Transcripts For CSPAN2 Today In Washington 20130201

I think you pretty much took my entire speech when he mentioned the word cbo. Unfortunately, i think it is, i think this is something both sides of the aisle, this is something bipartisan we kind of struggled with right now is we are kind of living in an arrow cliff. It is one cliff after the other after the other. The debt ceiling or the sequester or the sgr cliff. Does congressional staffers, im sure debbie can attest to, we are constantly living in his temporary environment because we have to. That is unfortunate your we would all like to take some time and do a deep dive into deep policy thinking and try to think of transformational ideas that can transform everything, but when we kind of walking to work reality hits us. We have a job to do. We have to take of the thing that is the most pressing on the front end, and, unfortunately, thats kind of the environment we are living in. And it was a very interesting panel, especially the last one, where i was hearing, theres Nothing Better than congressional staffers. Actually talk to patients are going through the clinic. One of the things that, the reality that we suffer with, unfortunately and this is something we all have to deal with come is just the fiscal reality. As you rightly pointed out, it is right now the debate is about budget and at, people are cant figure out to control costs but also how to find actual savings that are scored by cbo. The Congressional Budget Office gets a bad rap from a lot of people, but im a fan to have a very tough job to do. They always come out with answers that doesnt please one side or the other side, but trust me its a very tough job that they have have had to do, and its hard to please everyone in a town like washington, d. C. They try to do the best they can. I of fort a lot of respect to them. But at the end of the day thats the reality we have to operate under. So we get a lot of ideas. For example, from my great state of utah which might cost represents we have a Great Health Care system which is on the periphery a lot of the integrated Health Care Delivery reforms, and some of the most Amazing Things that are being done. Ordinations i. So we are very lucky to kind of have this working model in the state we are from, and they have great lessons for us but a lot of time those lessons, as much as we would like them too, dont really translate into real cost savings. So when that doesnt happen with enough to kind of move onto an exercise where we can actually realize some cost savings. The last thing i will say is, we are now in an environment that all of the lowhanging fruit is gone, just being completely candid. People hate to hear that and people like to say the best thing you can do and that you can do, well, i completely appreciate those thoughts that we do live in a fiscal reality that is governed by agencies like cbo. We have to look at ideas that are scorable. And at this point once again i can only speak for my office and my boss, we are much more deeply engaged on entitlement reform side because we do believe that the end of the day if you really want to put an actual consistent downward pressure on health care cost, the way to do it is by reforming our entitlement system. And Health Care Delivery reform is part of it but its a twopart solution. Its not just a focus on one to make a look at the other because its more tough to do at a later date. I think the time has now come to kind of swallow the tough medicine and start addressing both of these ideas together. From the other side of the aisle. I associate myself with most of the remarks had been said today. This is been an interesting panel. Its a discussion wed have a lot more. I would start off by saying that we have, i think theres some consensus the status quo a across health care isnt sustainable but i would also but i dont we are a self selecting group and we are chosen to involved in this. And involved in things or and washington to try to do and around the country to try to change the system. Rochester, for every rochester there is a texas where they are fighting change every single day and making a lot of money in the process. So weve got to figure out a way where we can get this conversation much more out across the country, and to the single practicing physicians who dont want to change. I guess my next thing is over all that changes hard. When youve been doing something, just think about ourselves, when my Computer System changes at work i freak out for a couple of weeks. To try to think about how you change incentives for physicians and change the way we deliver care to drive value is a much, much harder thing to think about. We do have great private sector examples. The gentleman earlier, what are not financial incentives, look at kaiser. Cash is a program where doctors get paid less than they would if the feeforservice medicine that people flock to kaiser because of the quality of life and people go to medical school not to deal with insurance company, and all the different paperwork. They go to practice medicine. Kaiser come you practice medicine. Its a collaborative system and there are lots of other examples like that that are growing around the country. So i think theyre a tremendous nonfinancial incentives that we can provide to the vision but we have to figure out how to incorporate them into the system. I guess my broadbrush kind of statement, everyone has had their one little statement on these panels, and mine is first, harmed. What i see upcoming in this debate about entitlement reform, which i would argument that so much be about reform, is that weve got a situation where we passed the aca, everyone can say nice things are complained but what that will has done is build a process. Cmmi and other demonstrations that are built into the system to test new Delivery Systems, and to figure out if they work and really build a model where they can go forward without congress having to interfere again. And that is a really important thing, but if congress decides we need to get 400 billion, 600 billion, 372 billion, these random made up numbers that we have to pull out of the medicare system, i just remind everybody that we did that in the aca. Simultaneously republicans ran campaigns for Congress Thing you cut 716 billion out of medicare, you are horrible. Then they say we need to cut another 600 billion. It does not frankly make sense. So i think weve got to be very careful on the medicare side that we dont poll so much out, that we in danger the ability of all this innovation to move forward. And we endanger the ability of doctors to remain engaged in the Medicare Program, and that goes to needing to find a solution to the sgr, which again i agree, i care members, we need to build a the consensus that most people the new systems. But you cant as long as we continue to of the cliff of sgr out there, the other cliff, then were not able to think longterm care and do the things that we need to do in the Medicare Program and across her Health Care System to innovate. So i guess my number one thing is lets look at the facts. Because of the aca and other changes that are going on, the economy has some to do with it, weve lowered the growth rate in medicare below cpi. That has never happened. We have really lowered the growth of medicare. And in doing that we are creating tremendous savings for the government, but we are not hurting access to care right now. We need to preserve that. If we achieve greater savings on paper out of the medicare system, but destroy that system for people, that is not an outcome that is a good outcome for our country. And i think is much private Sector Innovation as there is an continue to be, lets be honest but if the private sector can do this, we have a functioning Health Care System outside medicare, and we dont. And we do because it takes all of us working together. Most Insurance Companies today use Payment Systems which was developed through the Medicare Program with government. Weve got to figure out how we can continue to collaboratively work, and hopefully take politics out of some of what medicare has become an move forward in a way that really improves our Health Care System. Dana safran, you represent the other unrepresented elephant in the room, the insurance perspective. Any immediate thoughts come to your mind . Yes. Its been a really interesting and exciting morning from my perspective, from the first panel, deep thinkers, two who were as all observed enormously a line in the vision of what needs to happen. Moved to the second panel of ill call them the deep of doctors, who also were enormously outlined in what needs to happen. So i feel like part of my role here is to inject some optimism that actually these things are happening. These are not just deep thought toward the possibilities. And so if i could take just a few minutes to share how this actually has unfolded in reality in massachusetts, over the last several years. And really the images for this was that in 2007, as folks in this room probably know, we began implementing our state law to extend coverage to everyone in massachusetts. And have succeeded at covering their everyone in massachusetts, but the next mountain to climb was quickly apparent to us. In the early months of 2007 we knew that we had to reform payment and that that payment reform had to deliver the kind of Delivery System reforms that would produce longterm sustainability in spending growth, and at the same time and improve quality. So those twin goals, holy grails, can you really reduce medical spending growth and improve quality and outcomes was the mountain we felt we had to climb in 2007. And so the company i work for, Blue Cross Blue Shield of massachusetts, begin developing a payment model that by the way we made completely voluntary. So this was not a forced march into a system, but something that back in 2007 when no one was talking a payment reform was out of their an optional model for providers organizations that felt outlined that we could do better, and that we needed to do better because of the cost prices that were surely coming. Now that we would have the universal coverage. And really there are four things that are distinct about that model. We talked about pretty much all of them this money. The first is the Provider Organization that comes into the model takes accountability for care across the continuum for their Patient Population. So everything from prenatal care and endoflife care and everything in between is their responsibility, regardless of whether they personally deliver the care or it happens elsewhere in the system. Thats very different mindset, and leads to very different behaviors and relationships and staffing models. From a model that says youre only responsible for the patient who was in front of you this moment, that you will build for and then they will be on their way. So creating that kind of longitudinal accountability is one very important difference of the model. A second very important difference of the model is that its based on a global budget for the population. And to our shared savings and theres also risks. There are all kinds of protections so that that is a Reasonable Risk and the budgets are set anyway that is accounting for that Patient Population and whats been spent to take care of them up to that point under feeforservice model. So that the provider begins knowing that theyve all the resources that they have a day before, but now they have an incentive to try to figure out where was their wasteful spending. And i can tell you that over the four years that the model has been in place now, every organization that has come into this has found significant savings. And also made significant improvements in quality and outcomes. These have been documented in new england journal of medicine, health affairs. This is not just our say so. And thats our network has seen these successes, and also heard the drum beat that maybe now sounds like payment reform is coming, there has been faster adoption of the model to where we now have 80 of our Provider Network contracted in this way. Taking accountability for total medical expenses and for quality and now, being rewarded very significantly for achieving better quality and Better Health in the population that they take care. A third thing thats different about the model is that its a longterm contract and the rate of increase over that longterm is negotiated up front and comes down to look like general inflation by the end of the model. Back in 2007 when we were staring at this problem of trends that were 11 , 12 , double digits every year, we knew we had to cut at least in half and thats happened. The economy also contributed to that the part of what is built into the contract is even as the economy rebounds, the contracts are scheduled to grow at a rate that will not so far outpace the rest