended up 

with hollow militaries then. We simply don’t want to do that again. 

But it kind of puts this cut in perspective. 

As the chairman indicated, if the sequester is implemented as 

written, it would be totally devastating. I know there are some argument as to what precisely the wording of the sequester law 

means, but if you had to renegotiate more than 2,500 contracts, 

prime contracts, and many thousands of subcontracts and reduce 

them by 9.6 percent, we would grind to a halt very quickly. Obviously, you can’t do that. 

Mr. Secretary, if Congress continues to be irresponsible and we 

do not address this problem, are you prepared to recommend to us 

an implementation procedure for the sequestration that would 

cause the least harm to the military? 

Secretary HALE. Yes. We will be prepared to implement this in 

the best way that we can. You know, I am reminded of that analogy—— 

Mr. BARTLETT. Sir, excuse me. That was not my question. I know 

you have a little wiggle room with this, but not a whole lot, sir. 

Are you prepared to recommend to us a change in the law that we 

can then vote on so that this can be implemented at much higher 

levels, rather than at the specific levels that the sequester indicates? 

Secretary HALE. I mean we would have to look at that, Mr. 

Chairman, or Mr. Bartlett. You know, in the abstract, I don’t know 

what that law would be. We need to avoid this thing, not try to 

make it better. I would like to offer you an analogy. If you are driving into a brick wall at 60 miles an hour, let us find a way to avoid 

the wall, not figure out a way to pick up the pieces after we hit 

it. 

I believe that is true. We need to halt this thing, rather than try 

to make it better because we are not going to be able to make it 

fundamentally better. 

Mr. BARTLETT. My question anticipated that, sir. I said if Congress is going to continue to be irresponsible, then the Administration can be responsible and recommend to us an implementation 

procedure which is going to cause the least harm to the military. 

Are you prepared to do that? 

Secretary HALE. Yes. Within the law, we will prepare to do that. 

Whether we are going to recommend another law, I think I need 

to think about and I will, and I will be glad to respond to that for 

the record; but within the law, we will recommend the best plan 

that we can if we have to, but it won’t help that much. 

[The information referred to can be found in the Appendix on 

page 67.] 

Mr. BARTLETT. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Reyes. 

Mr. REYES. Thank you, Mr. Chairman. 

Gentlemen, thank you for being here. 

You know, that old cliche of the devil being in the details? We 

don’t like the details that we are hearing, even though it was us. 

And I couldn’t agree more with my subcommittee chair, Chairman 
15 

Roscoe, that it is our fault. It is Congress’ fault for putting you in 

this position. 

It is a lot like somebody holding a gun to your head, wanting to 

take your possessions. You don’t have enough possessions, so we 

are saying, ‘‘Well, give us a plan on how you are going to get possessions so you can give them to me.’’ It is ludicrous. 

Every time that we come up with how we are going to deal with 

sequestration, I can’t help but tell my colleagues in Congress to 

look in the mirror. We did this. We passed that idiotic law that 

now have put you in a situation where we now want you to solve 

the dilemma that we didn’t have the courage not to do. 

So, I don’t have any questions, Mr. Chairman. I just think that 

we have, as a Congress, have to accept the responsibility. We have 

to find a way to solve it. And we shouldn’t be asking the generals 

that are here and the secretary that have been so gracious and patient with us all these months, to give us a solution. It is up to us. 

It is up to us. 

And I say that even though I didn’t vote for this idiotic, stupid 

law, I accept responsibility as part of Congress, and I think it is 

up to us to find the solution. However we do that, we better do it 

fast. 

Thank you, Mr. Chairman, and I yield back. 

The CHAIRMAN. Thank you. 

Mr. Wilson. 

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

And thank for being here today. 

Two days ago, I had the privilege of being with Congresswoman 

Vicky Hartzler at the University of Central Missouri. And while I 

was there, we were hosted by the university and the issue was sequestration. We have persons all over our country—Whiteman Air 

Force Base, Fort Leonard Wood—that I had the opportunity to 

visit. The American people are very concerned. 

And I want to thank you for your service, but also we really are 

counting on you to make sure that, again, the American people understand what is going on. 

I am particularly concerned, General Dunford. I have the privilege of representing Parris Island, Marine Corps Air Station, Beaufort Naval Hospital. My late brother-in-law was a Marine who received the Navy Cross at Okinawa. 

So I grew up with a great appreciation for the Marine Corps. 

And it is my understanding that the personnel costs of the Marine 

Corps are significantly higher than the other services. Approximately 58 percent of the budget is spent on personnel. Is that correct? 

And then additionally, I am very grateful that indeed the personnel accounts are exempt, but what does that do in regard to 

force level, in regard to readiness, research, procurement, training? 

Secretary Panetta has indicated this could lead to a hollow force. 

And how will the Marine Corps address the issues before us? 

General DUNFORD. Congressman, first, you are correct. Fiftyeight percent of our total obligated authority goes toward personnel. Our cost per Marine is not higher, but the proportion that 

we spend in our budget on personnel is higher. 
16 

As a result of personnel being exempt in 2013, what I alluded to 

in my opening remarks is that we would then have to find a preponderance of funds out of operation and maintenance, infrastructure and our modernization accounts. So we will continue to do 

things like run Parris Island. We will absolutely continue to support those Marines and sailors that are in harm’s way in Afghanistan. We will support those that are forward deployed. 

But where we will see the biggest impact from a training perspective and where those resources will come from are those units 

that are at-home stationed. And I think you know that right now 

two-thirds of our units that are at-home stationed are already in 

a degraded state of readiness. They are in a C3, C4 status already. 

And these cuts will further exacerbate deficiencies in home station readiness. 

We will also be unable to support the strategy. One of the things 

that we are beginning to do now and had intended to do in fiscal 

year 2013 is reconstitute our 3rd Marine Expeditionary Force, 

which is the core of our contribution to the U.S. Pacific Command 

and the resources that are necessary to support that are unlikely 

to be available. 

And then what we will see across the board in our modernization 

accounts are delays and so forth that will cause us to delay programs and in some cases do more with less. 

Mr. WILSON. And, of course, I want to point out the challenges 

you have: facing an asymmetric enemy not in uniform; illegal 

enemy combatants; persons who truly are bloodthirsty and act with 

no regard to the civilian population. 

And, thank you for the success and the hard work that has occurred. General Spencer, it has been reported that the U.S. Air 

Force might have to cancel its contract with Boeing to buy refueling tankers, the KC–46, as a result of sequestration. The Air Force 

would then have to negotiate a new contract possibly for fewer KC– 

46. How many fewer KC–46s would the Air Force buy? What sort 

of per unit cost increase will this cause? 

General SPENCER. Well, Congressman, I would say upfront that 

we wouldn’t at this point plan to cancel the contract. And, depending on the cuts—and I think the chairman mentioned earlier, if sequestration is triggered, the first thing we would do is look at those 

accounts or those areas that we would want to try to protect, and 

OCO, or overseas contingency operations, would be one of those. 

So, once you do that, then that drives more of a cut into the 

other accounts. And so assuming we would protect wartime operations, that would drive higher than a 9.4 percent cut into our 

other accounts, like our procurement accounts. 

So what we would have to do—we have not had specific conversations with the contractor for the KC–46. But depending on the 

amount of the cut, the issue would be, we would have to—because 

we have a firm fixed-price contract—we would have to open up that 

contract. 

And so, we would have to then talk to the contractor about revising our payment schedule. And, I would guess the contractor would 

then talk to us about, ‘‘Okay, well, we can’t give you as many airplanes on the schedule that you asked for,’’ or, ‘‘We may have to 
17 

stretch out the airplanes,’’ or, ‘‘By the way, we may have to charge 

you more because now the contract’s back open.’’ 

So, clearly, as we go down—I think, as Mr. Bartlett mentioned, 

as we go down the thousands of contracts and thousands of lines, 

that is the type of process that we have to go through with every 

contract. 

Mr. WILSON. And I am concerned about the cost, and thank you 

for addressing that. 

I yield. 

The CHAIRMAN. Thank you. 

Mr. Andrews. 

Mr. ANDREWS. Thank you, Mr. Chairman. 

I would like to thank the witnesses. 

I commend the chairman for his persistent and continued interest in focusing on the severity of this issue, which he has done 

throughout the year. 

I, frankly, wish that the same degree of interest was being demonstrated on the House floor this week. The House is leaving town 

tomorrow until after the election. There will be an adjournment 

resolution at some point today or tomorrow. I am going to vote no, 

because I think for us to walk away from our responsibilities—we 

have heard about this morning—without making some effort to 

pass some legislation both Houses and the President could sign is 

not very responsible. 

And, I think it is an interesting contradiction that this hearing 

has set forth chapter and verse about the urgency of this problem 

and the response of the institution is to leave town for 6 weeks. 

Now, having said that, let us talk about the importance of some 

of the decisions we may have to make. And I want to preface this 

by saying, I fully embrace the principle that anyone who served 

this country is deserving of high-quality health care for the rest of 

their life. I fully embrace the principle that you shouldn’t ever 

change the rules in the middle of the game for someone who is retired or who is near retirement. I don’t think you do that to people. 

However, Secretary Rehnquist, Secretary Gates and now Secretary Panetta have come here and laid out for us year after year 

chapter and verse the hard reality that retiree health care costs are 

eating up a larger and larger share of the defense budget. We all 

pretend that is not true, because raising the issue is a political 

landmine. 

But I think if we are serious about not having the sequester but 

equally serious about balancing the budget, one of the things that 

we have to talk about is whether it is possible to have a fair and 

equitable system of having more contributions from retirees into 

the military health care system. 

I want to reiterate: I am not for that for present retirees or people near retirement. I don’t think that is fair. 

I want to ask you this question: If we came up with a system 

that was equitable, that phased in such contributions over time so 

that youngest had the longest to plan for it and it was fair in the 

sense that those at the top of the pay grade had a relatively greater contribution than those at the bottom, do any of you gentlemen 

think that such a change would retard or impair your recruitment 

or retention of people in the armed services of our country? 
18 

General AUSTIN. We would have to see the actual details of the 

proposal, but certainly I think any change is going to create some 

concern. But having said that, you know, I think if it is, as you 

have described, fair and equitable, I think that there are a sizable 

amount of folks that would view it positively. 

Mr. ANDREWS. I am painfully aware that there will be disagreement over definitions of fairness and equity, but I appreciate that. 

Admiral, what do you think? 

Admiral FERGUSON. Congressman, I think we have the gold 

standard of health care in our country for our people, and they 

richly deserve it, as do our retirees and our dependents. 

I think we would have to examine very carefully the details of 

the proposal in order to give you a better assessment of that point. 

Mr. ANDREWS. Yes, sir. 

Admiral FERGUSON [continuing]. We have to preserve it, in my 

view, on a fiscally sustainable basis into the future to ensure—— 

Mr. ANDREWS. I agree with that. I don’t want to make a promise 

that we can’t keep 20 years from now. 

Admiral FERGUSON. Exactly. 

Mr. ANDREWS. Yes, sir. 

General SPENCER. Congressman, I agree with my colleagues. 

One of the things that is interesting about retirement, as an example, is you would think that folks newly coming into the military 

wouldn’t be worried or thinking about retirement, but they do, as 

I think we all found out as we went around and talked to people 

the last time it came up. 

Mr. ANDREWS. Yes. 

General SPENCER. My daughter is married to a soldier in Fort 

Hood in Texas. And when it came up before, she called me and 

asked me, ‘‘Are they going to take my retirement away?’’ 

So I think, as my colleagues have mentioned, we would have to 

see the details of it, but certainly there is some potential there. 

Mr. ANDREWS. I appreciate that. 

Yes, sir, General. 

General DUNFORD. Congressman, I think it is important that we 

remember the end state of compensation, which is to recruit and 

retain a high quality force, and you alluded to that. 

Mr. ANDREWS. Right. 

General DUNFORD. You know, I think it would be very dangerous 

for us to isolate any aspect of compensation without a comprehensive review of compensation writ large. And I think that really is 

what the Secretary and the chiefs concluded last year and have 

come over and recommended, is that we not isolate any aspect of 

compensation, that we not focus singularly on health care; that we 

take the opportunity to look at compensation in a holistic way by 

an independent panel to provide choices then that senior leadership 

could look at in order to deal with the very real problem that you 

outlined—— 

Mr. ANDREWS. I thank each of you gentlemen. And I see my time 

has expired. 

I just want to say that I have been encouraged by the dialogue 

in this committee which has been sober, serious, and factual, I 

think, all year. 
19 

I am equally discouraged by what we don’t hear on the floor, that 

this is the kind of question we are going to have to come to grips 

with if we are going to cancel out the sequester and reduce the national debt. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Appreciate the gentleman bringing that point 

forward. 

And in our authorization bill that this committee passed and the 

floor passed and the House and the President signed last year did 

increase the co-pay on our retirees. It was about $5 a month for 

a single person; about $10 for a—— 

Mr. ANDREWS. I heard about it. I remember. 

The CHAIRMAN. And that was first time in many, many years 

that that had been addressed. And we also face the issue in this 

year’s bill. That hasn’t become law yet because, again, we are waiting for the other body to act—— 

Mr. ANDREWS. As I said, this is the kind of sober deliberation 

that will help fix this problem, as opposed to sequester, which is 

across the board. 

The CHAIRMAN. Thank you. 

Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

And gentlemen, thank you for being here and thank you for your 

service to the country. 

General Austin, I know you are from Thomasville. That is part 

of my district—and happy to have you in the district. Any time you 

are down there, let me know. 

And General Spencer, Robins Air Force Base is the largest industrial complex in Georgia, the largest employer in my district. 

So I have opposed sequestration from the start. I understand 

that we have to have some reductions in total spending, and certainly I think that you gentlemen are better equipped to provide 

for where those cuts should come than Members of Congress and 

certainly the way sequestration would implement those cuts and 

tie your hands. I think it is probably the least efficient thing we 

could have done. 

The world is a more dangerous place today, is one of my other 

concerns with sequestration. We have seen this with the embassy 

attacks and other places. 

And General, I know that some Marines have been denied access 

to even get in to provide additional protection for our embassies in 

some parts of the world. I think that is something we have got to 

review, as well. 

But I want to go, if I could, to Secretary Hale and to your comments. You said that you would consider whether or not Congress 

should pass another law before you made that recommendation. 

And your written statement says, ‘‘very much hope that Congress 

will pass a deficit reduction plan that the President can sign and 

avoids sequestration.’’ 

Just set the record straight here—this Congress, the House of 

Representatives in this Congress, has passed five different measures to avoid sequestration, and the President and the Senate, neither one of them have shown leadership in giving us any indication 
20 

of what they will sign. All they say is they won’t sign what we have 

passed. 

