Adding money and creating organizations. There may be a point where you do not see that return. There may be a point you see diminishing return. It links nicely to these others to strategic discussions. It is not a domain or you can say, this is my one threat. You have Nations Building by capacity, most of whom are laced less is capability. That is the debate we are not having in the us. The two things that reports say are spend more in operations and cyber. They do not say what that means. At what point do you grow it to the point that it becomes not greater in capability but to less special . That is part of an interesting debate. It is easy to see these and these reports tuesday that. No one gets to the next step. I would emphasize the part you said at the beginning. It is potentially the most serious area of technological change. All of the agility and efficiency that we are able to brag about in use as a vehicle for getting more efficient depends on our and vulnerabilities and vulnerabilities in cyberspace. It is important. I am not sure we can have a public debate about the question you raise. It is a valid one. Do we need more quantity or quality . Americans have always been quantity. We won the civil war and a few others. So much of the stuff is so highly classified. I do not know how you can have an intelligent discussion in public. It is a crucial question. It is interesting given the Discussion Group that links to longterm questions in the difference in the industrial environment. The nature of our debate of cyber has been the digital pearl harbor. The Greater National Security Threat is the gradual loss of intellectual property. It is effort by a thousand cuts. Part of the challenge at 35 is not just scaling costs but the leakage through cyber theft, which does not mean someone else can build it but they are gaining knowledge and capacity in a way they would not have been able to. Something that may have given you a tenyear advantage does not give you that kind of advantage at technological capacity. I would like to tie it back to our economy and jobs. President obama said the focus would be to increase jobs. I come back to paul. You said that the success of our [indiscernible]channel some of the budget from the dod to the state department. I take this time to say that Hillary Clinton is coming back to work today. I wish her great recovery. If we have projected our intent is to china and the world. Looking at the way china has been aggressive many ways in the south china sea. [indiscernible]how do we look into that without freedom of navigation . How do we look into that for our market share . Where is the limit before we go to the International Sanctions and global law . The problem is the Us Government does not know what its intentions are. We have not faced that question or decided. There is a lot of complacency with the status quo. That is indefinitely. Things in taiwan have gotten better. On the islands dispute, the initial american reaction was a statement from the state department saying the United States does not take a position on the islands. We say it is covered by the us japan treaty. Maybe that is creative. It is an invitation to miscalculation. That is why i worry. If you asked those americans, what should the United States to in the event of a crisis over these islands or over taiwan, they would not really be sure. What will recent me is the repetition of situations we face in 1950 and 1990. Paul indicated a concern like this. Before june 25, 19th it the, General Macarthur and secretary of defense said south korea was not inside the us defense perimeter. When the invasion took place, and truman focused on it, the reaction was to fight. The same thing happened in the invasion of kuwait. It was an unexpected contingency. If we had made an effort to be clear that deterrence was in advance, neither would have occurred. The reason i am pessimistic about the situation in asia is it seems to me there are potential contingencies of that sort. If they happened, they would not be as crazy as they seem if you asked the average person. Add british ambiguity about if they would oppose an attack on france in 1914. The germans had known in advance, maybe they would have behaved differently. In 1990, the us decision in kuwait was we do not take a position on a territorial dispute between iraq and kuwait. We did not take a position. The border was on define. We should have added to that statement that we would oppose any support of either party. The message would have gotten across. It was ambiguous. I agree. I will sound dovish. I worry about a dynamic over unimportant states. It may not count like belgium or france or south korea or kuwait. They are unappointed. They are not clear that the law of the sea treaty would get importance to development of underwater resources to the owner. There is ambiguity. They are uninhabited. It is the kind of example that you mentioned. It has been to in the news. If there was a dispute over these, i do not believe greatest concern should be if the we have to worry about security dynamics. We need to make it clear to china there would be a strong response but not reconnect ourselves to a military response. If china attacks japan, that would be different. They are not japan and neither are most of the eyelids in the south china sea. Look at ways for developing resolute responses that are nonmilitary that we keep our oteri posture robust. It sure the worst. Worstcase scenarios do not become tempting. It is interesting that we have a panel that followed a speech on with the impact of sequestration and Defense Budgets and theres link to strategy. What percentage of it has reference china . That is my