of the economy, that it continues to be an affordable system to the final piece that is distinct is that we the plan work in partnership with the Provider Organizations to help them be successful in this model. Because we have the data and the holistic view on their Patient Population that they dont necessarily have. And many of them, most of them have been functioning under this volumebased set of incentives that really now is 180 degrees different. So working together, best practices sharing, we are making enormous strides and we have in massachusetts a system that is looking very different. You ask where can i go for care that looks like that. Youd be hardpressed actually in our state now to go somewhere that isnt focused on care that looks and feels patients like onto your care because practice are very concerned about of windows by mr. Uses of the Emergency Department that we heard about this morning and is unnecessary admissions and read missions and the things that really add enormous expense. So im optimistic that if we can do it in one day of the country, that with the same burning platform of affordability and quality failures that exist everywhere else, this can happen, and medicare can help lead the way. So weve got lots of examples of what does work, and they are out there as a living demonstration pocket. Almost everybody agrees on almost every point. Macon, why on earth havent we moved faster to reforming our system . What is the holdup . To continue on your theme of optimism, i think there is a glimmer of hope on the way at least for congress, debbie might have some thoughts on this, but the fact that the hous house and senate are both going to write budgets for several years, and then possibly bring those budget to a conference slows down this process of the cliff coming all the time and perhaps create some room for more of the deep dive, for the Committee Said to do with health care. To deal with some of these issues that are not just raising the medicare age or of the eligibility or whatever cbo scores as a cost saver, but may believe some of the payment reforms that have been discussed up here today. You cant just get the money. You have to have the numbers to get things Pass Congress or to meet whatever number is out there. So that has been the biggest challenge and continue to be the biggest challenge. Im slightly more optimistic i guess because the process has slowed to a lived in the coming months and could set up a reconciliation process that requires less votes in the senate, makes it easier to pass more controversial legislation that made him medicare on a more sustainable path. So whats been next step in congress . Im a simple guy so i try to put a simple as i can pick plenty of people who are way, way smarter and brighter than i am, but the biggest challenge that we are facing in congress, unfortunately, is this fingerpointing exercise we always engaging. And until we stop learning how to stop pointing at and start working together is going to be very, very difficult year, if not years, to come by. And thats something thats upon my boss has made repeatedly. Theres some very tough decisions facing us. Theres some start fiscal realities facing us. So we can all eat a look at the past and to me kind of rehashed the past and keep using our same talking points, or we can try to figure out how to kind of move forward. You know, on the entitlement reform side, i understand people have concerns but that is the reality we all have to face with. Nobody has the perfect into the building is a perfect solution. But that has to be part of the solution that we are working on. We can sit here and splice the date on whats happening with health care expenditures, and you can look up the data trends and see whats happening. Again the past couple years Health Care Costs have gone down to look at 2014 and beyond and see what happens with Health Care Costs. They bounce right back at. So we can either kind of bayesian, were done our job, its time to move on, or which is okay, there are challenges that lie ahead, we all have our priorities but we have to Work Together. So lets hold hands and try to figure out a way forward. And its just, this is something once again this is something we have to do on a bipartisan basis. But when we talk simply using words like destroying medicare and those kinds of phrases, dont really help the conversation. Its much better for all of us to sit down and say okay, here are my ideas, like my boss sat down, he took an act of courage to put up by specific ideas he wanted to put out there and he said a bucolic all 100 senators and said here are ideas. Im putting specific policies on the table, come and sit down and talk to me and tell me what you like, what you dont like. That is the way were going to have a conversation, but if the conversation is going to dissolve into you guys want to destroy medicare, everything is fine, we need to do it this way, thats not good for either side and im not saying this is a one party or the other. I think this is congress as a whole. Went to figure it out to Work Together and move beyond the talking points and say, changes have to be made. I think a lot of people agree that politics has a very, debbie, you have some thoughts. Is there a way to fly under the radar . I would say its on both sides. Destroy medicare is now more of a lightning rods than Death Penalty or so its both sides can everybody is guilty. I guess what i would say, my former boss would say if he was here, it showed in the past decade that weve seen medicare become the political football that it is. And its because of this strong ideological belief that government is bad, im sure a number of people gotten elected to congress who ran on that form on that platform and continued to serve on a manner opposing government. The reality is medicare is a government program. It doesnt exist because of the government wanted to run an insurance company. It exists because the private sector was not taken care of seniors jason. There was an agreement have medicare, have the government step in and create this program. Pete stark would remind you when he and bill with a chair and ranking, there was not a medicare bill, and this was 15 years ago, that went to the floor of the house. That both of them didnt support. So we should be able and while i agree that reason past is not a good example, if you go back further in the past there was a lot of consensus on the Medicare Program. When we created the system, that was pete stark working with Gail Wilensky and with the ama to create a better system to pay prospectively for physician services. We do have to get out of this political namecalling, but it takes both sides to do that and if someone has a clue how to do it, we would all love to know. A little bit away from politics. Theres also some policy disagreements. Julieta, you mentioned one of the issues which is racing of medicare eligibility age. Nothat everybody agrees that wod ms. Ochoa save money. Can you address that more . The idea of raising the age of medicare eligibility and 65 to 67 or 69 its been around for a long time but its gotten quite a bit more attention in the past couple of years. One of the Major Concerns with the idea, prior to passing the Affordable Care act was actually create a large number of people who would be without insurance if they didnt have medicare coverage. When they reached age 65. The Affordable Care act creates new opportunities for coverage and subsidies for people with low income which would be beneficial to people if they lost eligibility for medicare. But i think a concern with this proposal is that you can save medicare some money by removing people from the medicare rolls for a couple of years, two or three years, but that doesnt really do anything to address the problem that we have in this country with the growth in Health Care Costs over all. It is a mechanism basically of shifting costs from the government to private payers, employers, state governments to the medicaid program, and to beneficiaries themselves, people who lose access to make a company of them would end up paying more for a new source of coverage than they would under the Medicare Program. So which one of those ideas that we will get a score from cbo, and so it will make the cost cutters happy in that regard, but it doesnt as i said it doesnt really address some of the more systemic cost problems that we are having in this country. And while it might, there might be opportunity for coverage for people who lost their medicare eligibility, many of them according to analysis analysis of the foundation would end up paying more under the new source of coverage. So its not quite the winwin policy option that many might think it is. And i think that i would also add very difficult when you look at each of these things in isolation. Because were not talking about passing one policy. So if you take the medicare and then you say lets increase means testing, i think one of the big problems we have with medicare today is people dont understand how much it exists in the program. If you are an 8000 a year in the Medicare Program, you are considered rich in japan increased premium. Under 65 just to earn i think 400,000 now before you begin increased taxes. It doesnt make sense. Medicare is not a cheap program and we all forget this. When you go into medicare youre paying to such a premiums if youre a couple. You are paying two sets of medigap coverage. Youre paying two sets of part d coverage. Just straight up Monthly Expenses for health care as delay dramatically at a time when you have probably a fixed income and less opportunity to increase the income in the future. I think we have to be very careful when we look at the beneficiary impact of changes and we need to really understand what we are talking about and how its going to impact people. The cost sharing in medicare is very high, and so to increase those costs on people is a difficult thing to do. Raising the age, all these things go together, and so i worry if we look at them in isolation you can miss some of the problems that happen. Dana had a thought. I cant help but draw the parallel to the commercial side, where we have had for years efforts to try to get Health Care Spending under control by dealing with the benefit side, by inventing new benefit structures, high deductible plans, tiered products and other things that would make individuals more price sensitive and increase their cost sharing and so forth. And on the other hand, now we are dealing with the supplier side through payment reform. Theres very little question in my mind, and im not an economist, but the economists that are a valued what were doing in payment reform i think a very little question in their mind that we get so much further in both affordability goals and Quality Improvement goals by addressing the supplyside. And then we ever really hope to accomplish using, you know, putting more and more on the backs of individuals. And so i think, weve heard story after story this morning about where there is a rational use and Delivery System because of the fragmentation that we have. And we have seen through the payment reform that we have done that setting the right payment incentives in place to actually does help rationalize that system, does help starting at the fabric together between the primary care and Specialty Care and hospitals and action of hospitals who start to understand that their place in this reform system is that they are a cost center and not a Revenue Center and have to become smaller over time for this system to become sustainable. And so to me, you know, to focus our attention on individuals and the public and beneficiabeneficia ries and how were going to change the benefits to make all this work just seems like a fools errand. When they are the real problem is the way that we have structured the incentives on the Delivery System side and fixing that we can get a long way towards addressing both affordability and quality. We have very little time for maybe a question or two from the audience, if there is one. If you could identify yourself. There is one over here and i think len actually wants to ask a question as well. Spin well, i cant resist because im len nicholson, george mason university, i was so impressed with a letter to colleagues, all 100 of them. To question. First very short, did anybody from the decide come to chat . And second, what accountable gesture might you, mike your boss cs welcoming from the other side . What else do we need to keep this conversation going . Thank you. Very nice question. I was just, i think its been a busy week in the senate so were hoping our caucus on the other side of the i will reach out to us in the next couple of weeks. Senator hatch is very hopeful. He attached some very good chats with his fellow colleagues on the other side of the aisle on the floor that