It is time for the United States Senate to pass a piece of legislation that deals with sequestration, and quite honestly it is time for 

the President to show leadership on this issue as well. 

And I guess, Mr. Hale, can you tell us what the President’s proposal is that he would actually sign, going back to your written testimony? 

Secretary HALE. Well, Mr. Scott, the Administration has made 

two proposals, one last October to the Joint Select Committee on 

deficit reduction and then one in the President’s budget. I think 

that he would sign either of those. 

Mr. SCOTT. Mr. Hale, can I remind—— 

Secretary HALE. Both of them—— 

Mr. SCOTT [continuing]. Can I remind you that the President 

didn’t get a single vote from a Democrat or a Republican on his 

budget? That is how fiscally out of balance his proposal was. He 

didn’t get a vote in the Senate, a single vote in the Senate on his 

budget. 

I apologize for interrupting, but is it realistic for the President 

to hold to a plan that of 535 potential votes did not get a single 

vote from a Member of either party, and he wants to hold to that 

plan? Is that leadership? 

Secretary HALE. The Administration also said in the Sequestration Transparency Act that they would work with Congress to find 

a way to solve sequestration. 

Mr. SCOTT. Well, that is just words—— 

Secretary HALE. So I have to take them at their word that—— 

Mr. SCOTT. Well, Mr. Hale, with all due respect, that is just 

words. This Congress has passed five—the House, I should say, I 

apologize, let us not confuse the do-nothing Senate with the 

House—we have passed five measures to avert the potential devastation of sequestration on national security. What is the President’s 

plan other than a budget that got zero of a potential 535 votes? 

Secretary HALE. Mr. Scott, I am the Comptroller of the Department of Defense. I know what he has proposed—— 

Mr. SMITH. Will the gentleman yield? I am sorry. You have asked 

the question of these people and I am happy to answer it. 

Mr. SCOTT. Sure. 

Mr. SMITH. I mean the White House has made two proposals that 

Congress rejected. The House has made five proposals that the 

Senate doesn’t accept. 

Mr. SCOTT. Mr. Smith, did you vote for the President’s budget? 

Mr. SMITH. So I fail to see how you are in a better position on 

that. 

Mr. SCOTT. Did you vote the President’s—— 

Mr. SMITH. We have all kinds of proposals that the other side 

doesn’t agree to—— 

Mr. SCOTT. Did you vote for the President’s budget? You did not 

vote for the President’s budget. 

Mr. SMITH. The President’s budget was not presented on the 

House floor. 

Mr. SCOTT. So you rejected the President’s plan as well as I did. 
21 

Mr. SMITH. The President’s budget was not presented on the 

House floor. You put something up that was not the President’s 

budget and you have spent all the time since then claiming that 

it was. That, too, is not helpful. 

Mr. SCOTT. That is simply not true, Mr. Smith, with all due respect. I mean, the President got zero votes out of 535 potential on 

his budget. It is time for him to lead, follow, or get the hell out of 

the way of this country. 

Thank you, Mr. Chairman, and I—— 

The CHAIRMAN. Thank you. 

Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman. And, again, thank 

you for the series of hearings, starting with the industrial workforce and leading up to today’s hearing this morning, for focusing 

on this, and, again, following on the transparency report, which 

was just released, which, by the way, also set out the impact in 

terms of non-defense areas of the Government that would be devastated by sequestration. 

I mean, all the way from food supply, because of the cuts in 

terms of food inspection that would paralyze the delivery and production of food in this country; the impact in terms of health care 

services with the across-the-board Medicare cuts; K–12 Title 1 that 

would be devastated. 

You know, again, the whole purpose of this was to be indiscriminate, to be unacceptable. And you have to look no further than the 

granddaddy of sequestration, who was Senator Phil Gramm, who 

constructed the original sequestration mechanism back in 1985. He 

testified after the Budget Control Act was passed and his language 

was it was never the objective of Gramm-Rudman to trigger sequestration; the objective of Gramm-Rudman was to have the 

threat of sequestration force compromise and action. 

And what we just heard, you know, shows that we have still got 

a gap in terms of the two sides. But in the past our predecessors, 

starting in 1985 through 1992, kind of, you know, grinded away in 

terms of getting proposals, which were very hard for both sides to 

get to, but nonetheless did what was right for the country. 

And, you know, General Dunford, your description of, you know, 

the folks that serve under you, who responded to the call a few 

weeks ago and did their job, and how they, frankly, are counting 

on us to do our job, you know, to me was probably the most powerful statement this morning in terms of, you know, what the real 

issue is here, about whether or not the people of this country have 

any confidence in this institution to do its job. 

And I would just say, you know, I don’t have a question, I just— 

you know, the decision on Friday by the leadership of the House 

to basically cancel all the session days that were scheduled in October, to basically leave town for 7 weeks, you know, that does not 

comply with the spirit of Senator Gramm’s description of what sequestration is supposed to be about. It is not about an end, it is 

about a process, and it is about people doing their job. 

And, you know, I personally believe that there still is a center 

in this place that is ready to roll up its sleeves and find a path between the two sides which we just heard a moment ago. And, 

again, the example of the Marines who are deployed, or whether 
22 

it is sailors who are, you know, all across the globe, or whether it 

is the amazing work that the Army is doing. 

And, again, I visited with you in Iraq, General Austin, and, you 

know, commend you again for your amazing service in the Air 

Force, which are patrolling the skies. 

By the way, the Coast Guard would also get hit by sequestration, 

the folks in New London at the academy. I was talking about sequestration with them a short time ago. They are impacted, too. 

You know, we know now, I mean, what is the consequences. It is 

completely unacceptable for our country both in terms of domestic 

and nondomestic sectors. And what we have got to do is do our job. 

And I just hope, frankly, that the motion to adjourn is going to 

fail and that people are going to roll up their sleeves and get it 

done. 

By the way, there has been some positive signals from the Senate in terms of some negotiations. Senator Lindsey Graham this 

morning talked about a mini-Simpson-Bowles to try and sort of get 

some savings and avoid the January 2nd timeline. 

I commend him. I mean, you know, that is somebody who is rising to his constitutional duty to try and start finding a middle 

ground and avoid what is looming on January 2nd. And hopefully 

the spirit of Senator Graham’s comments this morning is going to 

be heard in this Chamber and that we are going to maybe at least 

during the recess have some people talking about ways to stop this 

sequestration from going into effect. 

And with that, I yield back, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Just a reminder that the House has passed a bill that cuts mandatory spending. It was hard, a lot of tough votes, but we did pass 

it. It pays for the first year of sequestration, not just defense, but 

all of the sequestration, pays for the first year, which would move 

the discussion back onto a less politically volatile timing that we 

could be discussing it. 

The Constitution lays out how we function, and it says one body 

will pass legislation, the other passes legislation, a conference is 

called, and you work out your differences. 

I understand the Senate doesn’t like our bill, but they have not 

passed a bill that would take us to conference where we can really 

discuss those differences. Rather, they can sit and say, ‘‘We don’t 

like what was done.’’ 

So I guess then what their interpretation of the Constitution is, 

they can say that, then we have to pass something and ask them, 

‘‘Is this okay, Mr. Senator?’’ If that isn’t done, then I guess we pass 

another bill and ask them, ‘‘Is that okay?’’ 

But the way I read the Constitution is it says, until they put up 

the votes and actually pass something, we can’t move forward. And 

that is the big bottleneck that we have facing us right now. 

Our bill was based on cutting spending. If they want to pass a 

bill that is totally based on new revenue, then we come together 

and try to work out our differences. But they would have a lot more 

credibility if they did something, if they passed a bill that we could 

go to conference on and actually work on. The only reason the Senate is still in town is because one Senator is holding them up and 
23 

they can’t get the votes yet to pass the CR. And eventually the 

time will run out and they will leave town also. 

Mr. SMITH. Mr. Chairman—— 

The CHAIRMAN. I yield. 

Mr. SMITH. I actually agree on the last point, the CR. But the 

helpful place that we need to get here is the problem in the Senate 

is, while, as you see, one person can hold the whole thing up, we 

don’t have that rule in the House. We have a much more efficient 

and effective way of moving things forward. So the problem in the 

Senate is it takes 60 votes to do anything. So before they can pass 

a bill they need bipartisan agreement. 

So all I would say, in a note of what I hope is, you know, trying 

to bring us back together here, is, you know, who passed what, 

where? The bottom line is right now Republicans and Democrats 

have not agreed on what needs to be done. And until we do, it is 

not going to get done. It is not like one side is doing it and the 

other side is not. 

It is the nature of the way the Senate is set up that they have 

to get bipartisan agreement before they can pass anything. In some 

instances they have to get unanimous agreement before they can 

do anything. It is the nature of their rules, not that one side is 

showing leadership and the other isn’t. We both need to come up 

with a plan that is bipartisan. We need to get working on it. 

The CHAIRMAN. Actually, the bill that we passed, we passed 

under reconciliation. So they only need 50 votes in the Senate to 

pass this bill. And until they do something, we will not be able to 

solve this problem. 

Mr. West. 

Mr. WEST. Thank you, Mr. Chairman, and Ranking Member also, 

and thanks to the panel for being here. 

And, General Austin, I want to thank you for being a role model 

for me as a young paratrooper, and it is a pleasure to see you. 

My question for General Austin and General Dunford—when you 

look at my friends and a lot of e-mails they send me, five, six, 

seven tours of duty into the combat zone—the second, third order 

effects that has on the family, my big concern right now with the 

sequestration is what are we going to look at as far as the personnel strength, because there is going to be a reduction on personnel strengths for our Army and for our Marine Corps, our 

ground forces? 

So with that being said, when we are looking at implementing 

these personnel reductions that is going to be part of this overall 

sequestration for the Army and Marine Corps? 

General AUSTIN. Thank you, sir. And, again, thanks for your 

service and thanks for your support. 

We are reminded that as we have this conversation, as some 

have pointed out, that there are 61,000 or so soldiers deployed to 

Afghanistan in support of that effort and they are doing a magnificent job. 

As we have discussed earlier, personnel under the plan, if this 

plan does go into effect—and we hope that it doesn’t. We hope that 

Congress will work with the Administration to make that not happen, that is the best case, best course of action—but if it does, then 
24 

the personnel accounts are protected in fiscal year 2013—or exempted. 

So we would be looking at shaping a force further in the outyears. And as what you have heard our chief say earlier is that this 

would probably drive our end strength down by 80,000 to 100,000 

over time. So that is our back-of-the-envelope assessment at this 

point. 

General DUNFORD. Congressman, as I think you know, we are in 

the process of drawing the Marine Corps down from a high of 

202,000 in the active component to 182,000. And we have got a 

plan to do that between now and fiscal year 2016, a very deliberate 

plan that keeps faith with people. 

Manpower is exempt this year. The thing that we realize is that 

if sequestration takes effect, manpower is exempt in fiscal year 

2013. What I alluded to earlier is that it would be impossible for 

us to balance those pillars of readiness and maintain 182,000 past 

fiscal year 2013. 

So what the Commandant has really said was once we find out 

what our topline is, inside of that topline we will build the very 

best Marine Corps that we can build in a balanced way, so that we 

don’t have more force structure than we have the ability to train, 

properly equip, and to take care of the families, as you alluded to. 

What I would tell you is though that at 182,000, we are exactly 

at the line of our ability to respond to a single major contingency 

operation. So as we look forward, if we have significant reductions 

below 182,000, that will cause our force structure to be below the 

level of a single major contingency operation. 

Mr. WEST. Next question is, you know—you gentlemen taught 

me a great thing about anytime you prepare a military operation, 

you look at the most dangerous course of action; so with this being 

the most dangerous course of action, where do you all see the two 

preeminent places where you are going to have to accept risk if this 

continues to go forward, especially when we look at the volatility 

of the world today? 

General AUSTIN. Well, sir, what we would do is continue to support those soldiers that are deploying to Afghanistan, and the nextto-deploy soldiers. We would make sure that they are adequately 

resourced to get the job done. That remains our top priority. 

In addition to that, we would also make sure that we support 

those programs that are enabling and supporting our soldiers and 

families so that we don’t break the faith that we have established 

with our soldiers and families. 

You know, the fact of the matter is that we have fought with an 

All-Volunteer Force for over a decade. And as I have said before in 

other places, that if you had asked me 15 years ago if we could do 

that with an All-Volunteer Force, I would say absolutely not; that 

is probably not possible. 

But we have done it. We have done it because we have taken 

good care of our soldiers and families. And so we would want to 

keep those programs in place. So where we think we would begin 

to see eroding capability would be in those forces that are at home 

training and preparing to deploy for contingencies. We think that, 

you know, as you make decisions to transfer resources to cover 
25 

other shortages, that eventually that it will erode your readiness 

to respond to contingencies. 

So, we want to maintain the faith that we have established with 

our soldiers, and we also want to be able to respond to contingencies in addition to supporting the fight in Afghanistan. 

General DUNFORD. Congressman West, similar to the Army, our 

priority regardless will remain supporting those Marines and sailors that are forward deployed. We will continue to do that. You 

asked for the two main areas that we would take risk, I don’t see 

any way that we could maintain a proper modernization profile 

where we could continue to move forward, and we would not be 

able to sustain our investment in infrastructure as well. 

And to put that last point in some perspective, we fund to a low 

C–2 level in our infrastructure. If sequestration were to take place, 

we would see almost an immediate drop into C–3 and below with 

our infrastructure. 

Again, to maintain current operations at the level that we need 

to maintain them, as well as to try to maintain as many of those 

family programs that we need to keep faith with our Marines—but 

modernization, infrastructure would certainly suffer and they 

would suffer in a way that would be very, very difficult to recover 

in the years ahead, and frankly be very inefficient as we did that. 

The CHAIRMAN. Thank you. 

Mrs. Davis. 

Mrs. DAVIS. Thank you, Mr. Chairman. 

Thank you all for your leadership and for joining us today. 

At the beginning of your statement, Secretary Hale, you emphasized, I believe, that we need a balanced budget deficit reduction 

plan. Is there anything in this discussion that we have had today 

that would suggest that perhaps it doesn’t need to be balanced or 

that there is something about that in terms of all the areas that 

we are looking at, not just defense, that is not part of that discussion? 

Secretary HALE. The Administration favors a balanced program 

of deficit reduction. I realize there are differences of opinion, but 

that would suggest both cuts in spending and some increases in 

revenues. That has to be worked out between the two Houses of 

Congress and the Administration, but I believe that they continue 

to favor that. 

Mrs. DAVIS. Do any of you feel that that doesn’t necessarily reflect your services? 