observation. Maybe that is a telling point or not. We have a limited study group here. I went to take what she said and take it to a different direction. We should not look at jobs. It should not be a consideration and our Decision Making it comes to defense. Sent you noted the small percentage that had been spent on job stimulus and the like. There is a broader discussion taking place over sequestration where the strategy around the discussion was do not let sequestration happen because of all of the job impact it will have in the industry and the knock on effect on local communities and states. That was the centerpiece of a lobbying effort. We can argue whether it was successful. I want to ask each of you, is that a valid argument . Do you agree with the proposition that jobs should not be part of the discussion if we are setting this before hand . If not, what part of the discussion should they be . You should not cut programs if you said we will not cut programs if they lose jobs. One should be careful about large or sudden cuts. Cuts in an economy that is where the Employment Situation is bad. It is one thing to cut a full employment economy and another to cut one that is not. Why do you discriminate against several ready jobs in the Defense Industry . If you are going to spend money on things you do not need to create jobs, those are rims should have been funded as well and set of putting 50,000 people out of work. The main concerns i have are those parts of the Defense Industrial base that as we go to smaller budgets and we are building weapons that tend to cost more that we could lose because the court tell curt ain a certain production. The Ground Combat vehicles. A lot of the Technology Behind them is not so unique to the military not so hard to re create that i am concerned about reproducing each one to keep the Industrial Base alive. And some hightech areas, one should you lose the capability you will have a hard time re creating it. That is my greatest concern on the intersection between strategy and economics. I agree. My question dovetails into the jobs question. Every time we hear the discussions in regard to defense dollars, you would hear about compensation whether it is through healthcare dollars or the conversation about maintenance and equipment. You never hear about our reliance on the contractors and how that has become commonplace in the new normal for the defense establishment. I would like your thoughts on that. I am ignorant of the relevant issues. I would like to see what studies there are that get an answer to how much of the trend to contracting out has saved money and how much it has not because it is a mix. The answer is important because the trend has gone far, probably too far. An anecdote in support of that a former colleague of mine who ended up in charge of the Training Command in afghanistan said contractors would not do what is not in the contract. There is no substitute for a volunteer soldier or marine who will do whatever the job takes. Whatever danger or risk is involved. There is some routine civilian type functions that would be better performed by civilians and contractors. We are trying to get contractors in the compaq zone combat zone would suggest we have gone too far. While we typically talk about the pentagon as and its relationship to private industry is going out and buying goods. We have had this discussion here whether it should by Ground Combat vehicles or keep that on base. The reality is that we are moving to where the pentagon spends more on buying Services Rather than buying goods. It is not paying people to go make things. It is making in terms of the hours they are billing. The answer to what extent is it we have not seen the kind of savings that have been promised in the study before 1hand. The savings have been political cost savings where you keep your deployed numbers down even though the overall number of people are roughly the same. What is appropriate for contractors . Navy some roles that are appropriate to turn over to contractors and others are not we have been willynilly about. Once you figure it out, then developing Good Management structure so you get the best price. You have competition. You can say, they have done a terrible job. It comes back to how the contracts have been structured. Let us do two more questions. I find it telling that one that did not come up was nato. Is it relevant . Is it a relic . How can we rejuvenate it . The one risk is your rep. The one risk is europe. It is extraordinary. We complain endlessly that our european allies are not spending enough, which is true. They are fighting with us. We might prefer the aggressive posture. Who would agree that in the mid 1990s when senator lieberman said you are out of air or out of business they would be talking about afghanistan. Europe is one of the worlds great economic powers. It is in our interest to keep it friendly. How much effort it takes to do that, i do not know. You could never create nato if we had to start all over again. It has seen us through good times and bad. A modest effort to stay engaged and keep our allies engaged and to have it there should there be some Serious Problems and Eastern Europe is a good thing. This builds on something i learned from reading. I am inclined to agree. It is out of the mainstream of both political parties. Nato expansion makes me nervous. The steps that have been taking so far would not be worth the consequences of a deteriorating relationship with russia. Paul may not agree with me but i want to come into the Bush Administration for how they handle the russian invasion of georgia. Georgia is not a nato member. The Bush Administration was clear and resolute that