he has come back with. So far nobody has come and accuse them of destroying medicare, which is a good start to the conversation. But on the other side of the aisle, i think, len, all were really hoping for is a real conversation. Because at the end of the day, and as everyone on this panel talked about, this is a very complicated issue, which needs a multifaceted answer. And theres a reason we put out this plethora of options that go from age to cost sharing the fundamental transformation of medicare. There has to be a place where everybody has some skin in the game. That includes the beneficiaries. That includes the issues. That includes the providers. Its easy time of nitpicking nig single policies and say age from our youth about the medicare before or you can go to combined deductible, and you can always point winners and losers but you have to look at the holistic, otherwise at the end of the day heres the simple and honest truth. If we dont start looking at a time or reform in a comprehensive manner, as part of the overall discussion, the only thing were looking at as congressman is cutting providers. And i think providers are kind of done with those. And i honestly think congress is done with that, and my boss is done with it. And he wants a fundamental transformation of the program until we get away from this you by your clip exercises where were all struggling to find that low hanging dollars when were cutting providers, Market Basket cuts and move on to a spot where we say okay, guys, there are 10,000 senior joined the Medicare Program every day. The program is unsustainable. And people can put whatever kind of rosy glasses and look at a certain way, but we are on a path to insolvency on medicare. One of the things is how when bringing 65,66yearolds into the regular system would drive up costs, and with the 3 to 1 range banding under the aca could that really cause people who are younger and with higher premiums to drop out . One of the things Gail Wilensky pointed out was bringing people into the system. Could that undermine bringing younger people in and how we we did an analysis of this question, and we did show there would be a premium effect for people under 65 in the insurance exchanges bringing, excuse me, the relatively higher cost, 65 and 66yearolds into the relative lower Cost Exchange pool would increase premiums by a modest amount. I think it was 3 overall according to our analysis in 2014 if you implemented a raised eligibility age to 67 in that year. Um, we department to any we didnt do any further analysis of whether there would be dropout. You know, a potential for that, but its questionable whether a 3 higher premium would really move the needle very far in that regard. But it definitely would have those kinds of, those kinds of effects. And it would also increase the premium for people who stay on medicare, because just as youre taking the 65 and 66yearolds out of the medicare risk pool, youre leaving, you know, a relatively more expensive set of beneficiaries behind, people 67 and older. So theres sort of that premium effect all around. Well, that takes us to the end of our session. Id like to thank the panelists who have appeared, juliette cubanski, dana safran, debra curtis, meghan mccarthy. Thank you so much. Youve each brought important perspectives to the conversation. Ill turn it back over to connie. [applause] thanks. Thank you so much, and once again i would like to thank the American Medical Association and to welcome dr. James madara to offer some Closing Remarks to us. [applause] well, i think this has been fantastic, and i would like to thank the National Journal for acting as host, and thank you, connie. The speakers, they were wonderful panels. The audience, great questions. Maggie, you served as the bonding agent for the whole thing, so thank you. Just a couple of comments. Why is health care so, such a special topic . This really brings it home. And i can think of three reasons. First, obviously, its too expensive for the outcomes we secure. 17, 18 of the gdp. Second, its just [inaudible] as i like to say to groups like this, were all preops, its just a matter of timing. [laughter] and thirdly, its very national. Our security as a nation actually rests in the quality of our physiological capital of our citizens. So where are we in this discussion as we think of panelists that represented different disciplines and different points of view . Well, there seem to be several, and ill name three points of agreement. One is that the status quo is unacceptable. We can sort of see a blurry vision of the future, and the real question is how do we transition, whats our plan for transitioning to that future. Secondly, were a diverse nation. What works in manhattan, kansas, is unlikely to be the solution for manhattan, new york. And, third, a need for physician leadership not the least of all because physicians are the trusted agents of our patients. Much had been said about motivation. I think of the work of beth mcginn that showed that what is motivating and provides satisfaction for physicians, a primary driver of that is feeling as though he or she has delivered quality care to their patients and been relieved of Administrative Burden and doing that and actually spent time with their patients. So if thats where we are across disciplines, where are we as an ama many our position in our positioning . As i mentioned, we have worked with a variety of stakeholders on a transitional framework, the principles of which will be available to anyone who would like to have them. We see our role in this transitional phase to this future. Secondly, were focused on value and quality care in one of our endeavors, and in the second one were focused on educating physicians in a way that will allow them to participate in this future thats more teambased and quite different than the medicine of the past. And, third, thinking about physician sustainability of practice so physicians can do what they love to do, and that is take care of patients. Lastly, um, let me say that as a recovering dean and Hospital Systems ceo and now ceo of the ama that ive learned to always try to jump in and adjudicate early conflicts before they blow up. And so with grace, len and tom in mind, id like to say that in our view there is nothing more elegant and high row than primary care. [laughter] thank you. [applause] in a few moments, a discussion on how president obama may approach Foreign Policy and National Security in his second term. And in a little less than an hour and a half, a Cato Institute forum on the state of libertarianism. Several live events to tell you about today. The Georgetown University law center hosts a forum with Campaign Staff members and representatives of Interest Groups who will focus on how lessons of last Years Campaign will affect legislation in the new congress. Thats on cspan at 11 a. M. Eastern. And here on cspan2 at 1 p. M. , were covering an Atlantic Council discussion on the situation in mali. John mccains 2000 campaign when he ran for president is the most memorable campaign. I mean, of any that ive ever covered or been around. I mean, it was just well never, well never see it again. I mean, here he was, you know, facing george w. Bush who had all the face cards of the Republican Party backing him, and the three republican governors in New Hampshire and all the money, and john mccain went out and held 114 town meetings, and he stayed there until every or question was answered. And youd see people, youd see the lightbulb going off over peoples head. When are we going to get the patients bill of rights . And john mccain would say were not going to get a patients bill of rights as long as my partys owned by the trial lawyers. It was just this refreshing candor, and youd see it in peoples responses. And then he was totally open to the press. I mean, there was a candor and an opennesses and sort of a welcomeness that no one had seen before, and no one certainly has seen since. Longtime columnist and political analyst mark shields on his career in politics and the Washington Press corps sunday night at 8 on cspans q a. Now, an American Enterprise Institute Forum on how president obama may approach Foreign Policy and National Security in his second term. Over the next hour and 20 minutes, panelists examine issues including sequestration, syrias several war and the Nuclear Programs in iran and north korea. [inaudible conversations] good afternoon, folks. Can i get everybody to sit down and chew quietly . Thank you. I think were going to start here. Good afternoon, everybody. Im danielle pletka, im the Vice President for foreign and defense policy studies at the American Enterprise institute. Welcome to the first of our annual series in state of the union policy events. Every year aei scholars come together, and we look forward to the challenges of the year ahead and policy questions that have been raised and are likely to come up and try and look forward a little bit, think a little bit about what the right answers are to the questions that are being posed. Its one to have but events we one of the few events we do with only aei scholars, although im very happy to be together with them. Ill lay out what the other events are at the end of the session, but let me introduce the folks here with me at the table. First, on the far left, so to speak its such a stock joke, im sorry misha us aland whos a resident scholar in asian studies. He specializes in japan, although he does a lot of work on the pacific and air power as well. Next to him is fred kagan and the executive director of our critical threats project. And next to me is tom donnelly, resident knell at aei and the codirector of our marilyn ware center. Were going to try to have a bit of a conversation although because we have three microphones apparently from the year 1974, that may be a little bit difficult. But i know that youll be patient with us as we try and go back and forth a little bit and make it a little bit more lively for you. Itll keep you awake and, perhaps, keep us awake as well if we jump back and forth and talk about the issues facing us in National Security or, and we will top about half an hour from the end and open it up to questions from everybody. Because we dont just have a hill audience today, were going to talkless in shorthand about some of the issues that are familiar to all of you, sequestration, things we can refer to in this a word. Im going to ask my colleagues to be a little more fulsome in describing them just so we can have a complete discussion with the rest of the world who watches this on streaming video. In any case, we have the state of the Union Address coming up soon. I suspect much like the inaugustal address, its inaugural address can, its going to be pretty light on National Security. Because National Security, it turns out, isnt a huge priority right now. Were, quote, nation building here at home something that not just candidate obama but also candidate romney agreed about. We are looking at unprecedented cutses in spending on National Security, were looking at the process of drawing down prospect of drawing down from afghanistan, we are looking at a lot of changes not just here in the United States, but in the world. And one of the questions that i know that we have is whether we are ready for those changes. I suspect that most of us believe were not. Tom, maybe you could just start us out a talk a little bit about the sequestration that paul ryan told us this weekend is, quote, going to happen. Ill l give you the mic. Well, its a prediction that at this point seems like a certainty. But i would argue has been a near certainty once the sequestration provision was written into the budget control act. So ill talk a bit about sequestration per se, but i really regard it as symptom and not the disease it. Itself. The disease itself is the erosion to the point of vanishing almost of the bipartisan political consensus for military strength for peace through strength as people used to say. And thats really something that over the course of my career has been a touchstone, something that people could build upon. We could argue about what kind of strength we could have, the quality of the strength of these forces versus those forces. But there was a broadbased, bipartisan condition that American Military power was necessary, a necessary condition in a dangerous world. Of and that was a good thing. So i think both those underlying pieces of political consensus have evaporated. Its been about sequestration and the gruesome budget numbers that the Defense Department faces. So as dani mentioned, mr. Ryan has acknowledged, again, what i would say has sort of been in the cards from the start, that theres going to be yet another round of defense consistents. Defense cuts. This year about 55 billion will be sequester sequestered in ways that will be uniquely injurious