Secretary HALE. I am going to intervene and ask that our military leaders not be asked to comment on that particular issue, if 

that is acceptable to you, Mrs. Davis. 

Mrs. DAVIS. All right. 

Secretary HALE. And that you stick with me on that one. 

Mrs. DAVIS. Okay. I will stick with you, sir. Thank you. 

I wanted to go to the issue that you really have discussed in 

terms of high priorities—obviously, the warfighter. But when we 

think of the personnel accounts, sometimes I think it is difficult for 

people to recognize the impact of these personnel accounts on readiness—childcare centers as an example. 
26 

If they were to be drastically reduced, would that have an effect 

on readiness? Is that an area that perhaps needs to be looked at 

as even a higher priority when we are talking about these issues? 

Admiral FERGUSON. Well, Congresswoman, you know, we have 

made it a priority within the service because many of those are 

funded by the operations and maintenance account, that we would 

have some flexibility to make movements within that account to 

sustain our family support programs, our people programs. We 

think they are the cornerstone of readiness for both families and 

our service members. 

But that does cause reductions in other programs within the account in facility infrastructure, sustainment, modernization, some 

base support operations. But I think that we feel very strongly due 

to the deployed nature of our forces that we would have to make 

an effort to sustain those. 

General AUSTIN. I would echo what Admiral Ferguson just said. 

It is absolutely imperative that we continue to take care of our soldiers and families. And it does have an impact over time on the 

ability of the family to be resilient. And that is a thing that we are 

very, very focused on. 

General SPENCER. Congresswoman, I also agree with my colleagues that we would try our best to protect family programs, 

health care, that sort of thing. But I will add though, as Admiral 

Ferguson mentioned, as we look at what we want to protect, that 

is going to squeeze out other accounts. 

And they are all in that sort of organizational and maintenance 

account, the O&M [operation and maintenance] readiness account 

which, you know, has things for the Air Force like flying hours to 

train our combat crews, weapons systems sustainment to maintain 

our aircraft, to have aircraft available for our depots. 

We have got our civilian pay—180 civilians or so in the Air Force 

in that account; training; ranges; spare parts. You can go down the 

list—engine overhaul. 

So as we look at—obviously, we would want to protect programs 

like that, but then that would just squeeze out other readiness 

issues as well and make the problem even more difficult. 

General DUNFORD. Congresswoman, what I think you are really 

highlighting is the need for all of us to take a comprehensive look 

at readiness. And as I alluded to in my opening remarks, you 

know, we have got pillars of readiness. And one of those pillars is 

the need to recruit and retain a high-quality force. 

And those programs that you spoke to are inextricably linked to 

our ability to recruit and retain a high-quality force, so they are inextricably linked to readiness as well. 

And as General Spencer and the other members of the panel 

have outlined, once you assume risk in one area, you are going to 

accept risk in another area. This is about balance. And the difficulty with sequestration is it actually makes it difficult to balance 

across those pillars of readiness. 

So you are going to do things that are inherently things you 

wouldn’t do if you had the ability to do this logically and manage 

risk. And that is the difficulty, I think, for all of us is that the way 

the cuts are being applied will not put us in a position to manage 

risk. 
27 

Mrs. DAVIS. And when we look at—you mentioned health care, 

of course, and that is a great concern, particularly if our TRICARE 

physicians choose not to accept military personnel. Is there something you wanted to just mention about that, in terms of awareness 

of what we should be thinking about in that area? 

Secretary HALE. Let me take a shot at that and see if I can be 

helpful. The Defense Health Program is a budgetary account. 

Under the sequester rules, it would receive the same percentage reduction as all the other accounts; in the case of the STA report, 9.4 

percent. 

The only thing we could do would be to try, if that actually came 

to pass, would be to try to move money into that account. It will 

be very difficult, frankly. We could only do it through reprogramming and you have got to find something to cut. And as I have 

learned painfully over the last 4 years, that is very hard to do. 

So I think we would be faced to some extent with not being able 

to pay all of our TRICARE bills probably right at the end of fiscal 

year 2013. We would try to avoid it, but I think it would happen. 

I am not quite sure what our providers would do in that case. We 

would be just late, and then we would try to fix it in 2014, but it 

is not a good situation and not one that I think any of us—I certainly don’t want to go through. 

The CHAIRMAN. Thank you. 

Mr. Brooks. 

Mr. BROOKS. Thank you, Mr. Chairman. 

I would like to first thank our men in uniform for your service. 

It is quite impressive to see three four-stars and an admiral here 

and the dedication that those emblems represent on behalf of our 

country, and also, Mr. Hale, your presence here. 

And I have heard a good bit about why we are here today. And 

I wanted to add my thoughts to it, and people can digest them for 

what they are worth. But we are here today because we have had 

a United States Government that for years now has been reckless 

with the American treasury. 

We have had three consecutive trillion-dollar deficits. We are 

now in our fourth year of a trillion-dollar deficit. Our country has 

never seen this kind of financial irresponsibility in its history prior 

to the last 4 years. 

And it has reached the point where, in the very chairs where you 

all sit, both in 2010 and in 2011, the Chairman of the Joint Chiefs 

of Staff has appeared before the House Armed Services Committee 

and testified that this accumulated debt is the greatest threat to 

America’s national security. He did not name Al Qaeda. He did not 

name North Korea. He did not name Iran. He did not name anybody else. He said number one threat is our debt. 

Now, if you look at the numbers, the debt has one trigger point 

primarily—a lot of factors, but one trigger point. Spending has 

gone up over 40 percent in the last 6 years. 

It doesn’t take much of a mathematician to figure out what the 

cause of the problem is when spending has gone rampant. And it 

has gone rampant in large part because the entitlement programs, 

that some of my colleagues have pointed out. 

And in that vein I want to emphasize one point. We are in this 

process of sequestration not only because of this history of deficits 
28 

that have accumulated to $16 trillion in debt that have put us in 

a very hazardous position financially, where we are risking insolvency and bankruptcy as a country, which in turn if that happens 

could destroy our national defense capabilities, far worse destruction than sequestration would ever do. 

We all know how bad sequestration is. But then we get to the 

solution aspect of it and in August of last year an agreement is 

reached. 

But let us be very, very clear about this point. The agreement 

that was reached with respect to sequestration was because that is 

what the White House demanded. 

First, they wanted tax increases on top of tax increases we already have in play. I have a list of 12 pages of tax increases that 

are going to hit American families this year, next year and the year 

after that and maybe the year after that too—12 pages. 

But that is not enough. They want even more. And so the House 

of Representatives said we are going to protect family incomes. And 

so the President came up with this sequestration idea that attacks 

and puts at risk our national defense capabilities. 

And so I am very much in accord with Mr. Scott’s comments earlier that I believe that if the President is sincere in his desire to 

avoid these national defense cuts, then he should also be sincere 

in proposing a specific plan that is in writing, in the form of a bill 

that can be introduced into the United States Congress by at least 

one person who agrees with him. 

And to date I have not seen that plan introduced in the House 

of Representatives where at least one Member of the United States 

House of Representatives has seen fit to agree with its terms and 

conditions. 

And if the President is going to continue to be the Commander 

in Chief and if he is going to continue to rightfully complain 

through his Secretary of Defense about the adverse effect of sequestration on our national defense capabilities, and I believe those concerns are legitimate, then I pray that Barack Obama, as Commander in Chief, will propose a specific bill that is introduced in 

the House of Representatives with some semblance of support, if 

not bipartisan, at least by Democrats, that details what his plan 

is so that the American people can see it and they can digest it and 

decide where they want to go with it. 

Now, Mr. Hale, if you are familiar with a specific bill that the 

President has proposed that has been introduced in the House of 

Representatives that is confined to this issue, and I am not talking 

about a smorgasbord where it has got a thousand different points, 

one point happens to touch on sequestration. 

I am talking about a sequestration-fix bill, one bill that has been 

introduced in the House that has the support of Members. Please 

share it with me. 

The CHAIRMAN. The gentleman’s time has expired. 

If you could, please answer that for the record, Mr. Secretary. 

Secretary HALE. I will do that. 

[The information referred to can be found in the Appendix on 

page 67.] 

The CHAIRMAN. Mr. Critz. 

Mr. CRITZ. Thank you, Mr. Chairman. 
29 

Secretary Hale, in your written testimony you are worried about 

a different type of problem. You mention it in your next steps and 

it is the effects of if we don’t have sequestration but that the process starts. 

And you talk about you don’t want to alarm employees. You don’t 

want to hold back on obligation of funds for weapons projects or operating programs. 

And a statement at the end of this one paragraph says we will 

continue normal operations unless sequestration is actually triggered. So does that mean that although it is in the back of everyone’s minds, the Department of Defense is marching forward as if 

sequestration is not going to happen? 

Secretary HALE. Well, I wouldn’t put it that way. We don’t want 

to sequester ourselves. 

And so, yes, consistent with OMB’s guidance and our own guidance, we are not going to start cutting back right now in anticipation of sequestration. But we know it is there. It is more than in 

the back of our minds. 

And we have begun steps to look at impact assessment. We have 

worked closely with OMB to understand how the law would work. 

And as we get closer to this event, we will have to move toward 

specific planning to do it. 

But we don’t want, as I said, to sequester ourselves—— 

Mr. CRITZ. Right. 

Secretary HALE [continuing]. And start in advance to say, ‘‘Well, 

let us cut back this weapons system because maybe we will have 

to do it.’’ 

Mr. CRITZ. Right. Right. 

Secretary HALE. We are still hopeful that we won’t go through 

this. 

Mr. CRITZ. And there is a series of information here that says 

that, you know, and obviously we have already received, this committee, testimony that indicates that there is actually an observable slowdown and reduction in contracts and orders. 

So there are things happening. And in your testimony, and we 

have heard it too, it from the private sector, everybody is doing this 

sort of scenario. 

And the one thing that I would ask you, and I don’t know if you 

can quantify it or not or if the service chiefs, vice chiefs can quantify it, is how much effort is being put into starting to put the 

pieces of the puzzle together, looking at what if sequestration happens. 

Is there a concerted effort within the Secretary of Defense or 

within the services that there are people assigned now to start 

looking because there is a point, and I am trying to think, where 

you mention, ‘‘We are working with OMB to understand this complex legislation and are assessing the impacts.’’ 

So although you are not sequestering, you are in process of addressing this. And I mean to my point every day that we kick the 

can down the road, you are expending funds for something that 

may not happen. 

Secretary HALE. I think that is right. And it will pick up in its 

pace. We largely do now understand the laws, even if we don’t like 

them. 
30 

And we have done high-level impact assessment. You have seen 

that in our testimony today. 

Mr. CRITZ. Right. 

Secretary HALE. And we will have to pick up the pace, working 

with the services and the defense agencies in terms of guidance on 

how we will implement this, hoping at every point that we can 

stop. 

But if it does not get halted, we will eventually have to do detailed budget planning. And that will be enormously costly in terms 

of time within the Administration. 

Let me just go back to one of your other points. In the aggregate, 

we don’t see a slowdown in obligation rates, at least through the 

data we have, which is about a month lag. 

I am not saying there is not some program out there that is 

doing it. 

Mr. CRITZ. Right. 

Secretary HALE. And there may be industries that are making 

advance preparations. But we do not see for the Department as a 

whole a slowdown in obligation rates through maybe a month ago. 

Mr. CRITZ. Okay. 

Now, are you making any assumptions as you plan for fiscal year 

2014 with regards to sequestration? 

Secretary HALE. No. The fiscal guidance that we have from the 

Administration is the same as last year, last year’s plan for fiscal 

2014, and does not take into account sequestration. 

Again, we are not going to do this to ourselves. We are still hopeful that Congress and the Administration will find a way to avoid 

it. 

Mr. CRITZ. Okay. 

And if any of the chiefs want to address if there is particular 

folks who have been assigned to getting prepared for possible sequestration, please chime in. 

With that, I—— 

Secretary HALE. We have a team set up that is working on and 

looking at impacts and will move toward guidance for planning. So 

they are all represented in various forms. 

Mr. CRITZ. Okay. 

Admiral FERGUSON. Yes. Congressman, I would characterize the 

effort—is that our normal staff function is that individuals are assessing the impacts. Now that we have the Transparency Act report, we understand what the budget amounts are. 

The planning involves understanding what your top-line is ultimately and the assumptions and the planning factors you use to 

shape the future fiscal target shapes the decisions in 2013. 

So that type of planning is not going on. 

Mr. CRITZ. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman, Ranking Member. 

I would thank all of you for being here today. I know these are 

unique challenges that we are all confronting and trying to find our 

way through, so appreciate your service. 
31 

The first issue I would like to touch on. You know, my district 

is in south central southern Indiana. And we have a number of assets that support the missions of DOD in particular, from NSWC 

[Naval Surface Warfare Center] Crane to Camp Atterbury to the 

Muscatatuck Urban Training Center. Even Indiana University has 

an important role in defending our Nation and supporting our military. 

One of the questions I have pertains to the actual cost of the sequester. This committee has received testimony from a number of 

industry experts including a former deputy director of OMB, who 

has testified to the fact that the actual budget impact of sequestration is going to go far beyond what is in the Budget Control Act, 

$55 billion in fiscal year 2013 top-line reduction. Instead, informally the committee has heard estimates of $70 billion for equitable adjustments to contracts or by my calculation 

what is 50 cents on the dollar. Ashton Carter has also referenced 

the so-called hidden tax. 

I would ask Mr. Hale, if you could answer, do you agree or disagree with this observation and why? And if you could give us an 

estimate of how much in additional cuts could be required as a result of contract cancellations, claims, personnel severances and 

other things. Please let us know. 

Secretary HALE. Well, let me start by trying to clarify a bit how 

sequestration would work. 

If we have already signed the contract and obligated the funds, 

especially with prior year money, that contract is not going to be 

affected; obligated balances, prior year obligated balances are not 

affected by sequestration. 

So I would not anticipate that contracts signed before January 

2nd are going to be significantly affected. They won’t be canceled 

and so we won’t encounter fees in that regard. We would be forced 

not to pick up options. 

We would be forced to change contracts that were planned to be 

signed after January 2nd. We would be forced into some personnel 

actions in the civilian area that—we will avoid rifts because frankly that would cost us money in that year. 

So I think the bottom line is we are going to, both because of the 

law and the way we would implement it, I don’t see those sorts of 

large cancellation fees. There could be some but I don’t see them 

occurring. 

And I think that we will just have to find ways to avoid the severance cost because we won’t be able to afford them. 

Mr. YOUNG. Well, thank you for that response. 

I will pivot a bit and talk strategy here for a second because you, 

Mr. Hale, have indicated that, by your estimates and presumably 

of others, I think some of the service attendees here have indicated 

that some adjustments will need to be made, should sequestration 

go into effect, to the national security strategy and to the missions 

we are asking our military to perform on our behalf. 