the us russia relationship could not be the same if russia overthrew the government of georgia. The Bush Administration stopped short of threatening an American Military response. For the range of countries that could be candidates for nato expansion in the future, i would rather not just go slow but probably not go at all. The usrussia relationship is too important. We are living with consequences of expansion in the 1990s and earlier part of the last decade. Thank you. L priest price i am leon. I would like to ask members of the panel their thoughts on higher expenditure on the use of intelligence may be able to lower expenditures on operation for structures for equipment. It may have showed how hollow out the russian economy was. Was it possible that hiring a small degree of higher expenditures on intelligence would have a big effect on lowering expenditures elsewhere . We have to differentiate between the functions of intelligence of collecting basic estimation and reporting things. Rmation and hithin gs. Both things have to be done. You will get more reliable payoff and more agreed payoff from the recording function than from the analytical one that you brought up. I am a great fan of investing in intelligence. Maybe because i am a professional analyst. The intelligent budget is high. I am not against it. I agree with the spirit of what you said. As a policy option. I would not support spending more on intelligence and expecting better results. It is parallel to the issue on cyber. It is crossing into intelligence. Is it a field where throwing more money at it gives you the kind of results you want . Organization, priorities being set by policy makers to the Intelligence Community have more impact that i got one extra dollar or 1 million. We are getting to the closing. I want to pose or a pointed question. In the discourse over National Security, we have seen an evolution and we talk about the most important threat to america. At one point, it was easy. The most important was these soviet nukes. There we get to the postcold war. Nakes. All of the small stake we get to 9 11. It is terrorism. Then it is the fear of a loose nuke. We have to say the most important National Security threat was our debt. That was something the chairman of the joint chiefs said. There has been a change in that discourse. Some people have put out the idea that the most important National Security threat is our dysfunctional political system. What do you think is the most important National Security threats . We will go in order. And the last 12 hours, it is Mike Shanahans decisionmaking. It is a great way you have framed it. There are two categories. There is the rod holding the International System stable. I am a supporter of what we are doing. There is managing the specific crises. They tend to be things you talked about. We may go to war with iran. I will not predict that that will be where we fight or that should be same as the top third. Holding together our system of alliances and presence in the western pacific has to write just as high. That will preclude combat. If we do that right, that should reduce the odds of war. It is an apples and oranges comparison. The tendency to defined National Security broadly is unhelpful. A better way to differentiate these Political Security from other threats to our National Welfare or well being. Debt and the dysfunctional political system i will put in the latter category. There may be more important problems. Since the end of the cold war, we have been blessed with a decline in the severity of external Security Threats. I would distinguish them. We will not be able to deal with National Security effectively if we do not solve the other problems. They are linked. The shortterm and ability of american democracy to face the real choices is going to create bigger problems that are not results. I am in the same place. It depends on the time frame. If we are talking near term, and if it is the case that where ever it gets mentioned [indiscernible]if one looks overt 30 years, if one looks over 13 years, absence of American Leadership. There is no one to step in behind us the way we stepped in behind the british. It would be a very dangerous world for every body. We cannot maintain that leadership if we do not get our economic house in order. One is not more important than the other. Clarks i want to thank our analyst and all of you for joining us. Please, join me in a round of applause. [captioning performed bynational captioning institute][captions copyright nationalcable satellite corp. 2013] we will focus on the renin and hegel nominations live at seven 00 a. M. Eastern. Several live events on cspan. The urban institute analyzes the recent debate on the fiscal cliff and what is next on the debate on government spending. At two 00, new york jersey Governors State of the state address. I enjoy the capitol hill coverage. I started there many decades ago. Also, the Certain Committee hearings. They are informative to see what happens in congress. I like the way cspan covers the fact that it pretends present itself on what is really happening. Bill watches cspan on comcast. Cspan, created by americas Cable Companies in 1979. Rock to you as a Public Service by your television provider. President obama nominates former senator chuck hagel to the security advisor and john brennan as head of the cia. The president of the United States, leon panetta, chuck hagel, and mr. Le john brennan. As president and commander in chief, my most solemn obligation is the security of the American People. We have met that responsibility. By ending the war in iraq, a transition to afghanistan, and decimating the al qaeda core, and taking out osama bin