to the department. Its not just that this is an automatic, acrosstheboard meat cleaver approach, but there was some wiggle room granted to the president and particularly hes chosen to preserve personnel benefits. So the consistents that have to be made coming as they will come, about halfway through the budget year, will fall disproportionately on weapons procurement and research, but in particular on the operations and maintenance accounts that go for making trained and ready units for deployment. And because this socalled o m set of accounts also uncolludes things that are sort of automatic like a certain amount of Health Care Spending for Defense Health programs, it means that even, an even larger burden will fall on those relatively rapid spending accounts that are most directly associated with making units ready to deploy to combat theaters. So im sure the department will say in fact, last week chairman dempsey said were going to sort of manage these cuts in a way so that noncritical readiness accounts will be protected. Well, when you come down to it, theres not much that isnt pretty critical to readiness, things like the money that goes to get people to show up in the units at the right time, buying gasoline and ammunition to do training with, paying the contractors who run the ranges who masquerade as pmy combat about thes enemy combat about thes at Training Centers and so forth. So the idea this is not going to have a pretty quick effect on combat effectiveness of guys and gals who are going into harms way, it is sort of, you know, just a fiction. But thats just, again, the immediate effects of sequestration. Its possible that a budget deal of some sort or even more likely that the president s 2014 budget will chart a course forward for the Defense Department wherein sequestrationlevel spending becomes the ceiling not the floor. The president , i mean, again, we have no real clue what his thinking is other than what hes revealed in his inaugural speech. But hes not a guy hes a guy who believes that the tide of war is receding, and even if the tide of war isnt receding, theres not much of a war that the United States should get involved in. Therefore, we can afford to reduce military spending, investments in military power, reinvest it elsewhere. Not so much cut the deficit, but use the money saved for his priorities, his domestic priorities. Closer . Yeah. Okay. Oh, no, i just want the mic back. Closer to me. This is the problem with us having three mics, and i apologize. Tom, i just want to push you on a question and then actually segway to fred to talk about the wars we theoretically can fight. Part of the problem is the notion that we dont have wars that we want to fight, and that is in some ways an acceptable notion. A man who was elected as commander and chief, and he gets to make those decisions. The American People voted him into office, and in some ways the president is absolutely right to suggest that he has a mandate in these areas. The real question is the impact that these decisions have on the threat environment that the United States is in. For most of history, we dont talk about this very much, we have maintained a Strong Military not so that we can fight, but so that we cannot fight. And the other point i think that tom made and this is how i want to segway, if i may, to fred is to understand what it is that is involved in a military operation. Fred has just finished a very important piece of work, actually, a shorter article, a longer piece and an interactive piece on the web that i know wed be happy to share with folks that explains just what it is we can do with particular numbers of troops that we have as the president makes critical decisions about afghanistan. Its not just about war fighters and bureaucrats in d. C. Fighting a war is a big logistical exercise. Fred, do you want to just talk about that and some of the surrounding decisions . Sure. Weve become very accustomed to throwing numbers of troops around, and people have gotten way too comfortable with pulling numbers out of the air and discussing them as though they were serious. And the effect of that is that very few americans, i think, actually understand that there is a method for figuring out how many troops are actually needed to accomplish something. And that when a recommendation comes from a military commander, its not just as this white house seems to think the commander asking for everything he thinks he might possibly get as a negotiating tactic because he always wants more p troops. It is, in fact, the result of a very complicated staff process. That can only be performed by a military staff. So when you hear numbers coming out of the white house, you should be asking yourself, well, which military staff did the analysis to figure out how many troops are actually required . As an example, when the president talks about keeping 3,000 p troops in afghanistan, heres the problem you cant. You cant keep a base in afghanistan with only 3,000 troops. Because once you start looking at what the concrete requirements are on the ground in order for those troops to be safe, in order for those troops to be fed, in order for those troops to have ammunition, in order for the basic functions of a military organization to be carried out remember, the p troops need to get paid, forms need to get submitted, all kinds of things that we regard as tail and that since the cold war, since the days of the mid cold war weve regarded as superfluous are actually vital to keeping things working in the field. And is so when you start asking questions like how many troops would we need at a base in afghanistan; you quickly say, well, which base because it matters. So you look at bagram which has a 10,000foot runway which is important because you need to be able to land fullyloaded cargo aircraft because its a landlocked country which nobody seems to be tracking on in this entire conversation. So as were referred blithely to somalia and yemen as models, many seem to have forgotten the value of having a seacoast if youre trying to do logistics from offshore as it were. There is no offshore in afghanistan. So it needs to be a 10,000foot runway. That needs someone needs to secure the perimeter around a 10,000foot runway. Thats a big task. We know what the threat is. The enemy groups have repeatedly attacked our bases with multiple truck bombs followed by light ip fan try supported by ipgs and mortars and rockets. Thats standard practice. So we know something about what kind of defense of perimeter is required, and we can count that up. Oh things that other things that people dont tend to track on, do you want american soldiers in combat to have medical care or not . Do you want what is the attrition autothat the president is willing to accept among wombedded soldiers in the wars to which he has sent them . Wounded soldiers . Because if you want soldiers to survive their injuries, you need a roll three Medical Clinic somewhere in theater. If you have only one base, it must be at that base. A roll three Medical Clinic is 200 people. Heres another fun fact that gets lost in this discussion. Were going to do this all with predators, right . Were going to do this all with drones, and the great thing about drones is that theyre unmanned aerial systems. I quote the United States air force on the subject of what a misnomer it is to call them up manned aerial systems. The only thing thats unmanned is the actual plane. If you want to have predators on the ground, you have ground crews for them because, guess what . They need to be fueled, they need to be repaired, they need to be armed, and you need to have about 50 people on the ground for every predator cap, as they say, every four predators that you want to have. None of which is very interesting when you put 10, 20, 30, 50,000 troops in theater. Which is one of the reasons no ones heard of these discussions. But when you start saying i want to have a cap of 3,000 troops in the middle of the hindu curb, then you have curb, then you have to start getting into these conversations. And what quickly becomes apart is even if by maximum use of contractors or local Security Forces if we liked benghazi, we could maybe keep 3,000 troops there. It would be, to coin a phrase, a selflicking ice cream cone. It would be able to accomplish nothing other than to defend itself. Because we get rapidly over 3,000 troop requirement before we even Start Talking about the troops required actually to do anything to any punitive enemy. This is one of the reasons why its a good idea in professional terms to let military staffs to go through a process called troop to task analysis and figure out exactly what kinds of troops of what varieties are needed in order to accomplish a particular mission. And it would be very helpful if the president of the United States ordering troops into combat would take seriously the kind of assessments that he receives from the people who know how to do this. Id like to bring it back to tom but also, i think, fred, youre going to have an answer to this as well, because the debate that we see going on over afghanistan is not just, its not just a debate about afghanistan. Its not just a debate about the wisdom of staying there. Its about the nature of the fight as we move forward 11plus years now since 9 11 in the battle against alqaeda and related movements. So thats the battle thats taking place, yes, in afghanistan, but elsewhere as well. The new im about to Say Something i swore i never would but the new paradigm is [laughter] yes, im doing my sais degree proud, the new paradigm is special forces. Its that we can do things by Remote Control and with what i like to refer to as a lot of guys in beards with suitcases full of cash. They can make all that magic happen, and then we really dont need the men and women that fred is talking about. Interestingly enough, in the last week weve seen two budgetrelated announcements coming out of the pentagon. One, i was looking up just now because i was trying to remember the numbers, and that is that the pentagon is beefing up its cybersecurity force, taking it from 900 to 4,000 and putting a few billion dollars into it. The other one that is apparently being beefed up in these times of budgetary constraints are the special forces. Tom, would you just talk about that generally and then, fred, if you would talk about that not just in afghanistan, but in the broader battle and the nature of it, and then well come over to publish shah and the non membership shah and the nonexistent challenge that faces us in asia. [laughter] ill try to be brief, dani. Look, these new capabilities, you know, Cyber Operations or whatever you want to call them are certainly necessary and needed, and our ability to exploit, you know, the electromagnetic spectrum configured as the internet is, you know, pretty critical. But its not qualitatively different from other forms of intelligence gathering or, you know, attempts to either by propaganda means or by direct attack affect the military or strategic situation. The fondness for sof, special operations forces, is some, to some degree understandable. But as fred alluded, i mean, you know, particularly direct action special operations units dont just magically appear and sustain themselves. If youve seen zero dark thirty, which is a great movie which i would commend to you, its a great picture of how the intelligence manhunt for osama went and then mysteriously in the movie the heir her to win appears, and all these velcro guys start walking out of a tent. How did they get there . You know, who puts fuel in their helicopters . Who fed em . Their sitting theyre sitting around playing horseshoes when theyre not going out trying to kill bad guys. The idea that that just sort of and magically theyre up on stage happened is quite ludicrous. So these are amazing capabilities that we have, but if theyre not nested in, you know, conventional force bubbles and balloons which do a lot to create the conditions under which these forces are effective, and even when the Counterterrorism Forces are as effective as ours are and as they possibly in the real world can be, thats not enough. That is not enough to, you know, procure the outcome that we want. Even if we can continue somehow magically to suppress the alqaeda leadership, the high value individuals in the pakistani tribal areas, a, theres a lot more guys like that in other places around the world and, b, the larger political situation in the region is not going to get any better. So we can treat the symptoms possibly, you know, at great expense, but we are not going to cure the underlying disease. And every time we kill a bad guy, theyll grow two. Fred . Um, i think its interesting to look back over the last four years outside of iraq and afghanistan and now, well, at iraq since we pulled out our last forces at the end of 2011, um, where the