What I have been struck by, though, is multiple indications from 

different individuals on our panel, all of whom I have great respect 

for, that there is seemingly little to no contingency planning going 

on. We don’t know which strategy changes will be required, and 

presumably you are the strategic thinkers of our military. To me, 
32 

that seems most irresponsible for this freshman Member and 

former captain in the Marine Corps. 

I think it would be revealing if we could get more information 

on this team that was referenced who is in the early stages of, 

quote—‘‘looking at the impacts of sequestration on our strategy.’’ 

That would be revealing, I think, because it would tell us what 

risks are in fact regarded as greater and lesser risks to our Nation; 

what missions we are going to ask our military to perform in the 

future. And we could infer from the changes to our strategy what 

missions are of higher and lower priority. 

And finally, we could determine which spending is more important or less important, is exactly the sort of analysis we don’t receive on this committee. And therefore, we are asked to make superficial spending decisions based on parochial interests and the 

limited information we receive from the Administration. 

So if we could get any information, I would most appreciate it. 

Thank you, gentlemen, again for your service. 

The CHAIRMAN. Thank you. 

Ms. Hanabusa. 

Ms. HANABUSA. Thank you, Mr. Chair. 

Secretary Hale, you know, I have sat through so many of these 

meetings regarding the effects of sequestration, whether it is in 

this full committee or it is in the Readiness Subcommittee. I even 

sat in on Seapower, which I am not a member of, because I represent Hawaii and you can imagine how important these issues are 

to us. 

Today’s hearing was called ‘‘Department of Defense Plans for Sequestration, the Sequestration Transparency Act of 2012 Report, 

and the Way Forward.’’ That is the title. 

And the one thing I have got to say is that in all the prior hearings and testimony that we have had, including Chief of Naval Operations Admiral Greenert, as well as Army Secretary John 

McHugh, that the theme seems to be the same. It is whether someone above them has said not to really plan for sequestration, or the 

Office of Management and Budget has said just plan your budget 

for the upcoming year without any consideration of sequestration. 

Would that be a correct statement as to how the Defense Department has been proceeding on this specific issue? 

Secretary HALE. Well, we are certainly planning our fiscal 2014 

budget without regard to sequestration, and that is consistent with 

fiscal guidance from the Office of Management and Budget. 

We made a decision not to plan in detail for sequestration, again 

in the continued hopes that there will be an agreement between 

the Administration and Congress to halt it. I think as we get closer 

to this event, we will have to move towards guidance to the service 

and specific planning. And if it does go into effect, I can assure you 

we will be ready to implement it and we will move toward the 

planning that is required to do that. 

Ms. HANABUSA. Can you tell me how long you think it is going 

to take to get to that point? Because some of these testimonies we 

got from February of this year—the chairman has always expressed his great concern about sequestration, which all of us 

share. So I am just curious. I mean, you knew that sequestration 
33 

was going to be an across-the-board cut, so the report that was 

done by OMB is a 9.4 percent literally across-the-board cut. 

So how long will it take you to then drill down from all these different program IDs which have the 9.4 percent across-the-board 

cut? How long will it take you? I just kind of want to know when 

the chairman is going to call us back in and we are going to hear 

the actual plans. 

Secretary HALE. Well, the first thing we will have to do is come 

up with guidance, as we would do in a regular budget to the services. That probably will take place over the next month or so. I 

would say 6 weeks or so after that guidance has gone to come up 

with detailed plans. 

Ms. HANABUSA. So probably a 2-month period, and then we will 

be able to know how each one of these different programs—— 

Secretary HALE. We will wait as long as we can to begin this 

process. You know, I feel like I spend most of my time these days 

planning for things I fervently hope don’t happen. And I think we 

will wait as long as we can to begin this process, again in hopes 

that it is halted, but we won’t wait so long that we won’t have this 

Department ready if in fact it goes into effect on January 2nd. 

Ms. HANABUSA. Now, one of the statements made by OMB in 

their report is this. It says with the single exception of military 

personnel accounts, the Administration cannot choose which programs to exempt or what percentage cuts to apply. These matters 

are dictated by a detailed statutory scheme. 

Just so anyone listening in on us, when you say you are going 

to start to study how the cuts are going to take place, you are talking about the 9.4 percent within each program ID. Is that correct? 

Secretary HALE. That is correct. 

Ms. HANABUSA. So would you say as frustrating as it may be for 

us to try and figure out what is going to happen, so when we get 

home and people ask us how it is going to be cut, from your vantage point, it is really up to Congress and the President to make 

everything right. 

Secretary HALE. Well, we are depending on Congress and the 

President and the Administration to halt this. We certainly hope 

that is true. But as I said before, if it happens on January 2nd, we 

will take the steps that are needed to make this Department ready, 

and OMB has said they will do that across the Federal Government. 

Ms. HANABUSA. And Mr. Hale, many of the testimonies that we 

have had all say that Defense Department has taken its share of 

cuts already in the first part of the Budget Control Act. And I believe that Secretary Panetta said that if we have got to take an additional series of cuts, throw everything out the window. Would you 

agree with that? 

Secretary HALE. Well, I don’t know if he said it quite that way, 

but if we take substantial additional cuts, whether it is sequestration or in some other way, we will have to reconsider the security 

strategy that is put in place. And I know I can speak for Secretary 

Panetta in saying he believes that strategy is the right one for current times. 

Ms. HANABUSA. When you say ‘‘the strategy,’’ you are talking 

about the 2014 budget that—— 
34 

Secretary HALE. The strategy that was put in place last January 

and is the basis for the fiscal 2013 budget he believes is the right 

strategy and he would like to continue it. But if there are significant additional budget cuts, we will have to revisit that strategy. 

Ms. HANABUSA. Thank you. 

Thank you, Mr. Chair. I yield back. 

The CHAIRMAN. Thank you. 

Mr. Schilling. 

Mr. SCHILLING. Thank you, Chairman. 

And it is great to be amongst you fellows. We really do appreciate what you do for our country. 

Just a couple of things to Mr. Hale—a couple of questions. One 

of the things that I am concerned about—we have the Rock Island 

Arsenal in our district. Dave Loebsack from Iowa and I share that. 

And, you know, I truly believe that sequestration is here, it is now 

and it is happening. 

Just this morning, I got a message—‘‘Good morning, Congress- man Schilling. We just were told that if we don’t get another $45 

million worth of work by October the 1st, we won’t be able to maintain current workforce. Our contracting people are on it, but apparently significant job loss is a possibility. I am thinking we are in 

a bad way, brother; any news on your end?’’ 

You know, so one of the things that I think, you know, coming 

from a small business perspective, is that you are constantly planning. And, you know, when we talk about the Senate, their inability to pass the 30-some jobs bills and so on and so forth. 

But the one thing that I think is critical as a country, that both 

sides of the aisle need to do, and also on the Senate side, is there 

is a word called ‘‘compromise’’ and coming together and try to find 

that common ground. And what I have seen—this is my very first 

time ever holding a public office. I got to the point to where I just 

could not take it anymore and decided to run for Congress, and 

hence the reason why I am here. 

But what I have found is with this Senate is the fact that every 

time there is something that they don’t like, they pick up their toys 

and they leave the toy box and they go home, just like what they 

did with the payroll tax back in the holiday that they had back in 

December. 

But I guess there are a couple of things. I mean, we definitely 

need to sit down and address this, but what I would like to do is, 

if you could, sir, when we talk about—one of my concerns is contracts that are written prior to sequestration taking hold, is what 

do we do—I mean, we have a lot of cost overruns that are out 

there. I guess, how do we put an exact value on these to be able 

to say that these things are good? 

I mean, we see constantly the cost overruns are there, but that 

is what we are trying to—I would like to have clarified is how do 

we project? I mean, if you have got a couple million or billion-dollar 

cost overruns, how are we going to deal with that? 

Secretary HALE. You are not talking about sequestration. You 

are talking about cost overruns that would occur in a regular budget, if I understand you correctly? 

Mr. SCHILLING. Well, primarily when sequestration hits, and you 

are saying we are going to guarantee the contracts that are already 
35 

in effect prior to sequestration hitting, how are we going to deal 

with the overruns that are going to be there? I mean, we have no 

way to calculate those out. 

Secretary HALE. Well, what I said is under the law, if we have 

already obligated the funds, especially prior-year funds, they would 

not be affected by sequestration. So the contract, if already signed, 

would go forward with the amount of money we had obligated. 

Now, if that contract needs more funds and has to be modified, 

it would be subject—any additional funds would be subject to sequestration. And I think we would have to judge whether or not 

the added funds were sufficiently important in a period of budgetary stringency, and that kind of decision would be made by our 

program managers with guidance from senior leaders. 

I don’t know if that is helpful, but I think that is the process that 

we would go through. 

Mr. SCHILLING. Right. Another thing that I, you know, we, constantly look at, when I talk to people out in the district, most 

Americans are willing to pay more in taxes. Some here call it revenues. I call it what it is. It is an increase in taxes on the hardworking American folks out there. 

And most folks that I talk to tell me, ‘‘You know what? We are 

willing to pay a little bit more under one condition—stop wasting 

our money.’’ No more tunnels for turtles. No more swamp mice in 

California, and so on and so forth. 

But until then, to raise taxes so that this Government can continue to waste our hard-earned tax dollars, I think it is pretty difficult in this House to get that through, and we can’t get that guarantee. So I just wanted to have my two cents in there. 

I really appreciate you all’s service to the Nation, and keep doing 

what you are doing. I yield back. 

The CHAIRMAN. Thank you. 

Mr. Barber. 

Mr. BARBER. Thank you, Mr. Chairman. 

First of all, I apologize for being late. Just got through with a 

hearing on ‘‘Fast and Furious,’’ which is, of course, very important 

in my district since that was where Border Patrol Agent Terry was 

killed. 

I appreciate the opportunity to ask some questions—first question for Secretary Hale. 

At the last committee meeting when we discussed sequestration, 

I said at that time that the lack of action on this important issue 

is really a failure on both our part and others to getting our fiscal 

house in order. 

And we will be voting on adjournment tomorrow. I will vote 

against it. I think we should stay here and not go home. We 

shouldn’t be so much worried about our own contracts and with our 

constituents and saving our jobs if we can’t save the jobs of our 

community and our constituents from this threat. 

Secretary Hale, as we see this looming threat just over the horizon, can you say how it is affecting the morale of our service members, how this uncertainty is affecting both them and their families? 

Secretary HALE. Well, let me take a shot at that. And I would 

certainly invite the vices who are probably better able. 
36 

I am particularly worried about our civilian members. For fiscal 

year 2013 we will exempt military personnel, so it won’t have a direct effect on the number of military personnel, though it may have 

effect on their confidence, generally. 

I am particularly worried about our civilians. They will be directly affected. We would probably have to have a hiring freeze and 

I suspect we would have to consider unpaid furloughs. 

And I think there is starting to be increasing unease in our 

workforce about how this is going to affect individuals, and I don’t 

blame them. I am very worried for them. But I would invite my colleagues here to comment if they would like. 

General AUSTIN. Thank you, sir. 

From an Army perspective, you know, as I go around to different 

installations and talk to soldiers and families, we are beginning to 

hear more and more of them ask the question of, ‘‘What does this 

really mean for us in terms of support for family programs or what 

does it mean in terms of end strength? Will my soldier be caused 

to leave prematurely?’’ Those types of things. 

And so the issue is that they are beginning to focus on it more 

so than we would like to see them worry about it. 

And, again, our concern is that we don’t want to break the faith 

with the soldiers and families that we have established over the 

years. I think that is one of the things that has enabled us to do 

what we have done and support two fights for over a decade. 

Let me commend our families for what they have done to date. 

And with your support we have been able to take good care of 

them. 

So they will continue to be with us, but, again, they are focusing 

on it a bit more than we would like to see. 

Admiral FERGUSON. Congressman, as I mentioned in my opening, 

I just returned from a tour to Central Command to Middle East, 

and spoke to about 10,000 sailors on our aircraft carriers, mine 

force, patrol craft. At every forum, from the most senior commanders to the most junior sailor, they ask about sequestration 

and what it means to them, their families. And I sensed a growing 

anxiety over the uncertainty of our fiscal future and what it means 

to them and their service to the Nation. 

And I would just offer that they are looking very strongly to us 

to solve this and to give them certainty so they can plan their lives 

and their aspirations and their future. And I think we owe them 

that great debt as we go forward. 

General SPENCER. Congressman, I have a similar experience. 

There is, I think, some growing anxiety, particularly with our civilians in depots, and that, you know, overall our aircraft engine repair, et cetera, because of the uncertainty. They don’t know what 

is going to happen. 

And as I have gone out and talked to military folks—I mean, it 

is pretty heartwarming, I guess, to hear—all they want is parts 

and to get airplanes off the ground and get satellites launched. 

They just want to get the mission done, and as Admiral Ferguson 

said, they are looking to us to get this thing behind us so we can 

move forward. 

General DUNFORD. Congressman, I would just reemphasize a 

point I made in my opening statement, and that is our folks over 
37 

the past 10 years have done what they have done because of the 

trust and confidence they have in us. They trust that they will 

have the wherewithal to accomplish the mission when they go in 

harm’s way. They trust that we will take care of their families 

when they are deployed. 

And I honestly believe they still trust that that will be the case. 

They still trust us to resolve this issue and make sure that they 

have the proper resources. 

But my point would be, our inability to resolve this, our inability 

to assure them that they will have the wherewithal when they go 

in harm’s way the next time to have what they need to accomplish 

the mission I think is a significant risk. And the point I would 

make about civilians is, there is significant angst in the civilian 

community—civilian Marines, as we call them—about their future. 

And that concerns us a great deal. Because just like Marines, our 

success with civilian Marines—and what they do is important. 

They participate in our training. They fix our equipment. They 

take care of our families. 

And our ability to recruit and retain high-quality civilians is 

equally important. And I think the way we treat them and the ability that we have to provide them with some predictability in their 

future is also important. 

So those are some of the concerns I have. 

Mr. BARBER. Thank you, Mr. Chairman. 

Mr. THORNBERRY [presiding]. Thank you, Mr. Barber. 

Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

And I first want to say that I believe that the Congress of the 

United States should stay in session until we resolve this problem 

of sequestration, as well as some of the other issues facing this 

country, such as bumping up against another debt limit and the 

fiscal cliff that we face. And so I will be voting against adjournment tomorrow. 

Let me just say, first, I differ with a lot of my colleagues. I think 

that we are capable of more cuts in the Department of Defense. I 

just disagree in the manner that they are going to be done through 

sequester; that is it is going to fall disproportionately on weapons 

and equipment that are so vital to our fighting forces. 