laden. By disrupting terrorist plots, saving countless american lives. Among an Outstanding Team i am especially grateful to leon panetta who has lead the cia and our military. You have more than earned the right to return to civilian life. I have much more to say about his distinguished service in the days ahead. Today i want to convey the eternal gratitude. Thank you so much. I also want to thank michael who has earned the admiration of all of us who have worked with them all will across the government and here in the white house. In moments of transition he has guided the cia with a steady hand as acting director not once but twice. He is a consummate professional. Everybody who works with him across agencies consider some truly to be one of our most outstanding National Security team members. On behalf of all of us, thank you for your continued service. Goal for you will the work of protecting our nation is never done. We still have got much to do. Ending the war in afghanistan and caring for those who have borne the battle. Comparing for the full range of threats from the unconventional to the conventional. Including things like cyber security. Within our military, a continuing to ensure our men and women can serve the country they love no matter who they love. To help meet the challenges of our times, i am proud to announce my choice for the two key members of National Security. Chuck hagel for secretary of defense, john brennan is director of the cia. Chuck hagel is a leader our troops deserve. He is an american patriot. He served with honor alongside his own brother. When he was hit by shrapnel his brother saved him. When his brother was injured by a mine, he risked his life to to pull him to safety. He bears the scars from battles but in our name. This would be historic. He would be the first person up enlisted rank to serve the secretary of defense. One of the few secretaries to have been wounded in war. The first vietnam veteran to leave the department. Chuck hagel will our troops the character and strength. They see one of their own. He is a champion and our troops and military family. He thought to give our veterans the benefit they deserve. As head of the u. S. O. He devoted himself to caring for our troops. Having studied under the gi bill he helped lead the fight. Having co chaired my and a. I. G. Board he knows that our armed forces collect and lives depend on good intelligence. He recognizes that American Leadership is indispensable in a dangerous world. I saw this in our travels across the middle east. He understands that america stands strongest. We stand with allies and friends. We have to keep our military the strongest this world has ever known. Most importantly, he knows war is not a distraction. He understands that sending americans to fight and lead in dirt and mud is something we only do when it is absolutely necessary. My frame of reference is set. It is geared toward the guy at the bottom and would join the fighting and dying. Our troops will always know that secretary chuck hagel will be there for you. Finally, he represents the bipartisan stance we need more of. For his independence and consensus, he has earned the respect of military leaders, republicans and democrats, including me. I came to admire his courage in judgment and willingness to speak his mind even if it was not popular and defied conventional wisdom. That is the spirit i want on my team, a recognition that when it comes to the defense of our country we are not a democrat or republicans. We are americans. Each of us has a responsibility. We are not by the interest of our party or president but by the interest of our people. Thank you for agreeing to serve once more. When i am on the subject patriots, let me say a few words about john brennan. John brennan, the men and women of the cia will have the leadership of one of the most respected intelligence persons, not to mentions smart and strength which he claims comes from growing up in new jersey. A 25 year veteran of the cia he knows what our National Security demands, strong facts, analytic insights, the key. He traveled through the Arabian Peninsula where he camped with them in the desert. He has a desire for human dignity. He held Senior Management and operational positions at the agency. He is committed to the capabilities we need. He literally built and led the terrorism room. He knows the risks they face every day. John has lost colleagues and friends, he rose to stars the grace the memorial wall. For the last year he developed and has overseen our counterterrorism strategy, a collaborative effort across the government. Think about the results. More have been removed from the battlefield since any time since 9 11. All of which makes it harder to plan and carry out largescale attacks against our homeland. We will remain relentless against al qaeda and its affiliates. In all this work john has been tireless. People here in the white house work hard. John is legendary even in the white house for working hard. He is one of the hardest working Public Servants i have ever seen. I am not sure he has left in four years. When i was at marthas vineyard, john came and did the press briefing. He was in a false and tie in august. One of the reporters asked him dont you ever get any downtime . He said i do not do downtime. Hes not even smiling. [laughter] there is another reason why i value him so much, and his integrity and commitment to the values that define us as americans. He has worked to imbed our efforts and a strong legal framework. He understands we are a nation of loss. He asks the tough questions and he insists on a rigorous standards. Time and again he is spoken to the American People about our