administration has basically been experimenting with the model of relying on drone strikes and special forces raid in places like yemen and somalia and libya and iraq were not even doing that, actually. And in syria were not even doing that, although we do have so it is said dudes with beards and suitcases full of money. Which has been a huge problem because they have been preferentially funding salafi jihadists and not the people we would be supporting, and one of the reasons thats happening is because we dont like to put boots on the ground, and thats the problem with special forces teams. Of they have boots. So this is the problem. When youre saying no boots on the ground, youre saying no special forces either. So youre really just saying youre going to vaporize a number of enemies. Hows that worked out for us . Well, the last four years has seen the single most dramatic experhaps in the areas of the world under the control of alqaeda affiliates in history. And we are priding ourselves now on progress that we think that weve made in yemen which is based on rather tenuous local accommodations that are, actually, if you look hard, unraveling. And this is one of the things we track very closely on a daytoday basis at critical threats. Org. If you look at somalia, yes, the local countries which are now themselves under terrorist attack such as kenya have made significant progress against alshabaab. The notion that some stable Somali Government is in the offing that will put an end to what has been quite a long period of chaos that has allowed these groups in various forms to persist is questionable. And im willing to predict with a fair amount of confidence that the french punitive raid into mali, um, you know, brave as it is and much as i like seeing the french go and kill violent islamists is unlikely to produce any kind of stable resolution there. In the moon time, weve seen in the meantime, weve seen a flocking of Certain International terrorists into mali, weve seen the flood of weapons throughout north africa that resulted from the way that we led from behind in libya and the failure of the International Coalition to take any steps really to set up any government, let alone stop the enormous arms depots that were there. And alqaeda has infiltrated this and back into egypt. And im here to tell you that over the weekend the alqaeda affiliate in iraq, the Islamic State of iraq, openly announced that it was conducting counteroffensive operations against the maliki government after demonstrators were killed in fallujah on friday. And has, in fact, been maneuvering small units and snipe or teams in fallujah, picking off iraqi army troops. So heres the 64,000 question though. The big problem for most americans is they look at, i mean, okay, afghanistan, thats one thing. Maybe iraq, another thing. Mali, come on. Yemen, you know, to quote those who adore criticizing these kinds of operations, you know, it would appear that all we ever talk about is endless war. And i think that one of the failings is making a connection between our interests and what happens in these countries. Because we up speak of them as if somehow, you know, there is an absolute. Whereas the vast mass of americans dont give a good damn what is going on in mali and who lives or dies and, frankly, same in iraq. So that connection, can you just quickly make it before we turn to asia . Yeah. The problem is it takes one to make war. We can persuade ourselves that the tide of war is receding, but if our enemies think theyre going to attack us, then we have a problem. And all of the groups that ive identified not only share a common ideology thats focused on attacking us and attacking us in our homes, but almost all of them have made attempts to attack us in our homeland and will continue to make attempts to attack us in our homeland. Im not suggesting theres an easy solution, and im certainly not suggesting i want to invade all of these countries. What i am suggesting is relying on offshore balancing, drones and limited special forces operations and paying off locals has failed. So we need to find another solution, and we need to take the threat seriously. Just really quickly, um, at this point theres almost more problems than we can deal with immediately, simultaneously at the moment. But the problems that are arising, that are coming to the fore now in syria and in egypt and if iraq, you know, unravels too, those are traditional Power Centers of the mediterranean and the muslim world. These are countries that are developed, important, that, you know, we have enters, where other nations in europe have interests, where the saudis and the other gulfis have interest and are unlikely to do the right thing. So the idea that, sure, afghanistan we used to think of it as the dark side of the moon. The maghreb in africas on the other side, the dark side of the moon. Its pretty rugged and remote territory. But damascus is not. Cairo is not. Baghdad is not. Lest we think of the world is made up solely of alqaeda and thes lammic world the islamic world, misha, i wonder if you would just talk about what we see in the pacific. Not just about china, but about some of the intraasian problem that is were seeing. And if you can doing what our economists at aei absolutely revile, link it back to some of of the, you know, economic questions that we face and the prosperity that weve gotten used to up to a point . Thanks. Well, first,ing now you know how asia feels in these discussions, always sort of last, and when attention comes, its sort of quick. [laughter] this is why you grew a beard. Exactly. Let me, let me mention three things. That i think will be on the radar that we should be aware of. And then link it, actually, back to the broader discussion, what dani asked about the economics. Um, so, you know, if tom was talking about the immediate game and fred was talking about the shortterm game, asia sees itself as the longterm game. And they sue they view whats going on there in those terms. Of its not something that well, whatever im about to mention, they dont think its going to be resolved tomorrow. They dont think that the trends theyre dealing with are at any point in time about to end, but rather its india, its korea, its Southeast Asia trying to understand what the correlation of forces and the balance of power is going to be and going to become. So part of the frustration asia feels with d. C. Is that it is so immediate focused. They understand that, and they understand why thats important, but their concern that we dont have that same analytical ability to think out as long as they do and start looking at how this worlds going to look in 2020 or 2025 regardless of some of the products that come out of d. C. I think for the most part the aiz yaps flip through it with interest but dont take it seriously. So what are the three things i think we should Pay Attention to thatll link into this question of the longer balance of power. The first is north korea, the second is the china japan spat, and the third, of course, is managing the overall relationship with china and our forward presence. Um, north korea we seem to be going back into the same dance where we just assume that were going to be having some sort of outrageous action by the north koreans, be it a missile launch, a rocket test, a nuclear explosion, some type of plea will then be made to come back to the sixparty talks. I think what changed a little bit is that the rhetoric that you see coming out of north korea now seems to be somewhat sharpened. Its not that they havent called us the enemy of the Korean People before, but its becoming very much directed at the u. S. In a way that if i were in the minds of the north koreans, i would be or more confident to do that because were seeing success on the fronts that they want to have success in. A successful Ballistic Missile launch. Which means they now are moving along the road where they can think about one day targeting at least parts of american territory. They do a Third Nuclear test, getting more expertise, ultimately moving down the road to weaponizing and put it on these nowsuccessful missiles. We know of their close connection with the iranians whom they sell these missiles too. Its hard to overestimate how jumpy this makes the rest of the neighborhood, and i think theres a sense of frustration that washington doesnt take it as seriously. And each time north korea does something and to be honest, whether its been a republican or democratic administration, the u. S. Does nothing and simply moves that red line farther down. There are no more red lines asians believe we have with regard to north korea. So in the interest of time, let me move on from that, but i think you will certainly see something happen. Youll probably see it happen soon. And the only question i would raise is are we prepared for the day when our allies decide they can no longer wait . South koreans have made that clear, the japanese with a new administration and new capabilities are making it clear as well. Second is the seneca cue spat between china and japan. This is a group of islands off the Northeast Corner of taiwan. They sit on rich oil and gas deposits, they also position the bottom of a strategically important chain of islands that could block the chinese navy from the east china sea. They have been a source of daily confrontations on the sea and now in the air between japan and china. You have two new administrations, one in china, one in japan. There is a hardening of positions on both sides. Theres the usual diplomatic feelers, but i havent talked to anyone who takes them marley seriously. And we are particularly seriously. And we are one ep3 incident away from potentially a major conflict. Do i think itd be a war . No. On the other hand, the domestic tensions in both countries, i think, mean this would not be very easy to solve. And whoever backs down either before conflict or after conflict is going to lose an enormous amount of credibility and influence in the region. Both sides know that, and thats why they are now moving forward to getting much closer to war. The third thing is managing this broader china relationship, and heres where ill link it back to what dani said and wrap up my comments. This is the long game. I think that despite the missteps youve seen china taking over the past couple of months im sorry, couple of years where its sunshine its sunshine diplomacy was sort of e revealed to be inside of an iron fist in a velvet glove, the territorial disputes it has in the South China Sea and the east china sea, the continuing pressure its putting on taiwan, things that china has not significantly or fundamentally recalculated its strategic interests. And i think you see this in the pronouncements. I think you see they look very carefully to come to what my colleagues have been talking about in america, that they firmly believe is retrenching in america. An america they firmly believe is more and more dysfunctional. This, i think, goes to the core of what tom was talking about with how she sequestration is playing out. The asians can count as well as we can, and, in fact, if you look at the educational rankings, better. [laughter] they understand i cannot go to asia without people anywhere asking me about sequestration in america. They know and theyre watching despite all the rhetoric about a pivot and a rebalance. Theres a fundamental reality of how many resources you have, how present you can be and the size of the region that thai in. And ill actually have a piece in politico tomorrow talking about the first steps that the air force is taking on biting the bullet to deal with both bca and the looming threat of sequestration. And it goes right to the core of this concept of readiness. And a Senior Air Force official told me just the other day that hes expecting when this hits in the may june time frame that he will go down to about at best about 40 combat Mission Capable of his forces which have been engaged for a decade now, and the other 60 will go to the basic Mission Ready capable. Basic Mission Capable is what we calls it. The asians know that. They see it, and they understand. You look ten years down the line, the possibility or likelihood of america having [inaudible] as it does today is a shrinking likelihood. Now, misha, let me so let me push back at you with the favored theory of offshore balancing. This is, this is increasingly popular as a construct for american National Security. It is this notion that somehow we can pull back and look inwards when we need to and yet we can leap out when we are urgently called upon, but when were not urgently called upon, for example,ing when it isnt a war between japan and china, we can really allow countries to manage their own neighborhood, and we can actually subcontract to regional powers, even regional powers with which we dont agree. The management of their own