But let me just say first, I think that prospectively, I would like 

to see cuts. I think that the Department of Defense is far too top 

heavy—more admirals than ships in the United States Navy. And 

it is that top heavy across the board in the other services, as well. 

I think we ought to look at some of the permanent overseas military bases that we have: 79,000 troops still in Europe. Our NATO 

[North Atlantic Treaty Organization] allies, most of them are 

spending less than 2 percent of their economy on defense. We are 

at 4.7 percent. 

South Korea—28,000 troops. We are at, again, at 4.7 percent of 

defense spending as a share of the economy. They are at 2.7 percent. It seems like we care more about defending South Korea than 

the South Koreans. 

This whole notion of nation building, which has been so incredibly costly—that we could invade, pacify and administer whole 

countries based on the premise that at the end of the day they real-
38 

ly just want to be like us, if only given the opportunity they will 

be like us. 

You know, I volunteered to go to Iraq with the United States Marine Corps out of retirement—not because I believed in the war; because I believed once we were in it we had to finish it. But how 

costly that was not just in terms of lives, but in terms of tax dollars 

spent. 

And as long as I am on this committee, if I can do one thing, it 

would be making sure that this country never goes down the road 

of nation building again. And I am glad to see that we are phasing 

out of Afghanistan. 

On the issue of Libya today, I mean, it is stunning the lack of 

coordination between the intelligence community and the State Department. And now that we are being reactive when we could have 

easily been proactive, didn’t even have a Marine Corps security detachment on the ground in Tripoli in the embassy. Pretended as if 

it was a permissive environment, which was stunning to me, and 

it cost the lives of a U.S. ambassador and two of his co-workers. 

With that said, let me put one question out to the United States 

Marine Corps. And with our ability to respond in that region right 

now with FAST [Fleet Antiterrorism Security Team] teams and 

NEO [Non-combatant Evacuation Operation] ops, how does sequester impact that capability? 

General DUNFORD. Congressman, when we look at sequester, 

what we will make every effort to do is make sure that our current 

operations don’t suffer. So the expectation would be that the Marines that are in Afghanistan, our fleet anti-terrorism support 

teams, and the forces necessary to do the kinds of things you alluded to a minute ago would be resourced. 

Where you would see the price being paid is units at home station, again already in a degraded state of readiness. This would 

further exacerbate that home station readiness. But it would not 

degrade the readiness of those forces that are forward deployed. We 

would make every effort to make sure that wasn’t the case. 

Mr. COFFMAN. Let me just say I would never support a cut that 

compromised the national security or the capability of this country 

to defend itself. And I think, fundamentally, sequester and the 

manner that these cuts are going to be done will in fact compromise national security, will in fact compromise the capability of 

this country to defend itself. 

You know, I guess another question for the Marine Corps—if sequester would occur, what would be the permanent damage to the 

United States Marine Corps in terms of its ability to respond to incidents across the board? 

General DUNFORD. Congressman, the permanent damage would 

be hard to explain at this point. What we would experience, as I 

mentioned to Congressman West, is we would pay for current operations. 

Our modernization account, our infrastructure would suffer, and 

then those units that are home stationed would suffer. But the immediate impact would be—that is the bench that you expect the 

Marine Corps, as the Nation’s crisis response force, to be ready 

when the Nation is least ready in the unexpected crises and contin-
39 

gencies that are supported by those forces that are at home stationed. 

And so the degraded readiness that we would see in those forces 

at home station would impact our immediate crisis and contingency 

response capability. 

Mr. COFFMAN. Thank you, Mr. Chairman. I yield back. 

Mr. THORNBERRY. Thank you, Mr. Coffman. 

Gentlemen, thank you again for joining us today. We appreciate 

your service to our Nation. 

And I wanted to make a little statement before we got into my 

line of questioning, and that is, there is an issue out there that I 

think hasn’t gotten as much attention as I think it needs to. We 

all talk about sequester, but we haven’t talked a lot about Afghanistan and recent events in Afghanistan, with the attack there at 

Camp Bastion and the Taliban’s efforts there. I think that is something that we all ought to be looking at. 

I see we had two brave Marines there defending that airfield perished. We see six of our AV–8B Marine Corps harrier jets being destroyed, a number of other ones damaged. We see that type of brazen attack there in Afghanistan. 

And while at the same time we are here talking about sequestration, talking about cuts to the overseas contingency operation funds 

while at the time that we are under, I think, some pretty challenging times here in Afghanistan, I think it is unconscionable that 

this body is preparing to go home while we look at these challenges. 

That is just not right. This body can do better than that. It must 

do better than that. It must stay in town. Make sure this sequester 

gets set aside. 

As the debate took place earlier—I know folks were talking 

about, ‘‘How do we make reductions to the budget?’’ Nobody had 

any intention of ever getting to this point of making these types of 

cuts across the board to our national defense. It is not where this 

Nation needs to be. 

We need to stay in town and get this done. And I, like other 

Members here, have stated I will be voting against this body going 

home. We have to get this job done for our men and women that 

serve this Nation. 

With that being said, Admiral Ferguson, I wanted to point to you 

and ask your estimate about what will happen in one area of the 

Navy, specifically aircraft carriers. 

We know the U.S. law says you have to maintain 11 carriers. We 

know that about seven or eight are at sea at any one time, based 

on maintenance schedules, based on time sailors have to be resting 

a little bit or retraining, whatever the case may be, making sure 

that the refueling is taking place. 

That being said, we know that those challenges are there. And 

we know that if you look at sequestration and look at what challenges that is going to place on carrier OPSTEMPO [operations 

tempo], on maintenance schedules, on refueling schedules, I want 

to get your estimate on how you believe sequestration will affect 

that. 

Also manning, how a 9.4 percent reduction in your budget is 

going to affect maintenance schedules and manning schedules. 
40 

Also, are we looking at 9-plus-month deployment schedules and 

shorter dwell times, shorter times for our men and women who 

serve in this Nation’s Navy to be at home? Is that going to change? 

And thirdly, with the new Asia-Pacific strategy, with that shift 

in strategy, will sequestration allow the Navy to attain the goals 

set forth in that strategy so, Admiral? 

Admiral FERGUSON. Well, thank you for the question, Congressman. 

Let me speak about the carrier force and then I will go into the 

broader strategic questions that you have posed. 

Firstly, we have an issue right now, and I will digress a second, 

in the continuing resolution is that we need authority to complete 

the refueling overhaul in the Theodore Roosevelt and we need additional congressional authority to begin Abraham Lincoln, which is 

prepared to start after the first of the year. 

And that we are working with Congress through reprogramming 

action to achieve that and so I would ask support of that initiative 

because not having those carriers complete their availabilities or 

start their refueling will greatly impact future availability of aircraft carriers. 

We have a single refueling yard located in Virginia. And that single facility has to process the carriers and they are stacked up to 

come through. 

On the broader question of sequestration, what the impact will 

be is that we will have to defer maintenance and we are presently 

supplying two aircraft carriers in the Middle East, Enterprise and 

Eisenhower, now. 

And we are accelerating the preparations and training of additional aircraft carriers to replace them as well as sustain an aircraft carrier in the Western Pacific. 

Under sequestration we will divert as many resources as possible 

to prepare those air wings, the escort ships and the carriers to 

meet the schedule. But we will be creating a deficit in the forces 

beyond the next group to deploy where we will have insufficient 

funds to offer them sufficient training, flying hours and maintenance. 

And over time under sequestration you will see the Navy get 

smaller. We have testified previously to a force of around 230 to 

235 ships in the future if this is sustained for 10 years. 

And you will see less presence forward. You will see an inability 

to complete maintenance periods in a timely fashion to meet the requirements of the combatant commanders. 

And it will result in a smaller force that is less available to respond to crises and to deploy. 

For those existing forces we are seeing already, because of the 

heavy demand for the Navy, both in the Middle East and in the 

Pacific, longer deployments. Our carriers are operating at about 8 

months or so. 

Our ballistic missile defense ships are operating at 9 months, 

with very rapid turnarounds to go back. And those portions of the 

force in most demand are operating at a very high tempo. 

We would not be able to sustain that going forward, under sequestration. 
41 

Mr. THORNBERRY. How about the new Asia-Pacific strategy? How 

do you see this affecting that in the long term? Would we be able 

to maintain meeting the goals of that strategy? 

Admiral FERGUSON. Yes. As part of the broader security strategy 

of the Department of Defense, we would be unable to sustain that 

because we would be a smaller force and with less presence and 

less ability to surge. 

And that puts that at risk as we go forward in the future. 

Mr. THORNBERRY. Very good. Thank you, Admiral. 

General Dunford—wanted to ask you a question and kind of put 

things in perspective. The Marine Corps has been extraordinarily 

busy in recent years. 

As you know, last year a Marine Corps MEU [Marine Expeditionary Unit] during a single deployment was able to take up a variety of different operations: humanitarian aid in Pakistan, combat 

operations in Afghanistan, anti-piracy efforts there in the Horn of 

Africa, and then being a significant part of Operation Odyssey 

Dawn there in Libya. 

Very, very busy times—your forces being stretched; we all know 

where the Navy is right now as far as the number of amphibious 

ships and being able to really meet the requirement that is there 

and questioning where that goes in the future with being able to 

build additional amphibious ships. 

You lay on top of that the new Asia-Pacific strategy that looks 

at dealing with issues there in that particular region, many of 

which are a need for Marine Corps capability that goes with that. 

I wanted to get your perspective, based on this current scenario, 

how do you see your current posture in relation to potential sequestration and then laying on top of that the new Asia-Pacific strategy, if you can give me your perspective on what that means for 

the Marine Corps? 

General DUNFORD. Congressman, with regard to the crisis response, you know, you alluded to the things that we have done over 

the past 2 years. 

And we would expect we would continue to do those things, even 

under sequestration. 

In other words, there is not a call that we have missed yet. And 

there is no expectation that we will miss a call in the future. 

The impact, though, will be on that crisis contingency response 

depth at home that I have talked about. In other words, our forward-deployed, forward-engaged forces, we are committed to make 

sure that they go out the door as ready as possible. 

But the bench back at home is going to get thinner and thinner 

over time. We have a readiness challenge today. It will be exacerbated. 

The critical piece about the Pacific is that we are in the process 

of reconstituting our unit deployment program in the Pacific. That 

really is the core of our contribution to the United States Pacific 

Command and that is the force that would execute the combatant 

commander’s theater campaign plan. 

As a result of sequestration, in our initial impact assessment we 

would not have the resources available in order to continue to resource the unit deployment program in 2013 and beyond. 
42 

And that will, again, preclude us from meeting the goals that 

have been assigned to us in the theater campaign plan by the U.S. 

Pacific Command. 

So it absolutely will have a strategic consequence. 

Mr. THORNBERRY. Very good. Well, thank you, General Dunford. 

Gentlemen, Secretary Hale, General Austin, Admiral Ferguson, 

General Spencer, General Dunford, I want to thank you all again 

for your service to our Nation, for your leadership, for your direction during what is a very challenging time both for us abroad and 

here at home. 

And I thank you again. 

And with that, if there are no other questions or business to 

come before the House Armed Services Committee, the hearing is 

now adjourned. 

[Whereupon, at 12:05 p.m., the committee was adjourned.] 
A P P E N D I X 

SEPTEMBER 20, 2012 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

SEPTEMBER 20, 2012 

(47) 

Statement of Chairman Howard P. "Buck" McKeon 

Department of Defense Plans for Sequestration: The Sequestration 

Transparency Act of 2012 Report and the Way Forward 

September 20, 2012 

This will be the last week the House is in session until mid-November. Today's 

hearing will provide Members a final opportunity before the lame duck session to 

infonn themselves and their constituents about how sequestration will be 

implemented and how those decisions will affect our men and women in uniform 

and our national security. 

We had hoped that the President would provide this infonnation in the report 

required by the Sequestration Transparency Act. Unfortunately, he failed to 

comply with both the letter and the spirit of the law. Not only was the report late, 

but the report submitted to Congress merely paid lip service to the dire national 

security implications of these cuts - after the President has had over a year to 

consider this crisis. 

Moreover, the White House has even gone so far as to instruct the Department of 

Defense not to make preparations for sequestration. Nevertheless, as previous 

testimony to this Committee has provided, many of our military leaders believe 

initial preparation for sequestration must occur well in advance of the January 2, 

2013 implementation date. For example, when the Secretary of the Anny, John 

McHugh, was asked this spring ifplans for sequestration were underway, he stated 

"[w]e are not doing as yet any hard planning. That would probably happen later 

this summer." 

Today we are following up with the Department to review and understand the 

mechanics of sequestration - how would they implement it and the timelines 

necessary to develop a comprehensive and concrete strategy if sequestration were 

to occur. This morning we will hear firsthand from the Honorable Robeli F. Hale, 

Under Secretary of Defense Comptroller; General Lloyd J. Austin Ill, Vice Chief 

of Staff ofthe Anny; Admiral Mark Ferguson, Vice Chief of Naval Operations; 

General Larry O. Spencer, Vice Chief of Staff of the Air Force; and General 

Joseph F. Dunford, Assistant Commandant ofthe Marine Corps. 

Let me make one final observation and appeal to our witnesses. As the recent 

violence throughout the Middle East has reminded us, we are living in the most 
48 

dynamic and complex security environment in recent memory. The decisions we 

make with regard to sequestration will have a tangible and lasting effect on that 

global security environment. 

Last month, in testimony before the Committee, the White House budget director 

stated, "The impact of sequestration cannot be lessened with advance planning and 

executive action." He misses the point planning can't resolve sequestration. But 

the lack of planning and the failure to exercise leadership now can make a dire 

situation worse. Gentlemen, we understand that there are no easy choices here, but 

now is not the time for ambiguity. In your testimony, I urge each of you to be as 

clear with us as you possibly can about what the road ahead portends for the 

implementation of sequestration. This could well be the last opportunity for our 

military to get these facts on the record before the deadline for a legislative remedy 

has passed. 
49 

Statement of Ranking Member Adam Smith 

Department of Defense Plans for Sequestration: The Sequestration Transparency Act of 

2012 Report and the Way Forward 

September 20, 2012 

Thank you, Mr. Chainnan. I appreciate that we arc having this hearing. I think sequestration is 

unquestionably the most important issue facing our government, figuring out how to deal with it, 

and it is important that we learn more about it. 

And it is clear, and I believe the president, the secretary of defense and numerous other executive 

branch officials have made it clear that they see sequestration as having a devastating impact on 

defense. That was the point, I believe, of the OMB [Office of Management and Budget] 

director's remarks-was, "Don't think that you can somehow, you know, make this work in a 

way that is not going to have a huge negative impact on our national security." 

