Transcript: Deputy Secretary of Defense Ashton Carter’s testimony on the impacts of sequestration before the Senate Appropriations Committee

Transcript of testimony by Deputy Secretary of Defense Ashton Carter on the impacts of sequestration on troop readiness, U.S. military capabilities, defense strategy, and the defense industry. The Senate Appropriations Committee hearing was held on Feb. 14, 2013:

…We have been very concerned now – Secretary [Leon] Panetta and I and the entire department leadership – about what we’ve called the devastating effects of sequester on our nation’s defense and everything we do. We’ve been talking about this for 16 months now, and now the wolf’s at the door.

I’d like to describe to you some of the specific consequences of sequester for national security.

I should say that right at the beginning that we have another contingency that’s affecting us that’s not affecting my colleagues at the moment which is the continuing resolution and the prospect that it will remain in force through the remainder of the year for reasons I’ll explain shortly that has particularly near-term deleterious effect on the department.

So for us there are two things that come together. The first one is sequester, which is scheduled to kick in in just a couple of weeks’ time, and for us that requires us to remove $46 billion from our spending in the last 7 months of the fiscal year, and moreover, as you all know, to do it in the dumbest possible way from a management stand point, which is account by account, item by item.

The continuing resolution pose a different kind of problem. We have enough money in the continuing resolution; the problem is it’s in the wrong accounts, and in particular that the operations and maintenance part is very much short and that creates problems which I’ll describe shortly in the remaining months of the fiscal year.

So these two things come together to create what we have been calling and what the Joint Chiefs of Staff have called a crisis in readiness in the near term.

In the far term, over the next 10 years, if the budgetary caps triggered at the same time the sequester is triggered for FY13 are sustained, we’re not going to be able to carry out the defense strategy – the new defense strategy – that we crafted under President Obama’s leadership just one year ago.

It’s not that we don’t understand that the Department of Defense needs to make a contribution to the nation’s fiscal situation, its resolution. That’s why we have accommodated $487 billion in cuts over the next 10 years. We’re just beginning to make that enormous transition. That was on top of several hundred billion worth of cuts that Secretary Gates began eliminating unneeded and underperforming programs. And all of this is on top of the historic reduction associated with the winding down of the wars in Iraq and Afghanistan.

I also understand that the taxpayers deserve very careful use of each and every defense dollar that we do get from you. And that’s why we have striven and will continue to strive to get better buying power for the defense dollars and reform the acquisition system.

But both a strategic approach to defense spending and efficient use of the taxpayer dollar are undermined by sequestration.

And what’s particularly tragic is that sequestration is not the result of an economic recession or an emergency; it’s not because discretionary spending cuts are the answer to our nation’s fiscal challenge – you do the math; it’s not in reaction to a more peaceful world; it’s not due to a breakthrough in military technology or new strategic insight; it’s not because paths of entitlement growth and spending have been explored and exhausted; it’s not because sequestration was ever a plan intended to be implemented. All this is purely the collateral damage of political gridlock.

For our troops, for the force, the consequences are very real and very personal. The President has indicated his intention to spare military compensation from sequestration. That’s a very good decision, and one that we intend to carry out.

But make no mistake, the troops are going to feel this very directly in other ways, and I’ll just give you the principal example – there are many.

Between now and the end of the year, we will need to sharply curtail training in all of the services and so that means, for example, a brigade combat team that has returned from Afghanistan that is used to being tip-top ready – and that’s what matters to this profession and that’s what we want to have matter to them – can’t train. And the Army reports that two-thirds of its brigade combat teams will be at reduced readiness by year’s end. And I can go through the same thing – true in the Air Force and so forth. So it’s going to have a big effect on our uniformed people.

Likewise, also for our much-maligned civilians – you know, a lot of people think that DOD civilians are people who wake up in the Washington suburbs, get in a car and drive up 395 and come to an office building here. They’re not. Most of them work in depots; they fix airplanes; they maintain ships and overhaul ships. 86% of them don’t even live in the Washington area. 44% of them are veterans. And all around April 1st, we will need to begin to furlough many of them and to do that for up to 22 days, which is the statutory limitation.

And I’ve promised that when that happens, I’m going to give back a fifth of my paycheck to the Treasury for those last 7 months if we have to furlough people. I can’t be furloughed because I’m a presidential – a Senate-confirmed presidential appointee but I’m going to give back a fifth of my salary.

There’s a real human impact here.

In addition to the military and civilian personnel, the effects will be devastating on the defense industry upon which we depend. The quality of our defense industry second only to the quality of our people in uniform is what makes our military the greatest in the world. And a technologically vibrant and financially successful defense industry is in the national interest.

The act of sequestration and the longer term budget cuts and even the prolongation of uncertainty will limit capital market confidence in our industry and companies may be less willing to make internal investments in their defense portfolios.

The turmoil’s even greater for our sub-contractors. Many of them lack the capital structure to withstand this kind of turbulence. And I’ll just remind you that 60 to 70 cents of every dollar we contract goes not to the prime contractor but is in turn sub-contracted out. Many of these are small businesses. We count on them for the vibrancy and new people, new talent, fresh blood in the defense sector.

And above all, sequester will cause a spike in program inefficiency by stretching out programs and driving up unit cost. So for the force, military, civilian, our industry, the consequences are very direct and devastating.

I’d like to close with an appeal which is to de-trigger sequestration and also very importantly to us to pass appropriations bills not only for defense but for all of our federal agencies for that matter.

And in that connection, I’d just like to add, you know, in the long-run, national security rests on a strong economy; it rests on a strong industrial and engineering base; it rests on having science, technology and engineering and math talent here in America. And these, I recognize, are provided in other parts of the budget, but indirectly we depend upon them as well.

And understanding the effect of sequestration for us, managing in the Department of Defense, I understand that the comparable problems that are arising for my colleagues around the table.

The cloud of uncertainty hanging around our nation’s defense affairs is already having lasting and irreversible effects. Ultimately, the cloud of sequestration needs to be dispelled and not just moved to the horizon.

The magnificent men and women of the Department of Defense and their families deserve no less. They need to know we’re going to keep our commitments to them. Our partners in the defense industry and their employees need to know we’re going to have the resources to procure the world-class capabilities they provide.

And perhaps most importantly, the world is watching us. Our friends and our enemies are watching us, Madam Chairwoman, and they need to know we have the political will to forestall sequestration.

Thank you.

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