area. So russia, eastern europe, china, asia. I think people fail to think through what the implications are, and i wonder if you could just play that out for a moment. Because our asian allies have not failed to think this through. Absolutely. And, briefly, i think theres two problems with offshore balancing. One is the political, and one is the practical. Everything you said is absolutely right, and i think that sort of falls in the phase zero period of political. You have to have skip in the game. I know its a cliche, but if youre not there present, then the asians question extraordinarily why youre going to come in when the stakes get much higher. And they dont even need to think out to the existential question of, you know, soviet soviet, chinese icbms hoping for the good old days when things were much clearer. [laughter] does the Nuclear Umbrella still hold. For them the credibility is your daily presence, and as you point out, weve already been doing offshore balancing even while being present because weve had the filipinos our allies, the japanese our treaty allies come to us in these territorial disputes and say are you backing us up, and what are you doing. The administrations response has been we take no position on sovereignty issues. We want to see the us quo maintained, but its up to you to solve it. Now, i think ironically thats the right position. It is for us to understand how the balance of power in the region is changing. And by not reacting, we are changing the actions of our allies. And china in each of these territorial disputes has come out on top, and the one thats playing out right now is the most dangerous of them. The second part to answer your question goes exactly to what fred and tom were just talking about, its the practical. If you do literally offshore balance, if you start pulling back from the region, if you go to hawaii or other places that are cheap or whatever, you have to get back in when needed. Once you come out, in a worst case scenario, you have to fight back in. And even in a steady state you have to bring back in. That meaning bringing those bases back up to par, it means getting your logistics train going. I think as you point out, we dont think what it takes in this enormous three week steaming time, for example, from san diego down to the Malacca Strait if we come out, the cost of going back in, our friends there know it immediately because even when weve been there for 60 years, how many times do you see a gray hull . Not that much because its thousands upon thousands of miles of water space. Theres another thing that you all have probably noticed that we didnt bring up, and it says something that it didnt come up first and foremost. I didnt want say nothing about iran i didnt say nothing about iran. And ive noticed because i spend all my time looking at Foreign Policy issues broadly and because iran is one of my issues is that is increasingly true in washington. Is it because we have defeated the Iranian Nuclear Weapons Program . Is it because our dialogue with the iranians has borne fruit . Is it because the iranian government has had second thoughts . Is it because the europeans and their ongoing dialogue with the iranian government about the Nuclear Program has been successful . Or is it none of the above . The honest answer, of course, is its none of the above. The bigst problem is that there is an incredible blossoming of threats around the world right now, and we had a lot to talk about before we could even come to iran. Worse yet, our government is and i would say many, many on the right and the left are bored with iran. I think that the tacit notion is that containment is a very good option because this, after all, is the year in which iran will get Nuclear Weapons. And for those of you who have a slightly longer memory than some in the Washington Press, youll remember when Bebe Netanyahu stood up in front of the United Nations General Assembly with that carr toon that he rather ill advisedly drew or had someone draw for him and said that the deadline they saw was this summer. Stop talking about it. I wonder, both fred and tom have written on this, i wonder if you two just want to pitch a word in. Maybe, fred, you want to start with the technical and, tom, you want to talk about the containment. Sure. I want to throw in a concept as we look at this, consensus reality. Weve decided that whatever we all agree on as being whats happening in the world is whats happening in the world. And were not very interested in the intrusions of reality that come periodically, but in a very limited way through our media about these things. So weve all sort of agreed that the iranians, the diplomatic thing is maybe going to work, and the iranians are kind of holding back, so thats the reality that were going with. The reality is that the iranians are going with is that they will almost certainly have acquired the ability to detonate a Nuclear Device this year. They will have they definitely have the capability to produce the uranium. By almost any estimate you want, they should be far enough along in the Weapons Program to be able to do that. I suspect, by the way, that theyre a lot farther along than most of the consensus reality estimates that are periodically leaked by unknown officials. And you should also be aware of Something Else which is that the estimate of when they will have acquired the ability to launch an intercontinental Ballistic Missile has not varied, actually, over the past few years and has remained constant at about 2015. Fortunately, thats so far into the distant future that we really dont need to be concerned about it. But the bottom line is when you look at, as we do on a regular basis, when you look at the technical reporting and, again, different from iraq in this regard in the 90s we have inspectors on the ground in iran every few weeks looking at the instruments and reporting out exactly how much of what kinds of uranium they have and exactly what weaponization facilities they think they have that they havent been allowed to inspect, the iranians will very likely acquire the capability to have a Nuclear Weapon and within maybe another year after that the ability to put it on a missile. Thats reality. Whatever we might talk ourselves into believing. Look, i think there is at least one more than who with thinks about iran 24 7, jim mathers, the head of central command. Of course, for his obsession hes being asked to retire early, but while hes in command, you know, arguably hes letting other parts of his area of operations be the bill payers for that. When you look at it from the position of the u. S. Navy, its not pivoting to the pacific, its parking its aircraft carriers either in the persian gulf or in the open waters off the persian gulf. Thats where the navy is today, or thiess the high at least the highend navy. Its not part of our, you know, i mean, again, we are happy to look the other way, but it just shows you that with the limitedover all size of overall size of our or force today and the limited amount of resource we have, we are not fully resourcing afghanistan or doing any of the other things that perhaps we should be doing or ought at least be able to do across the greater middle east, notre are we switching neither are we switching, pivoting to the pacific. So when you only have, you know, a single chip to play, that iranian danger actually rises to the top in many ways above all other military contingencies. It was interesting to me that john kerry in his hearings last week, his prepared statement upside scored very aggressively the underscored the notion that the president did not want a containment option for iran but, in fact, wanted to see the program ended. Interesting because theres nothing in our policy, of course, that underpins that statement. So it was a little bit of a disconnect from reality. I like freds term, consensus reality. Before we open the floor to questions from you all, and im going to do that next, i want to just touch on two questions quickly. Maybe, actually, three questions quickly but really fast. The first is what do we learn from the nominations that weve seen in the National Security sphere . Senator kerry has benefited enormously by being the least of the controversial candidates that have been nominated in that sphere, and so its very likely his nomination will sail through the senate with the greatest of ease. Senator hagels hearings begin next week. He has been, perhaps, the most controversial. If he had not been nominated and somebody well qualified and less controversial had been put in place, someone like Michele Flournoy or ash carter, then, of course, we would all be paying attention to mr. Brennan who is the nominee to be director of Central Intelligence and who has himself a history of some controversy on both the heft and the right ironically. So if we could just talk about what the implications of this are, and im going to try and put these two questions together, actually, and to digress and explain this question a little better, many of us who work in Foreign Policy studied history because thats what draws you in. And in the old days polysci and ir were fields that werent exactly embraced as they are now, and for those of us who did study history, a hot remember that all these inconsequential and rather interesting countries whether it was the czechoslovakias or malis of the time were the precursors to larger battles that could have been dealt with had they been dealt with early. I wonder if just sort of thinking through that prism where we see things going, but maybe take the nominees, and im going to just throw it open and see who grabs the mic first. Tom. Okay. Youre putting it in front of my face, you knew i would volunteer. Look, um, lets just compare senator kerry and senator hagel to senator thensenator Hillary Clinton and bob gates. By that standard both the new nominees lack gravitas. Theyre not independent thinkers, they have no track record of either legislating in an intellectual sense or advancing important ideas on military affairs or interor national politics. International politics. But the underlying cause, i would say, is its a reflection to have president s lack of interest in these issues. Anybody else . Yeah. Ive got another pet phrase to introduce into this discussion. The Republican Party is now focused on trying to be responsible about what kind of fiscal environment we leave to our children and grandchildren, which i think is good in general terms. And so were very worried about the deficit. And what kind of deficit were going to be leaving to our heirs. There was a National Security deficit that is growing and that will continue to grow. Its a particularly american conceit that the world goes away or stops when we stop paying attention to it. The fact of the matter is that the problems that we see in the world will not go away. We dont cause them by looking at them, and we cant stop them by ignoring them. The enemies who want to kill us and its amazing to me how comfortably we forget the fact that there are large groups, including the entire state of iran, where leaders wake up every day and ask themselves what can i do to kill americans today . Thats not a period of wars receding. But back to consensus reality, if we agree that it is, then we will leave for our children an incredibly dangerous world. We will have missed many opportunities to address problems before they acquire the kind of compound interest that is measured in lives. Misha, just to close us up, also address the question of who actually is expected to be part of an Alliance Structure if theres any conflict, lets say, in the Taiwan Strait or over the islands. Are there implications for us . Yeah. I think on just the nominations quickly, you know, if the pivot of the rebalance of the administration prefers to call it is sort the signal proactive Foreign Policy, not ip meter inheriting wars, then the nominations are singularly uninspiring. I dont think that is a dig at either man personally, but neither of them have deep asia experience. Senator kerry, obviously, has been head of the Foreign Relations committee but, you know, has not really opined much on china other than to talk about how china will surpass us. He said that on the floor of the senate in 2011 and talk about how we need each other. But, you know, thats diplomacy, so i guess you can give a bit of a pass. On senator hagel, you know, its he did not, he was head of the Congressional Executive Commission on china but talked solely about development issues. And those are important, dont get me wrong. You know, rule of law and economic growth, thats fine. But thats not the job hes getting. Hes getting the job of defense secretary, and he has said absolutely nothing about the rise of china. Hes also said absolutely nothing about he as the head of the Defense Department is going to deal with china in an era of budget cuts to the department he supports. I think its very troubling. Fred has a great way to have putting it in the sense that it doesnt matter. So what . Hell get in, and hell do the job, but i dont think you can take that for granted. But on the question of alliances, absolutely. We have japan for the first time in a decade has just turned around its Defense Budget modestly. Itd be about a 1. 