That is the main point that has been made by countless witnesses and folks in a very bipartisan 

way. I don't think there is any disagreement whatsoever on that. Even if you think that savings 

can be found in the defense budget, and J do, this is not the way to do it. It is going to be a $57 

billion cut at the absolute last minute, in the middle of fiscal year 2013, after all kinds of 

planning was done to try to set it up. 

It is also, you know, across the board. Every program has to be cut by the same amount, for the 

most part-so the very limit in tenns of any flexibility in tenns of handling this. So we have 

established beyond a shadow of a doubt that this is not good policy and no one has claimed that 

it is. 

As for the issue that somehow the Pentagon and the White House has done nothing to plan for it, 

I don't think that is at all accurate. We had Undersecretary Ash Carter here about a month ago. 

He went for about, I don't know, 5, 6 minutes chapter and verse right down the line of the 

programs that were going to be cut and how they were going to be cut. 

The executive branch has said which programs, in their interpretation of the law, will be exempt. 

Personnel programs arc going to be exempt. They have said specifically this is going to be, and I 

may be off on the number here, a 9.6 percent across-the-board programmatic cut in everything. 

So I don't think it is accurate to say that we have not been planning for it. We have been 

planning for it. There is a limited amount that you can do. There is some ambiguity in the law. 

We have heard a variety of different interpretations as to how you can sort of work with that 

ambiguity in tenns of what programs count and what programs don't. The president has said 

now here is what it is. 

So we know what it is. The challenge is trying to stop it from happening. And the only way to 

do that is to pass a comprehensive plan to reduce the deficit. That is what the Budget Control 

Act required-find savings so that we don't have a deficit that is uncontrollable; that we get it 
50 

under control. The requirement is $1.2 trillion over 10 years. 

There have been various plans out there to get us up as high as $4 trillion over 10 years, and we 

simply have to choose to do that. I have said it before. I will say it again. [think revenue has to 

be part of that equation. [fyou are absolutely committed to the need to provide for the national 

security of this country; if you are deeply concerned, and I share the chairman's views about the 

complexity ofthe threat environment and our need to be prepared for it, then you ought to be 

prepared to raise the revenue necessmy to pay for that national security that we want so badly. 

Thus far, we have been unwilling to do that. That puts us in the box that we are in. I think it will 

be interesting to hear from all you gentlemen about, you know, how you are working out the 

details ofthat, but T don't think it is the huge mystery that some have portrayed it to be. We 

know how much is going to be cut; roughly, we know what it is going to be cut fi'om; and a 

number of different studies both, you know, in the government and outside, have attempted to 

assess the damage that will be caused by that. And there is a variety of different opinions on 

that, but it is not something that has gone unexamined, let us put it that way. 

What T would like us to do is spend the time trying to make sure that we stop this thing that just 

about everybody agrees is bad policy from happening. And the way to do that is to be realistic 

about our budget deficit. Stop pretending that we can bang the table about how awful the deficit 

is and then shy away from any of the steps necessary to cut spending or raise revenue to deal 

with it. That is the fundamental denial that we have to deal with to prevent this problem from 

becoming very, very great come January. 

So I look forward to the testimony fl'om the witnesses and trying to deal with this very, very 

difficult issue. 
51 

Statement of 

The Honorable Robert F. Hale 

Under of Defense (Comptroller) 

General Lloyd 1. Austin III 

Vice Chief of Staff, U.S. Army 

Admiral Mark C~'m"'~n 

Vice Chief of Naval n""'r~.ti,, 

General Joseph F. Dunford 

Assistant Commandant, U.S. Marine 

General larry 0, Spencer 

Vice Chief of Staff, U.S. Air Force 

before the 

House Armed Services Committee 

September 2012 

Embargoed until released 

the House Armed Services Committee 
52 

rmnnrrmmrv to today the effects of the pOl,cnrnal 

SC{ltlCstflCllir)l1 ,.'>",,,, .. ,,,,1 by the failure of the Joint Committee to ,reduce the 

issued ill response to in the Serqulestration 

Sercretar'V Panetta has for many months that would have 

dC'tastat:ingeffeels oa the Department of Detense (DoD) and virtually cvery other federal 

agency> While Wt' can discl1sS the STA report and assessments ofthc effects 

SC(ju{rsl1ution, we cannot create a that ol,iminates these consequences, or even 

mrl",,,ll'< them The reason is that sequestration was to be an 

intlexible policy that was never intended to be Instead, it was enacted as a 

to to devise a to reduce the federal deHcit of 

that the President can 

The ST A report that 

wonld oCCllr under the ,101111 n1t: repol1 assumes that 

anlOl'cmrJatlof'S are lunded based on a resolution that pr('VHleS 

rate as in FY 2012, Based 011 this and other the 

estimates that reductions in the national defense tunction would total $54>7 

8nt'IWI1l1," about $52,3 billion ofthcst' reductions would 

with each such (!(conn! ab:sorbirlg 

ofitsseq.ne"tcl'abile resources, The report reneets the eX1omptir)ll 

Based 011 authority by the Balanced Enlcrgcllcy 

Deficit Control Act of 1985. as amended> the President has indicated intention to 

exempt and the STA report reflects this decisiOlL 

With the accounts, the l\dministratinn cannot choose 

which programs to exempt OJ' percentage cnts to Tbe exempt and nonexempt determinations are based on requirements in the 

,e"lS,a!lOn also included a requirement to show reductions at the pnlgr'Ulll, 

activity leveL Because urtbe STA '$ deadIlne days, the 

number of PPAs across all and accounts, and iuconsistencies in the 

PPAs arc dennccl, the STA report slates thai ad,jiti.onal timc ;s necessary to 

and resolve issues associated with infonnatioll at this level of detail. 

Thc STA report also noles that its estimates are prer!inlin:ary. 

occur, the actual reductions would differ based on 

budgetary, and technical Joint Committee sccluestTllticrn W}VCrmc,ct by 

the Balanced Budget and Dctlcil Control Act of 1985, including 

amendments in the Act of 20 11. 
53 

For purpo,es of this to',Hii""'''Y, we assume that a sequestration of the Sott descrihed in the 

STA report actually uCt,urs on January 2, 2013, resourccs ill each 

dis:en:ticiUary account in the DoD would he reduced by 9,4 The basic 

across-the-board nature of the cuts would leave us with limited ilexi!,ili'tv 

olIset the across-tile-board nature OISej:jUl~stlratlon 

rep'ro~~rarnmin/i, '- a method used DoD to 

ret)rognut1ming at most otTers a limited 

""'l11'sh'Hticm Under current law, the amount of funds that can be transfcrred is limited, 

rClpn:lgramlm!lng that adds funds to or project must be offsct 

!x;,'ClIuse, as Ii matter 

serious problems, 

The reductions described in the STA report would to Overseas CO'llting,en,:y 

which pays fiJr the added costs of wartime activilies, 

in comhat is DoD's were 

maj:ntenance (O&M) 

and Marine Corps would give to 

and, do so, other O&M programs would need to be reduced by a s;,'ni:lic'll1tlv 

greater percentage than the overall rate, 

We. would try minimize the effects of these tmse'·bt:ld~,et redlJCllOll, on teaciiness. For 

exaIllple, we would cons.ider for facilities 

sustainment, restoration, and and 

administratlw coSIs and in base opef2ltmlg 

Howcv~'r, we would nut 

rcndiness, which would. result in reductions in 

reduced could to 

occur. 

2 

fhr direct 

Under some circumstances, 

eo·ntlJlg'~ncy, should one 
54 

£:jvilian Personnel Effects 

fix our weapons including those chunaged in war; less 

to enter into well-cralled contracts. those war zones. and to handle 

linandal transaction and audit etlurts; and support for other criticallunctions that 

henetit the and 

I~nects on Modernization 

Seqnestration would not nftee! already on 

contracts. But it would nevertheless have suhstantial adverse eJTects on DoD's 

investment programs. Under the in the STA report. there would be 

a 9,4 percent reduction in eaeh ofthe accounts that t1.md 

procurement research, test, and evaluation; and construction 

In many cases we would have ttl fewer weapons in order to accommodate 

reductions, which would drive up unit costs. In cases where we cannot 

reduce the of items come immediately to mind ,ve 

projects. Thus there could in ship deliveries lur vessels 

CVN-78 class aircratl carrier. While we would to 

ellec(s, SCcjUcstnlU(,n 

snpPo1'1ling DoD. 

In this statement, we ttlCUS Oil sequestration'$ irnmediate and drastic effects in FY 2013. 

However. and the ofthe discretionary caps would reduce DoD 

to $55 biHion in each ycarll'om FY 2013 FY 2021. The 

reducti()ns beyond FY 2013 would not have to be across-the-hoard 

cuts. But the cuts would stiH be in efleet doubling the reductions 

the Budget Control Act. Even the President has indicated his intent tQ exempt 

military from any 2013 sequestration. the (julyear cuts wquld force 

the Department reductions in military personnel and units the years 

2013. Otherwise, we would end up with too units and not 

funds to train and equip them. While decisions need to be made 

it is clear that and the ofthe defense would. over time, 

lead to fewer or many types of!urccs. 

teams. and 

"";""\.Ul'" airerall carrier", combat 
55 

Sequestration, and lowered 

just size, Our senior military 

day 

caps, would also atlee! our threes in 

assess that would mean 

with partners, which may aftec! and physical access when we nc~xl 

it in the lllturC, Over time, the total Joint Force would become less to respond 

across a range ofmissions~ less adaptable to Jnodern 

relative to the forces adversaries, those with anti-access/area 

denial With a smaller force, we ,vould need to increase cnd 

when and we would face greater risk in bow fast and 

how well our National Guard and Reserve threes are able 10 

units and their readiness caused by and the 

di,;cf1~ti,)m!rv caps in the out years would, in turn, that we revisit 

tbat the President put in place last January. While is 

sp.~cincs, s.~q!.iestratiou would fbrce DoD to revise a strategy that 

desig:ned to meet cnrrent national needs, 

Our senior leaders arc also coneehled that the morale of the force will be 

affected in ways that are We could face and retention nf(lhlems, 

"Arti',llIAdv among the most talented in the force. While we wi!! attempt to ensure that 

reductions do cause us to break faith with our troops, reductions to 

and retiree programs conld uudemlinc our to and retain an all-volunteer 

force and 10 keep families Our senior military leaders arc committed to 

the force in balance as the hest trained, best led, and hest [(wee on the 

In their assessment, risks the t,m:e (lut 

lamilies and retirees would also be O"'v,>,'<"I", While 

in payments 

potentially, some denial of service. 

4 
56 

While we can foresee the hannlhl impacts of sequestration that we described, 

we cannot devise a that eliminates, or even them, We arc 

working with the and Budget (OMB) 10 understand this COI!nnleX 

lefllslatll,m, and we arc Congress still has the time to enact 

reduction that the President can and that halts ofihis inflexihlc 

law, the unfLlfIullute event that sequestration is 

OMB und like all the federal affected hy the law 

implement 

worried about a different type 

hut we cnd up tri"",,,;r.,, 

wan! to alarm our enm"OVlces an!1o'l!ll,~ing 

would introduce ml,-thi'li'niV 

N or do we want to cut back on 

COlnDlex array of 

budg"ta!ry environment in which we arc 

nl1,mltml' the risk of triggering adverse reaL To avoid these prt,hl'oms, 

and consis!entwith OMB's issued on July 31, we will continue llol1tJaI 

operz.tic>lls unless se(ju,:stl'atioll 

we understand that 

constitute im!')()1iml' dCl:isi'Cll1S on 

issucs.related to sequester. They face many of the same dilemmas we do, and many of 

these companies have alaml about the potential eHeels The 

hest that can is ftlf Cc.ng,re,;s to 

sequestration. 

!n sum, and the lowering ofthe would result in a lcsscapable, less-modem, less-ready (wee and risks a military, It would also 

require a ill our current national security strategy, which we believe is the 

one. 

natimlal crises and this is a parti(:lliarly 

to allow such and mechanical cuts to take cffect We very much 

COllgresswill pass 11 donci! reduction that the Presidcntcan and that 

avoids se(IUesttlltk>l1, 

5 
57 

Robert F. Hale 

Under Secretary of Defense (Comptroller) and Chief 

Financial Officer 

As Under Secretary of Defense (Comptroller), Robert F. Hale is the principal 

advisor to Secretary of Defense Leon E. Panetta on all budgetary and fiscal 

matters, including the development and execution of the Defense Department's 

annual budget of more than $600 billion. As Chief Financial Officer, Mr. Hale 

also oversees the Department's financial policy, financial management systems, 

and business modernization efforts, 

At the time of his nomination by President Barack Obama in January 2009, 

Robert Hale was Executive Director of the American Society of Military 

Comptrollers (ASMC), the professional association of Defense financial 

managers. For three-and-a-half years, he led the society's certification program 

(the Certified Defense Financial Manager program), as weI! as training 

programs, a professional journal, and other activities, including ASMC's National 

Professional Development Institute, an annual conference which attracts more 

than 3,500 participants. 

From 1994 to 2001, Mr. Hale served in the Pentagon as the Assistant Secretary of the Air Force (Financial Management and 

Comptroller), where he was responsible for annual budgets of more than $70 billion, efforts to streamline Air Force financial 

management, and compliance with the Chief Financial Officers Act. 

For the 12 years prior to his Air Force service, Mr. Hale headed the National Security Division at the Congressional Budget 

Office (CBO), developing quantitative analyses of major defense budget issues and testifying frequently before Congressional 

committees. 

Earlier in his career, Mr. Hale was a senior fellow and head of the acquisition and grants management group at LMI, a 

consulting firm specializing in service to the Federal government. He also spent three years as an active duty officer In the 

U.s. Navy and served as a staff analyst and study director at the Center for Naval Analyses. 

Mr. Hale graduated with honors from Stanford University with a B.s. in mathematics and statistics. He also holds a Master's 

degree in operations research from Stanford and an MBA from the George Washington University. He is a Certified Defense 

Financial Manager (CDFM), a fellow of the National Academy of Public Administration, and a past member of the Defense 

Business Board. 
58 

General Lloyd J. Austin, III 

Vice Chief of Staff for the U.S. Army 

General Lloyd J. Austin III, hails from Thomasville, Georgia. He 

was commissioned an Infantry second lieutenant in 1975 upon 

graduation from the United States Military Academy at West 

Point, New York. 