policies because he recognizes we have a response ability to be as transparent as possible. You have been one of my closest advisers. You have been a great friend. Im deeply grateful for your extraordinary service. I am more grateful for kathy willing to put up for you. I am grateful to both of you for your service. Today i can say to the men and women of the cia, in john brennan you have a leader he will fight for you every single day. You will have a leader that has my complete confidence and trust. The work of defending our nation is never done. My number one criteria in making these decisions was simple. He was going to do the best job number securing american . They have dedicated their lives to protecting our country. I am confident they will do an outstanding job. I urge the senate to confirm them as soon as possible so we can keep our nation secure and the American People safe. Congratulations. With that i want to invite each of these leaders on stage to say a few words starting with mr. Leon panetta. First of all, let me express my deepest gratitude to the president for giving me the honor and the privilege of serving in your administration. The last four years as director of the cia and now secretary of defense i have been extremely proud to be part of your National Security team and to be proud of what it has accomplished in your first term. Looking ahead to the second term i want to commend president obama on his decision to nominate chuck hagel as the next secretary of defense. Let me also add as former director of the cia to commend the president for his choice of john brennan. I had the opportunity to work with john on counterterrorism issues these last four years. He knows the cia. He will be a strong leader of that great intelligence agency. I also known chuck for a long time as well. I had the opportunity to work with him closely, particularly in his capacity of the intelligence advisory board. I greatly appreciate the work he has done to strengthen our intelligent enterprise. It has been extremely important to our ability to improve our intelligence capabilities. I also benefited from his work when he served on our defense policy board. Chuck hagel is a patriot. He is a decorated combat veteran. He is a decorated public servant. I believe his experience, deep understanding of the Security Issues facing this country making the right choice to be secretary of defense. As for me, after close to 50 years of serving the American People, began in 1964 when i served as First Lieutenant in the United States army. Then in both the legislative and executive branch positions in washington. The time has come for me to return to my wife sylvia, my three sons, their families, our six grandchildren, and my walnut farm. Dealing with a different set set of nuts. [laughter] i want to deeply think my family for giving me the fullest measure of love and support during my many absences throughout my long career in Public Service. I will leave with a sense of pride in what we have accomplished during these last four years, being on the president s National Security team. As both director of the cia and the secretary of defense, ive always believed our fundamental measure is to keep america safe. Because of the outstanding dedication of our intelligence and military professionals america is safer and more secure than it was four years ago. We have reached a turning point after more than one decade of war. As we reach that turning point, we developed a new strategy for the 21st century. We have decimated al qaedas leadership and weakened their effort to attack this country. We have brought wars in iraq to an honorable conclusion. We have opened up opportunities for all americans to serve in our military. We continue to support our forces, their families, and our wounded warriors. These are some of the achievements that i am proud of. Let me close by expressing my profound gratitude to the Outstanding Team of military and civilian staff and leaders that i had the honor to serve with at the department of defense and at the white house. In particular, let me deeply thank the outstanding men and women in uniform who have had the privilege to serve and need. Those who put their lives on the line every day on distant battlefields for this country. Their sacrifices teach us that freedom is not free. A strong democracy depends on a strong defense. You cannot have a strong and stable defense without a strong and stable democracy. As we continue to confront strategic challenges and fiscal austerity, my hope for the future is that the sense of duty our Service Members and their families exhibit every day inspires the leaders of this nation to have the courage to do what is right, to achieve the american dream, give our children a better life, and to build a more secure future. Thank you. I am honored by your trust and confidence and mindful of the extensive responsibilities. I want to acknowledge my family who are in chicago today. He is attending his first day of class is at depaul university. And to my friend leon panetta. Thank you for your service to our country over so many years and in so many capacities. You are one of the premier Public Servants of our time. To follow you will be a most challenging task. I will try to live up to the standards that you, bob gates, and others have set for this job and nation. Let me also express my deep appreciation and congratulations to my friend john brennan. And to acknowledge the president s confidence and trust in john brennan. Thank you, mike, for your continued service. Im grateful for this opportunity to serve our country again. Especially its men and women in uniform. These are people who give so much to this nation