6 billion increase. Its a nice trend. Itd be nice to see it continue. But everyone watches very carefully to see the leading edge indicator, which is us and what were willing to do. What they see on taiwan is a country rushing to the exits to try and make sure nothing comes between it and china and, therefore, not only are we, i would argue, losing credibility over whether the United States would intervene in a Taiwan Straits scenario, but we certainly cant expect the type of support and, in fact, could even see, i think, treaty allies that would be required, for example, rear based 40 gistics and the 40 gistics and the like want to stay out of it because theyd question whether wed be committed to it and, instead it would drag them in and leave them exposed to which a situation of conflict and violation. Just really quickly because freds comments reminded me of the concluding remarks i wanted to make in my Opening Statement but was too slow to get to, i by think but i think its really important and it helps bring it back to the larger political discussion, not only are we failing to manage the world in a way that will leave our children with a safer environment and actually, judges by the faces im looking at, you people, were leaving a lot of work for you to do. But were leaving you many less means to deal with it. And not just because were demobilizing after a war. Even if you accept that paradigm. Its because the money is going to entitlement programs. Your, the money that you might want to remobilize to defend yourselves in the future is going to be in my baby boomer Retirement Health care accounts. We can either try to do it then, take away entitlements from people in a crisis circumstance, or we can begin to govern our appetites now so that if someday we wake up and discover that the world actually remains a dangerous place and we have to do something about it that involves using armed force, that we can then mobilize our wealth. Of were setting ourselves up for circumstances not in the not too far distant future where that will be much, much harder, and, you know, it will be historically unprecedented situation for this country to be in. Lets open up questions. And forgive me, but i dont have a mic to happened around, so im going to to hand around, so im going to repeat your question just so its audible for the audience as well outside. This gentleman over here, and then i saw a hand there. With. [inaudible] questions for mr. Kagan. You prefaced pretty well the Obama Administrations approach when it comes to alqaedalinked groups. What is the answer then . Whats the answer in mali, whats the answer in yemen, whats the answer in somalia around the world seeing [inaudible] grow in their power . Jest a sec. The question is that the criticism of, the criticism of the Obama Administration on its actions in a variety of these alqaeda fronts, mali, yemen, somalia, was persuasive, but whats the right answer . Well, i dont have a right answer, and there isnt a single right answer for any of these various places. Um, but i think that we need to get beyond a very doctrinaire, binary view of troops on the ground, no troops on the ground situation here. I do think that it is in our interests to find a way to work with local partners in order to combat local groups and allow them to, help them to govern their territories with their own forces. Unfortunately, i think that the way to do that involves putting some boots on the ground, and we have a long tradition. Its interesting, it was started by a democratic president who was the last president who was enthusiastic about this kind of thing, john f. Kennedy. And this is one of the things the special forces were created to do. And it is a train and advise mission, and it is an enable mission. And i think that if we had been doing that in yemen b, for example, we would probably be in a somewhat better place. But we do have to face some hard questions. And the questions are what do you do where you actually dont have partners or where the partners cant succeed, and where do you go up the escalation ladder, and are you going to be drawn into a war in every place . And the answer is you dont want to be, and youll have to make a hard decision in each case about the risk of going down one path or another. So its got to be contingent, it cant be ideological which it is now highly ideological in the opposite direction from what it had been in the bush years. Now were saying we would never, never put troops on the ground fundamentally, and you have to be you cant allow yourself, you cant allow your brain to be short circuited by slippery slope arguments. We always live on a slippery slope. The question is making the right decision when it comes to various inflections here, and you really cant make the decision honestly physical until you see the concrete choices that are in front of you in each case. [inaudible] talk a little bit about some issues in the western hemisphere, specifically cuba, venezuela and the instability from the drug cartels in mexico . So the question is about the western hemisphere, a name that went unmentioned, chavez, and the instability from drug cartels. Is anybody here capable of talking about that . Tom a little bit . Yeah. Okay. This is going to be an economy of force response. But, you know, first of all, you know, that has always been our other than actual the physical defense of the continental United States or the legal United States, you know, thats been our principal security interest since before we were a nation. Its clearly a moment in time where the and, of course, through history, you know, pattern ors have gone back and forth between more autocratic and more liberal governments and regimes in that area. And we have a lot of partners with whom we could with working. We have had, i mean, our Model Partnership was colombia which has been, you know, a pretty lowlevel thing, one which the house of representatives has traditionally kept very close tabs on. Its a model counterinsurgency partnership. We should, if we had aped that model in some of our middle east engagements, we would have been much better off also today. But it suggests that, um, again and its possible to work with the brazilians, for example. The brazilians were the leading force in the u. N. Mission in haiti. So some good things have been happening even while the, you know, cartel outrages have been happening, and theyre a serious threat to the stability of mexico and the border. So absolutely, you know, we need but likewise its going to take a fairly traditional approach thats going to be, you know, this is no doing this on the cheap. But part of the problem, part of the problem is at this table Roger Noriega isnt at this table, latin america, western hemisphere doesnt get addressed in washington unless its the latest on chavezs health. Basically, you get castro lives or dies, chavez lives or dies, maybe an election in venezuela or some fire in brazil, but thats what makes the newspaper. And thats part of the problem. And it is also part of the challenge to congress. I mean, a big part of the answer to every single question is that you cant beat something with nothing. If you want to beat the construct that america must retreat and must disengage from the world which is the one that is embraced by the Obama Administration, youve got to beat it with something. And that means capitol hill. And if its not capitol hill, its not going to happen, you know . As much as we would love to be able to legislate from the American Enterprise institute, were not capable of doing that. And thats a historic reality. In the 1990s when bill clinton said its the economy, stupid, and won an election based on that, it was the house and the senate that legislated sanctions on iran, that pushed for like it or not freedom for the iraqi people, that pushed for sanctions on cuba, that pushed for more engagement, that pushed for exactly what youre talking about which is playing in colombia, that really pushed for a new relationship with india. I could go on and on and on. Nato expansion. All of the things we now take for granted were not initiatives of the clinton administration, they were initiatives of members of congress here on capitol hill who changed the world in a very meaningful way. And that is still an opportunity if only we recognize that its something that we need to care about. Sorry for my little speech, but you have two former capitol hill staffers here, so hi [inaudible] general question, how do we know when weve won . Like with regard to the kind of counterterrorism, zero dark thirty movement. Is there, like, a metric . How is does there repeat the question. The question is how do we know when weve won . Dont worry about it. [laughter] were in no danger of winning anytime soon. [laughter] this is, this has become a shib list because its a fair question, obviously, whats your measure for success and how do we know when weve p stopped or when we can p sop. When we can stop. But we are so far away from that now, and were further away from that now than when this president took office, and the policies that hes recommending are going to take us further and further away from that because until we can stop measuring the he can tears that are actually governed by alqaeda affiliates, i guarantee you that the question of whether weve won or not is not operative. And right now that measurement is on the increase rather than on the decrease. So its a fair question, um, but i think we need to recognize where we are in history. We are this is more like stalingrad 1943. Hopefully, well stop the retreat here on the road to stalingrad. And at that point the soviets were not thinking so much about what kind of peace they were going to impose on germany when they were done. They were thinking about how to recover the ground that theyd lost in their own interest. And thats where we are now, because weve lost so much ground, and we are about to lose so much more. That is the conundrum that faces us right now. I do think theres an answer, though, that if you look back, you know, we were winning in iraq after the surge in 2007. Of but winning actually is not just, you know, a game in the play growpped, you know . Its not just a thank you very much, okay, were all done here now. Winning requires maintenance, and when you choose not to, then its very easy to go back the to losing again. The imimplications may not be obvious til later, but i think that fred has written a great deal about what the implications of having, failing to leave even a minor force in iraq have meant for the stability of the country and for our own National Interests and the National Interests of our allies throughout the middle east. We have yes, sir. Chris stewart, for mr. Us aland, you mentioned that a war between china and japan would not be a conventional type of war. What would that war look like, and at what point would the United States have to get involved . What would war between japan and china look like, and when would the u. S. Have to get involved . Yeah. Im sorry, i didnt mean conventional versus unconventional as we talk about soft and the like, i just didnt think it would be a war like the 1930s. In essence, a fullout war. Um, i think what first of all, i think whatll happen, theres going to be an accident. Thats what i think is going to happen. Youve got, you know, the japanese have sent up their fighter patrol jets, the chinese have responded, the japanese are talking about firing warning shot, the chinese have said thatll be an act of war. Tough coast guards and the Maritime Patrol vessels of china jockeying with each other. Somebodys going to die. Theres going to be an accident of some kind, as i mentioned, an ep3 event. And then its a question of what are the ruleses of engagement that each side has, and were, obviously, japan is a treaty ally of ours, so i assume were in better touch with them. What we do know is that the assistant secretary of state was sent there last week along with the head of asia from the National Security council and the asd handles asia in the department of defense to tell the japanese to calm down, to tell the japanese not to push too far, you know . And when we read that in the paper, then you can be sure the chinese are reading it as well and interpreting it that they have more leeway to push on these things. So the conflict can be any type of conflict, but it is a highly militarized, small area right now. And the question is, if something