General Austin has served in a wide variety of command and 

staff positions throughout his 36-year career. His early 

assignments included duty with: the 15t Battalion, 7th Infantry, 

3d Infantry Division, U.s. Army Europe and Seventh Army; 2d 

Battalion, 508th Infantry, 82d Airborne Division, Fort Bragg, 

North Carolina; U.s. Army Recruiting Battalion, Indianapolis, 

Indiana; United States Military Academy, West Point, New York; 

2nd Battalion, 22nd Infantry and 15t Brigade, 10th Mountain 

Division (Light), Fort Drum, New York. 

General Austin then returned to Fort Bragg in 1993 and served 

as Commander, 2d Battalion, 505th Parachute Infantry Regiment, 

82d Airborne Division; G-3 82d Airborne Division; and later as 

the Commander, 3d Brigade, 82d Airborne Division 1997 to 

1999. Following duty at Fort Bragg, he was assigned to the Pentagon where he served as Chief, 

Joint Operations Division, J-3 on the Joint Staff. 

More recently, General Austin served as the Assistant Division Commander (Maneuver), 3d Infantry 

Division (Mechanized), Fort Stewart, Georgia and OPERATION IRAQI FREEDOM, from July 2001 until 

June 2003; and Commanding General, 10th Mountain Division (Light), Fort Drum, New York from 

September 2003 until August 2005 with duty as Commander, Combined Joint Task Force-180, 

OPERATION ENDURING FREEDOM, Afghanistan. He then served as the Chief of Staff, United States 

Central Command from September 2005 until November 2006 followed by assignment as the 

Commanding General, XVIII Airborne Corps in December 2006 where he commanded, Multi-National 

Corps - Iraq, OPERATION IRAQI FREEDOM, from February 2008 until April 2009. He was then 

assigned to the Pentagon as the Director, Joint Staff from August 2009 to August 2010. General 

Austin commanded United States Forces - Iraq from September 2010 through the completion of 

OPERATION NEW DAWN in December 2011. 

His military education includes the Infantry Officer Advanced Course, United States Army Infantry 

School, Fort Benning, Georgia; United States Army Command and General Staff College, Fort 

Leavenworth, Kansas and United States Army War College, Carlisle Barracks, Pennsylvania. 

He holds a Bachelor of Science Degree from the United States Military Academy, a Master's Degree in 

Education from Auburn University, and a Master's Degree in Business Management from Webster 

University. 

General Austin's awards and decorations include the Defense Distinguished Service Medal (with Three 

Oak Leaf Clusters), the Distinguished Service Medal (with Oak Leaf Cluster), the Silver Star, the 

Defense Superior Service Medal (with Oak Leaf Cluster), the Legion of Merit (with Oak Leaf Cluster), 

the Defense Meritorious Service Medal, the Meritorious Service Medal (with Four Oak Leaf Clusters), 

the Joint Service Commendation Medal, the Armv Commendation Medal (with Six Oak Leaf Clusters), 

Army Achievement Medal (with Oak Leaf Cluster), Combat Action Badge, Expert Infantryman Badge, 

Master Parachutist Badge, the Ranger Tab and the Joint Chiefs of Staff Identification Badge. 
59 

Vice Chief of Naval Operations 

8/22/2011 - Present 

Admiral Mark Fergnson 

Following graduation from the U.S. Naval Academy with the Class of 1978, Adm. 

Ferguson completed nuclear power training prior to entering the fleet as a surface 

warfare officer. 

His afloat assignments include service on board USS South Carolina (CGN 37), 

USS Fife (DD 991) and USS Dwight D. Eisenhower (CVN 69). He commanded the 

USS Benfold (DDG 65) and Destroyer Squadron 18. 

In addition to various staff assignments, he served as a Special Assistant to the 

Supreme Allied Commander, Europe, in Mons, Belgium, He has also served as the 

assistant commander, Navy Personnel Command, chief of legislative affairs, and 

chief of naval personnel. 

Ferguson holds a master's degree in computer science from the Naval 

Postgraduate School and completed a National Security Fellowship at the Harvard 

Kennedy School. His awards include the Navy Distinguished Service Medal, the Defense Superior Service Medal, and 

various unit and campaign awards, 
60 

General Joseph F. Dunford, Jr. 

ASSISTANT COMMANDANT OF THE MARINE CORPS 

General Dunford was promoted to General and assumed the duties of Assistant Commandant of 

the Marine Corps on 23 October 2010. A native of BostOD, Massachusetts, General Dunford 

graduated from St. MIChael's College and was commIssioned in 1977, 

General Dunford's assignments in the operating forces include Platoon and Company Commander, 

Co K, 3rd Battalion, 1st Marines; Company Commander, Co A, 1st Battalion, 9th Marines; and 

Company Commander, Co L, 3rd Battalion, 6th Marines. He served as the Operations, Plans, and 

Training Officer in 2d ANGLICO and the Regimental Executive Officer, 6th Marines. He commanded 

the 2nd Battalion, 6th Marines and the 5th Marine Regiment. He served as the Chief of Staff, 1st 

Manne DIVIsion. 

Other assignments include Aide to the Commanding General, III MEF and a tour in the Officer 

Assignment Branch, HQMC He has also served as the Marine Officer Instructor, College of the 

Holy Cross; as a member of the Commandant's Staff Group; and as the Senior Aide to the 

Commandant of the Marine Corps. Joint assignments include service as the ExecutIve Assistant to 

the Vice Chairman, JCS; Chief, Global and Multilateral Affairs Division (JS); and Vice Director for 

Operations (D). 

As a general officer, he has served as the Assistant Division Commander, 1st Marine Division; the 

Director, Operations Division, Plans, Policies and Operations, HQMC; and the Deputy Commandant 

for Plans, Policies and Operations; and most recently as Commanding General, I MEF and 

Commander, Marine Forces Central Command. 

General Dunford is a graduate of the U. S. Army Ranger School, Marine Corps Amphibious 

Warfare School, and the U. S. Army War College. He holds an M.A. in Government from 

Georgetown University and an M.A. in International Relations from the Fletcher School of law and 

Diplomacy. 
61 

BIOGRAPHY 

UNITED STATES AIR FORCE 

GENERAL LARRY O. SPENCER 

Gen. Larry O. Spencer is Vice Chief of Staff of the 

U.S. Air Force, Washington, D.C. As Vice Chief, he 

presides over the Air Staff and serves as a 

member of the Joint Chiefs of Staff Requirements 

Oversight Council and Deputy Advisory Working 

Group. He assists the Chief of Staff with 

organizing, training, and equipping of 690,000 

active-duty, Guard, Reserve and civilian forces 

serving in the United States and overseas. 

General Spencer was born in Washington, D.C. He 

received his Bachelor of Science degree in 

industrial engineering technology from Southern 

Illinois University, Carbondale, and was 

commissioned through Officer Training School in 

1980 as a distinguished graduate. General Spencer 

has commanded a squadron, group and wing, and 

he was Vice Commander of the Oklahoma City Air 

Logistics Center. He was also the first Air Force 

officer to serve as Assistant Chief of Staff in the 

White House Military Office, He served as the 

Comptroller and then Director of Mission Support 

(A7) at a major command; and held positions within the Air Staff and Secretary of the Air Force. Prior to his 

current assignment, the general was Director, Force Structure, Resources and Assessment, Joint Staff, the 

Pentagon, Washington, D.C. 

EDUCATION 

1979 Bachelor of Science degree in industria! engineering technology. Southern Illinois University, 

Carbondale 

1980 Distinguished graduate, Officer Training School, Lackland AFB, Texas 

1983 Distinguished graduate, Squadron Officer School, Maxwell AFB, Ala. 

1987 Master of Science degree in business management, Webster College, Sf. Louis, Mo. 

1990 Marine Corps Command and Staff College, Quantico, Va. 

1994 Distinguished graduate, Master of Science degree in resource strategy, Industrial College of the Armed 

Forces, National Defense University, Fort Lesley J. McNair, Washington, D.C. 

2005 Logistics Executive Development Seminar, Wright-Patterson AFB, Ohio 

2005 AFMC Senior Leader's Maintenance Course, Wright-Patterson AFB, Ohio 

2005 LogistiCS Technology, University of North Carolina, Chapel Hi!! 

2005 Black Sea Region Seminar, John F. Kennedy School of Business, Harvard University, Cambridge, 

Mass. 

2006 Lean Six Sigma Green Belt Training Program, University of Oklahoma 

2007 Systems Acquisition Management Course, Defense Acquisition University< Fort Belvoir, Va. 

2011 Pinnacle, Joint, Coalition and Interagency Studies, National Defense University, Fort Lesley J, McNair, 

Washington, D.C. 

ASSIGNMENTS 

1. February 1980 - July 1982, Chief, Cost AnalYSis Branch, Headquarters Air Force Reserve, Robins AFB, 

Ga. 
62 

2. July 1982· August 1986, cost and budget officer, Headquarters U.S. Air Force, Washington, D.C. 

3. August 1986· July 1989, budget officer and executive officer, Headquarters Military Airlift Command. Scott 

AFB, III. 

4. July 1989· June 1990, student Marine Corps Command and Staff College, Quantico, Va. 

5. June 1990 - August 1993, Commander, 4th Comptroller Squadron, Seymour Johnson AFB, N.C. 

6. August 1993· June 1994, student and research fellow, Industrial College of the Armed Forces, Fort Lesley 

J. McNair, Washington, D<C. 

7. June 1994· August 1996, Assistant Chief of Staff, White House Military Office, Washington, D.C. 

8. August 1996 - January 1998, Commander, 72nd Support Group, Tinker AFB, Okla. 

9. February 1998 July 1999, Commander, 75th Air Base Wing, Hill AFB, Utah 

10. September 1999 • June 2003, Command Comptroller, Headquarters Air Combat Command, Langley AFB, 

Va. 

11. June 2003 August 2005, Director of Mission Support, Headquarters AFMC, Wright-Patterson AFB, Ohio 

12. August 2005 • August 2006, Vice Director, Oklahoma City Air Logistics Center, Tinker AFB, Okla. 

13. August 2006· October 2007, Director, Budget Operations and Personnel, Office of the Assistant 

Secretary of the Air Force for Financial Management and Comptroller, the Pentagon, Washington, D.C. 

14. October 2007 - March 2010, Deputy Assistant Secretary for Budget, Office of the Assistant Secretary of 

the Air Force for Financial Management and Comptroller, Headquarters U.S. Air Force, Washington, D.C. 

15. April 2010 - July 2012, Director, Force Structure, Resources and Assessments, Joint Staff, the Pentagon, 

Washington, D.C. 

16. July 2012 - present, Vice Chief of Staff of the U.S. Air Force, Washington, D.C. 

SUMMARY OF JOINT ASSIGNMENTS 

1. June 1994· August 1996, Assistant Chief of Staff, White House Military Office, Washington, D.C., as a 

lieutenant colonel 

2. April 2010 - July 2012, Director, Force Structure, Resources and Assessments, Joint Staff, the Pentagon, 

Washington, D.C. 

MAJOR AWARDS AND DECORATIONS 

Defense Distinguished Service Medal 

Distinguished Service Medal 

Defense Superior Service Medal 

Legion of Merit with two oak leaf clusters 

Meritorious Service Medal with four oak leaf clusters 

Air Force Commendation Medal 

Air Force Achievement Medal 

Air Force Recognition Ribbon with oak leaf cluster 

OTHER ACHIEVEMENTS 

1982 Air Force Cost Analysis Officer of the Year 

1987 Outstanding Young Man of America 

1988 Budget Officer of the Year, Headquarters Military Airlift Command 

1991 Air Force Comptroller of the Year 

1991 Department of Defense Financial Initiatives Award 

1992 Wing Comptroller of the Year, American Society of Military Comptrollers 

2000 Author of the Year, Office of the Assistant Secretary of the Air Force for Financial Management and 

Comptroller 

2002 8est Major Command Comptroller in the DOD, ASMC 

2007 Eugene M. Zuckert Management Award 

PUBLICATIONS 

"Stress and the Workplace," Air Force Comptroller Magazine, July 1990 

"Comptroller Wartime Role in Action," Air Force Comptroller Magazine, October 1991 

"Managing Base Operating Support Like a Business," Air Force Comptroller Magazine, April 1999 

"Take a Walk on the Wild Side: The Thrill of Group and Wing Command," Air Force Comptroller Magazine, 

October 2000 

"The Green Eyeshades of War," Air Force Comptroller Magazine, January 2001 

EFFECTIVE DATES OF PROMOTION 

Second Lieutenant Feb. 14, 1980 
63 

First Lieutenant Feb, 14, 1982 

Captain Feb. 14, 1984 

Major Dec. 1, 1988 

Lieutenant Colonel April 1, 1992 

Colonel Jan. 1, 1998 

Brigadier General July 1, 2004 

Major General Aug. 29, 2007 

Lieutenant General April 3, 2010 

General July 27, 2012 

(Current as of August 2012) 

WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

SEPTEMBER 20, 2012 

(67) 

RESPONSE TO QUESTION SUBMITTED BY MR. BARTLETT 

Secretary HALE. Our assessment phase has not been completed and as such, our 

planning phase has not commenced. 

The Department remains hopeful that Congress will halt sequestration through 

legislation. If it does not, we will be ready to implement sequestration. [See page 

14.] 

RESPONSE TO QUESTION SUBMITTED BY MR. BROOKS 

Secretary HALE. The President put forward comprehensive deficit reduction packages with sufficient deficit reduction to avoid the sequester on two occasions. 

First, he submitted a package of proposals in the President’s Plan for Economic 

Growth and Deficit Reduction for consideration by the Joint Committee that included over $4 trillion in deficit reduction and short term measures for job creation. 

This package was not required and the Administration took the nearly unprecedented step of drafting legislative language to assist the Joint Committee and expedite consideration of the plan. 

Second, in light of the Joint Committee’s failure in November of last year, the 

President used the FY 2013 Budget to again propose a comprehensive deficit reduction agreed to in the BCA. When combined with legislation signed into law last 

year, the President’s Budget proposed over $4 trillion in balanced deficit reduction. 

In total, it includes $2.50 in spending cuts for every $1 dollar of additional revenue. 

And the budget was clear in its intent to avoid the sequester. 

Now it is Congress’s responsibility to enact balanced deficit reduction that the 

President can sign and avoid the devastating, across the board cuts that would 

occur under the sequester. [See page 28.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

SEPTEMBER 20, 2012 

(71) 

QUESTIONS SUBMITTED BY MR. FRANKS 

Mr. FRANKS. What are the top three risks to national security that you believe 

will become even greater liabilities if sequestration is not avoided; in what way will 

they become greater liabilities? 

General AUSTIN. In accordance with guidance from the Office of the Secretary of 

Defense (OSD), the Army is not planning for sequestration. The Office of Management and Budget and OSD continue to assess the impact of the sequestration process on all of the Department of Defense should this event occur. 