every day with such dignity and selflessness. This is particularly important as we complete our mission and support our troops to a sacrifice so much more than a decade of war. Am grateful for an opportunity to help continue to strengthen our country and their alliances. And advance global freedom. We help build a better world for all mankind. I will always do my best for our country and those i represent at the pentagon and for all of our citizens. I will always give you my honest and most informed counsel. Thank you very much. Thank you for your very kind remarks and the trust you placed in me when asked me to be acting director twice. I have the honor of knowing and working with john brennan for the last 20 years. We have worked particularly closely the last three years. John brennan is an intelligence professional with deep experience in our business. And Public Servants with extraordinary dedication. A man of deep integrity. With Senate Confirmation i know he will be in all standing director of the Central Intelligence agency. John started his career at the cia and spent nearly a quarter century. This is a homecoming. On behalf of the talented and dedicated men and women of cia, it is my deep honor to say welcome home. Mr. President , it is a tremendous honor to be nominated to be the director of the Central Intelligence agency. The women and men of the cia are among the most dedicated, courageous, selfless, and hard working individuals. At great personal risk and sacrifice they have made countless and valuable contributions to our National Security and safety. Leading the agency in which i served for 25 years would be the greatest privilege as well as the greatest responsibility of my professional life. I want to thank you for your confidence in me. Even more for your confidence in constant support to the cia and those who serve the intelligence committee. They need their support of every american especially during such security challenges. If confirmed, i will make it my mission to make sure the cia has the tools it needs to keep its mission safe and the work reflects their liberties, freedoms, and values we hold so dear. I am proud to stand here today with such patriots as a leon panetta, chuck hagel, and Michael Morell. I very much the forward to the opportunity to serve with another of americas great patriot, chuck hagel. I am especially proud and has to be able to stand here today with a close friend and colleague Michael Morell which epitomizes what it is to be a defense professional. He has been nothing short of exemplary. I very much look forward to working with you in weeks and years ahead. I also look forward to working with congress. Andsecurity rests on the ability of the legislative branches of our government to work as our team. While the profession often times demand secrecy, it is critically important that there be a full and open discourse on Intelligence Matters with the appropriate elected representatives although i consider myself neither a republican or democrat i look forward to working closely on both sides of the aisle. Most importantly, my wife cathy to my children kyle, to my parents in new jersey, a shout out. Owen who is 92. I can not be where i am today without their love, patience, understanding, and support. Theres no way i can ever repay them except to say i will need it for a little bit longer. I am deeply grateful for this opportunity. It will be bittersweet to leave all of my close colleagues and friends here at the white house and that the National Security staff but come to work with in respect so deeply. If confirmed by the senate i will consider it to be an honor of my life. These are four outstanding individuals. We are grateful to all of them. I want in particular to think mike morell and leon panetta for their extraordinary service. I just want to repeat i hope the senate will act on these confirmations promptly. When it comes to security we do not bite to leave a lot of gaps between the time one set of leaders transitions out of another. We need to get moving quickly. One of the reasons why i am so confident that chuck hagel will be an outstanding secretary offense in john brennan of the cia, they understand that we are only successful because of the folks up and down the line in these respected institutions. Folks on the ground. Theyre oftentimes putting their lives at risk for us. They are oftentimes i greatly moved from washington and its politics. To have those who have been in the field, who have been in the heat of battle, who understand the decisions we make in this town and how it has an impact of ramifications for everybody who actually has to execute our National Security strategies. That is something invaluable. It will provide me the kind of insight i need in making very difficult decisions. It also mean that these folks will be looking out for the people who work for them. That is something i think is absolutely critical. I am looking forward to working with the two gentlemen. They will be outstanding. Thank you very much, everybody. [applause] we have several live event on our companion networks. At 2 00 p. M. Eastern, the work and institution hosts a forum on state laws legalizing marijuana. In a few moments, todays headlines in your calls live on washington journal. Then a discussion analyzing congressional action on the fiscal cliff and what is next on the debate over government spending. That is at noon. At two 00 p. M. , governor Chris Christies state of the State Government addressed. Chain harmon will take your questions about the nomination of john brennan to head the cia. We will look at the nomination of former the basque or senator chuck hager nebraska senator chuck hager