Our areas of greatest concern are the ability to conduct operations and win decisively; our ability to preserve, protect, and maintain the All Volunteer Force; and 

a potential hollowing out of the force. Reduction of significant resources will increase the risks of a mismatch between strategy and resources. 

First, the Army will seek to minimize the effects of sequestration on training and 

readiness. However, we would not be able to avoid some cuts in funding for readiness, which would result in immediate reductions in training. Furthermore, the 

complex operational environment demands that we continue to empower Soldiers 

and small units with significant investments in technologies and equipment. While 

the Army has maintained investments in modernization, sequestration cuts would 

add considerable risks to the execution of many of our programs. These impacts will 

increase risk to our depth and ability to cover the full range of missions contained 

in our defense strategy. 

Second, sequestration could also impact our ability to preserve, protect, and maintain the all-volunteer force. The Army must sustain the bonds of trust with Soldiers 

and their Families. The men and women of our Army and their Families need to 

know with certainty that we will meet our commitments to them. It is important 

to note that the health of the force and sustaining an all-volunteer Army also depend not just on personnel compensation and benefits, but also on leader and Soldier development programs and a high state of readiness. 

Finally, sequestration could put us on a path toward a hollow force. If sequestration occurs, it is imperative that the Army is afforded the necessary flexibility to 

adjust resources and conduct comprehensive strategic analysis, so we can execute 

our highest priority missions. We must ensure that we preclude hollowing the Army 

by maintaining balance in force structure, readiness, modernization efforts, and 

commitments to the all-volunteer force. 

Mr. FRANKS. What are the top three risks to national security that you believe 

will become even greater liabilities if sequestration is not avoided; in what way will 

they become greater liabilities? 

Admiral FERGUSON. The Department has not begun planning for Sequestration; 

however, the prescriptive and mechanical nature of sequestration affords limited 

flexibility to mitigate the impact of these budget reductions. A detailed review directed by OMB would be required to determine the specific impacts to national security from sequestration. 

Based on our preliminary review, sequestration will reduce funding for the Navy 

in FY13 by nearly $12B dollars. Depending on available transfer authority to consolidate these cuts, sequestration would severely limit the ability to preserve major 

acquisition or readiness programs. It will also affect our industrial base and the expected service life of our platforms. 

The potential reductions will translate over time to a smaller force with less presence, longer response times, and reduced ability to provide surge forces in support 

of our major operational plans and other emergent needs. Under these reductions, 

we will be unable to execute the requirements of the current defense strategy. 

Mr. FRANKS. What are the top three risks to national security that you believe 

will become even greater liabilities if sequestration is not avoided; in what way will 

they become greater liabilities? 

General SPENCER. To meet the objectives set forth in the January 2012 Defense 

Strategic Guidance (DSG), the Air Force must maintain the highest degree of capability and capacity. Imposition of the funding cuts in sequestration will result in 

long-term sacrifice of our ability to maintain the capability and capacity that is required to meet the challenges inherent in the future security environment. In the 
72 

event that sequestration is triggered, the following three risks threaten the Air 

Force’s ability to provide compelling air, space, and cyber capabilities: 1) a decreased 

ability to maintain readiness and proficiency; 2) increased cost to continue sustaining weapon systems while newer, more capable systems are delayed due to program restructures; and 3) increased cost of next-generation systems procurement 

due to the renegotiation of cancelled contracts and loss of economies of scale. Without the ability to mitigate some or all of these risks, they will challenge the Air 

Force’s ability to meet our Nation’s defense priorities. 

Air Force operations and maintenance and investment accounts are stretched to 

meet current readiness and modernization requirements. Sequestration effects 

would require the Air Force to cut operational flying hours and an already strained 

weapon system sustainment program; curtail training; reduce civilian hiring, as well 

as implement potential furloughs and reductions in forces; reduce daily operations 

to emphasize mission critical operations; and defer/stop infrastructure investments. 

It will also negatively impact the Air Force’s ability to recapitalize aging weapon 

systems, requiring the Air Force to continue to sustain legacy weapon systems until 

newer, more capable systems can be procured. 

DSG directs the Air Force stay focused on strategic priorities. Sequestration will 

have a clear and immediate adverse impact on our ability to maintain force readiness and provide capabilities to the combatant commanders (CCDR). To perform full 

spectrum operations while avoiding the creation of a ‘‘hollow force,’’ readiness must 

remain a top priority while recapitalizing an aging, smaller force structure. It is imperative that priority modernization programs receive full funding: the F–35 Joint 

Strike Fighter, the KC–46A Refueling Tanker, and the Long-Range Strike Bomber. 

Aside from military personnel costs, which have been exempted, sequestration calls 

for indiscriminate across the board cuts. Without the ability to manage cuts and 

prioritize among modernization and other programs, sequestration will result in increased costs due to contract termination fees and weapons system per-unit cost increases due to contract re-negotiation. 

In summary, the Air Force identifies sequestration’s three significant risks to national security as: decreased readiness for the next major contingency; a reduced capability due to the increased costs to maintain legacy systems due to delays in modernization programs that have to be restructured; and reduced funding flexibility for 

new, non-conventional technology due to increased cost of renegotiated procurement 

programs. In addition to significantly increasing the Air Force’s operational risk, the 

cuts to procurement programs will prohibitively limit the Air Force’s ability to invest in new systems, degrading our ability to regenerate capabilities that might be 

needed to meet future, unforeseen demands. 

Mr. FRANKS. What are the top three risks to national security that you believe 

will become even greater liabilities if sequestration is not avoided; in what way will 

they become greater liabilities? 

General DUNFORD. The Marine Corps will always seek to optimize the nation’s investment in our capabilities, regardless of funding levels. Even under sequestration, 

the Marine Corps will continue to strive to field the most effective force the nation 

can afford. The top three risks to the Marine Corps are decreased readiness in the 

Nation’s ready force, a disproportionate impact on modernization funding, and an 

inability to maintain progress towards a rebalance to the Pacific. 

Risk 1. Decreased Readiness in the Nation’s Ready Force. 

The Marine Corps carries the mandate from the 82d Congress to be ’’the most 

ready when our Nation is the least ready.’’ As the Nation’s forward engagement and 

crisis response force, the Marine Corps supports a globally responsive rotational 

presence in the Pacific Ocean, Indian Ocean, and a transitory presence in the Mediterranean Sea. This forward presence buys time and decision space for national 

leaders. The Marine Corps is also forward deployed to influence foundational strategic activities and for strategic deterrence. The expeditionary nature of the Marine 

Corps makes it a good friend to allies and partners and a lethal combined-arms 

force in the event of an unforeseen crisis. 

The foundation of this role is the Marine Corps’ five readiness pillars: high-quality 

people, unit readiness, infrastructure, modernization, and capability and capacity to 

meet Combatant Commanders’ demands. If sequestration were to occur, the Marine 

Corps risks severe weakening of these pillars to include decreased personnel readiness because of insufficient manning and training resources; significant shortfalls 

in required modernization and infrastructure investments; and decreased unit readiness due to inadequate resources for training and maintenance. All of these factors 

will contribute to a steady decline in both capability and capacity to meet combatant 

commanders’ foundational forward presence requirements. 

Sequestration could also quickly become a national liability by forcing political 

leaders to make a difficult choice between rapid maritime capacity (which also con-
73 

tributes to global foundational activities) or reducing capacity in the Asia-Pacific region, an enduring strategic priority. While it is important to prioritize particular 

global regions, history suggests that the United States must remain globally responsive, anticipating the destabilizing and disruptive security environment throughout 

the world. The United States requires a Marine Corps that is a ready crisis-response force prepared to respond to the most-likely security challenges—this readiness and responsiveness will be severely impacted by sequestration. 

Risk 2. Disproportionate Impact on Modernization Funding. 

The decision to exempt military personnel from the FY 2013 sequester would 

produce a disproportionate impact on the remaining non-exempt funding in the Marine Corps’ operations, training, maintenance, and weapons modernization accounts. 

The Marine Corps is a manpower-intensive force; the majority of its budget is dedicated to military personnel and it has the smallest equipment investment budget 

of all the Services. As such, exempting manpower from sequestration would have 

a severe impact on the Marine Corps and would be particularly devastating to nonmanpower accounts, especially to modernization and equipment reset efforts. Even 

though sequestration would be proportionately applied to the Marine Corps, the net 

effects on the Marine Corps’ portfolio of smaller investment programs would have 

a disproportionate impact on these programs and the Service’s overall readiness. 

Sequestration would cut the defense budget an additional $55 billion per year 

from the levels established by the Budget Control Act. This yields an additional 

$492 billion in cuts over the next nine years on top of the $487 billion reduction 

already being implemented by DOD. The decision to exempt military personnel 

would impose dramatic and disproportionate cuts across all other appropriations— 

procurement, research and development, military construction, and operations and 

maintenance would each be cut by approximately 9.4 percent. 

Marine Corps programs, by nature, are streamlined to achieve maximum effect 

for the taxpayer, and have little margin for large swings in funding levels. Thus, 

sequestration would cause the Marine Corps to cancel or delay many small modernization programs which are critical in ensuring our ability to equip our individual Marines for their warfare specialties. A secondary impact would be a delay 

in resetting equipment after a decade of combat, forcing Marines to train with obsolete or degraded equipment, in smaller quantities, for an extended period. The impact of sequestration to operations and maintenance funding would be a reduction 

in Marine Corps forward presence and training activities. Reset efforts would be 

slowed, resulting in war-weary equipment not getting the maintenance required to 

continue the mission. Units training at home station would have reduced training 

ammunition, fewer vehicle hours, degraded aviation support and decreased communications support. 

As military personnel are exempted from the cuts, the impacts to the other pillars 

of readiness would be dramatic and unquestionably lead to a hollowing of the force. 

The Marine Corps would be required to dedicate a significant portion of the budget 

to paying for manpower, yet would lack sufficient funding to properly train and 

equip this force. In short, this would result in a high degree of risk and a ‘‘hollow 

force.’’ 

Risk 3. Inability to Maintain Progress Toward a Rebalance to the Pacific. 

The Marine Corps is in the process of rebalancing to the Pacific after ten years 

of warfare in Iraq and Afghanistan; this effort seeks to strategically balance capabilities in Hawaii, Guam, Japan and Australia so that Marines can train, exercise 

and operate with allies and partners and simultaneously have the ability to respond 

to crises across the Pacific region. Sequestration will exacerbate delays in Guam 

construction, which in turn will increase the time required to reduce the Marine 

Corps’ presence on Okinawa and slow the rebalancing effort. 

Forward presence builds trust that cannot be surged when conflict looms. With 

each delay in the Marine Corps’ rebalance to the Pacific region, allies and potential 

partners must make strategic choices regarding their relationships with potential 

competitors in their home region. Opportunities for collective partnerships are 

stressed and relatively fleeting in these conditions. Reduced forward presence signals a reduced U.S. commitment to security partners in the Pacific, with a potentially detrimental effect to America’s strategic global interests. 

QUESTIONS SUBMITTED BY MS. TSONGAS 

Ms. TSONGAS. Some have proposed a 3-month delay of the automatic cuts to defense spending. If the sequester eventually does take effect, but not until April 2, 

how would the DOD absorb a potential 10 percent reduction with only 6 months left 

in the fiscal year? 
74 

Secretary HALE. By law, it would have to be absorbed within any unobligated balances from prior years and FY 2012 funds. This would pose some problems for the 

Department of Defense. 

Ms. TSONGAS. Although under sequestration each program is intended to be cut 

by the same percentage, some programs could be disrupted more than others, depending on size and maturity. Can each of you comment on the potential scale of 

Nunn-McCurdy breaches which programs being developed by each of your services 

could be facing were sequestration to go forward? 

General AUSTIN. Since we are not sure how much flexibility we will have to blunt 

the negative consequences of sequestration through reprogramming or other actions, 

at this time it is impossible to predict with any specificity the number, if any, of 

Nunn-McCurdy breaches that may occur. 

Ms. TSONGAS. Although under sequestration each program is intended to be cut 

by the same percentage, some programs could be disrupted more than others, depending on size and maturity. Can each of you comment on the potential scale of 

Nunn-McCurdy breaches which programs being developed by each of your services 

could be facing were sequestration to go forward? 

Admiral FERGUSON. If sequestration is triggered, automatic percentage cuts will 

be applied without regard to strategy, importance, or priorities, resulting in adverse 

impact to operations and many contracts within the Department. This could result 

in a Nunn-McCurdy breach if an acquisition program’s funding execution is limited 

to the extent that production level becomes cost prohibitive and/or significantly delayed. However, a detailed review of each program, or family of programs, would 

be required to determine the specific impact since each contract contains unique and 

complex provisions, dates, and pricing. We have not completed that review. At this 

point, the Department has not begun planning for sequestration and any planning 

effort will be government-wide as guided by the Office of Management and Budget. 

Ms. TSONGAS. Although under sequestration each program is intended to be cut 

by the same percentage, some programs could be disrupted more than others, depending on size and maturity. Can each of you comment on the potential scale of 

Nunn-McCurdy breaches which programs being developed by each of your services 

could be facing were sequestration to go forward? 

General SPENCER. With regard to modernization impacts, sequestration would 

drive an additional reduction above the first phase of the Budget Control Act reductions to the Air Force Fiscal Year 2013 budget request. The proposed budget is a 

balanced and complete package with no margin of error. Programs would need to 

be restructured, reduced, and/or terminated. All investment accounts would be impacted, including our high-priority Acquisition Category I modernization programs 

such as MQ–9, Joint Strike Fighter, and KC–46A. The Air Force has not conducted 

an assessment on how a 9.4 percent cut will affect each Air Force acquisition program, therefore, we do not know which programs would face Nunn-McCurdy 

breaches. 

Ms. TSONGAS. Although under sequestration each program is intended to be cut 

by the same percentage, some programs could be disrupted more than others, depending on size and maturity. Can each of you comment on the potential scale of 

Nunn-McCurdy breaches which programs being developed by each of your services 

could be facing were sequestration to go forward? 

General DUNFORD. Sequestration will impact all of our investment programs 

through increased unit costs, schedule delays, and slowing of necessary research and 

development. If sequestration occurs, the Ground/Air Task Order Radar (G/ATOR) 

program will likely trigger a Nunn-McCurdy breach. The potential scale of such a 

breach includes a cost growth of up to 20% of the Program Acquisition Unit Cost 

and a delay into Low Rate Initial Production from FY13 to FY14. The G/ATOR’s 

production transition, including timely semiconductor technology insertion, will also 

be significantly impacted leading to lost cost savings and misalignment of funding 

associated with a shift in schedule. 

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