happens, what do the japanese do . Do they ask, for example, for consultations with the u. S. . Which the chinese would regard as escalation. Do they invoke article v of the treaty and ask for help in selfdefense . What do we decide were going to give them . Right now weve kept all of our or forces out of that immediate area. Um, the credibility of the alliance is on the line. You know, we say that a lot, but it really is in this case. The p japanese have been tussling over these islands with taiwan and china for several years now, and if we did not back them up at a time when Japanese Military lives were being lost, then i think we lose our forward base in the pacific and from it our entire strategic linchpin for having presence. So i was going to ask about syria because syria prior to the civil war was one of the [inaudible] in the middle east. Now 60,000 people have died according to the u. N. Which means theres probably a lot more people that have died. Do you think that the u. S. Should intervene or at the very least support the rebels . Should i answer that . Yeah, go ahead. The question is about syria and what the United States should do. I do have to disagree. You suggested at the beginning that syria was one of the better developed countries in the middle east. Syria has never been one of the better developed countries in the middle east. Bathism is socialism, and socialism momentum work anywhere. At least of all in a place with no Natural Resources and stateowned industries. So syria was not doing well at all prior to the outbreak of this civil war. Um, the problem is that no good exit option in syria. Theres no good outcome here. This is the, this is the argument that i think underpins everything that weve been trying to say here which is that in the beginning of any problem its always easier to solve it. It may not come out optimally, you may not get an a answer or a b answer or even a c answer, okay . Now all you can get are f answers because the decision by the United States not to involve itself and when i say the United States, i mean the Obama Administration not to involve itself in any way in the syrian conflict has done exactly what we bemoaned, what fred talked about in libya which is that it has subcontracted policy to qatar and to other gulf countries who do not have the same tastes in rebels that we do, to put not too fine a point on it. Rather than push them into one. But what we will see in syria is that opportunists islamist extremist groups and other local groups have come to the forefront. They are well armed, and so a rebellion that began as one that was at least in part speculative that had no religious basis and that was brought together by universal opposition to Bashar Alassad is now infiltrated by all sorts of al qaeda and related groups. And so when assad willful, it is when, a question, what will be left is a gigantic, well armed, seething, feuding mess on the border of iraq. Turkey, jordan, lebanon and israel. It is as if we live in a fantasy world to think that the implications of the conflict of their have absolutely no meaning for our own National Security. It a disaster. And what we can do now is try and contain that disaster and hasten the movement of a sought out, and ensure that who ever is in charge actually is a group, or a group of groups that respect and value the kind of values that we have rather than the kind of values that, say, qatar as. Did you want to add something . Look, this is also a case where we are paying the price for having persuaded ourselves and iraq was a country that is located somewhere on the men and doesnt actually share common borders with any place on earth that is of any significance to us. And because we adopt that approach and because secondarily to the administration decided maliki was her best friend and the guy we needed to back at all costs, the result of that is that iraq had been feeding the situation in syria into. One is that iranian weapons and trainers and theres other things have been traveling to iraq on the way to support the assad regime as he murders people, and the Al Qaeda Organization in iraq that was supported from the outset by a Logistics Base so forth, that assad had allowed to exist in syria reversed larry and has been exporting violence back into syria and radicalizing the movement in part, right. Now what were seeing is a continued spill over into iraq of the sectarian violence, but also of the re strengthening of the al qaeda franchise in iraq. It is time to recognize that iraq and syria share a common border, and the tribes that call crossed the border to talk to each other. The highways that go between those two countries carry terrorists in both directions. And what we are now seeing is a problem that will begin to expand i think exponentially, as the Al Qaeda Group to cut its affiliates in both countries draw strength from the fact that they are gaining in both countries and being supported in both countries. And were provided no guidance, no assistance, no support, playing no role whatsoever. Just real quickly. Youve got to open up that more. This war is being conducted in a regional context, which is defined really by u. S. Withdrawal. 2008, you know, the u. S. Wouldve been a really, in a very strong, they like us but they dont like is now. Our actual power in the region was at historic high water mark. Now we are collapsing doubloon from iraq, in afghanistan. The arm many situations which were just taking a bath on actively sort of taking a half, saving the number one. And the other engagement, involvement that we did pursue, libya, is not a recommendation for being alive in that state. Im not sure that the assad regimes going to lose. Iranians will help the regime last a long time. Russians and the chinese will defend it internationally if not resupply them directly military. And at some point that will go up, not down. So you will have the middle east. The u. S. Is increasingly gone and its going to be blocks containing for power. The iranians, syrians, with great power sponsorship from russia and china. And the sunni increasingly solipsists part of the region, which itself will maintain some sort of allies but for the trendy but not one that we will be able to direct as we have been up to 2008. So this could turn into something, you know, really ugly very, very rapidly. Spent thats leaving 80,000 people dead is not ugly. Yes, sir. [inaudible] what should our or in policy towards this is another area where i think Congress Really has a role to play. The administration is basically decided that mohammed morsi, the Muslim Brotherhood president of egypt is the new mubarak. The guy in the seat that we will now help. And is completely indifferent to what our aid program should look like and what the desired outcome in egypt should be. The only thing that they appear to be interested in, and i say only appear, is a continuation of the israeli egyptian camp david accord. Which are out of state of great interest but not really the only thing that should animate us when we talk about the middle east. And when i saw that we were delivering fighter jets to the egyptian military, i just asked myself what message does this send to the rules should be, not that foreign aid is bad and not that is good, and that the military assistance is good or bad, it is that it is u. S. Taxpayer dollars and it is used to for the u. S. Taxpayer interest. And every time a new government comes into power, we should take that aid down to zero and build it anew. Does that mean that we should give everybody the same as before . Maybe it does. Doesnt mean that we should give them a zero . Could be. Doesnt mean we should give them more . Also a possibility. But i will pilot is absolutely unconscionable autopilot. And thats the probably of no is we are on autopilot or cannot talk about this blanket contract, stoppin stopping build whatever switch but we been in whatever country were building. There are things that are going on and pipelines in our foreign aid. The issue is the message that we send which is would become hysterical. Oh, my goodness utility christian, all our aid must in. And the answer is no, dont have a summit. Thats unacceptable but they should be based on a whole array of questions, treatment of minorities, treatment of women, political rights, civic rights, religious rights, economic rights. All of those things are nonfactors and yet it seemed that everybody just that Something Better to do than sit down and have aggressive oversight hearings on the question of egypt, take it down to nothing and build it fresh. Sorry, i have very strong opinions on the question as you can do. I just would say, agreeing entirely without, and we on the hill sometimes, we get caught up in the focus on our values, which is important, and our aid should be reflected in advancing on values. But why do we care at the end of the day about the welfare of individual egyptians or about how minoritys are treated or about these other things . We care because it speaks directly to the stability of the Egyptian State over the long term and the ability of that state to govern in peace, to control and territory and people and deny that territory and Popular Support to our enemy. Thats why we give foreign aid these days, and i think part of the probably of in the foreign a discussion is that when foreign aid was crafted originally put in the control of the state department he was seen a form of public diplomacy. In the overall context of the war with the soviet union where we were going to show what good guys were and were going to sort of win hearts and minds is whether its become Something Else. But it should become even Something Else beyond that. We have a fundamental interest in helping states around the world that are threatened by the infection of al qaeda or the infection of the good force, or hezbollah. We have a fundamental interest in helping the states in those areas govern effectively, govern stably. And in the real world as it is today, happily our bellies are generally embraced. And so that kind of governance requires not using f16s against the people, not machinegunning him to death, allowing elections to proceed in an open and honest with. This is not simply a question of we think everyone should be like us. This is a question of whether you want states to be stable in the world or whether you want the world to be a chaotic hotbed of opportunity for our enemies to embed themselves in alienated and fragmented societies. Another question. [inaudible] how those two things me really, whether or not collecting analysis as adverse to just looking so much more at nonstate actor, terrorist groups. The question is about intelligence in the pivot under the caa, will be more state based rather than looking at nonstate actors, if thats the right thing. Actually i have heard that much about that. I think in general weve been, we are state based now. The question is, are we state based enough mean giving enormous amount of territory to cover. Weve got the entire of china. Ya got north korea. Youve got the strategic waterway and and the area youve got the south and east china seas and then you start getting into territory towards guam, our own territory. In in years its been interest in expanding out into the indian ocean. We have vehicle and thats really about it. We are not using a lot of the means that we need out there such as vehicles to do high level surveillance, mid level surveillance. We dont have fire scout and other things out there in the numbers when he. What we havent done is really poster allies people. Thats one of the things we should be things we should begin to push in japan, pushing south korea and others to build this capability and begin sharing it amongst themselves your political good but also its an operational good. There is i think, you know, whether or not its true but it certainly seems to be at least a viable urban legend. When we find out about a new soviet, begin soviet russia, russia. We find out about a new chinese attack sub, or Ballistic Missile site, often google earth as opposed to a traditional process. You have to raise the question of just how much we are releasing the types of things we need to see. That doesnt and get to the question of human, what type of networks we have on the ground, how we are working with our allies who are also very concerned with, i think the best analogy is that most of our allies in the asiapacific are concerned with their front yard. And their front door. And when they get out to the streets and intersections, thats what they want the u. S. To police. Theyre not concerned about the current the intersection industry. I want to make sure no one comes inside their own gate. Its a problem because we have presumptions that a lot of the reasons we have, for example, the treaty with japan. We are not worried about an amphibious invasion of japan. We want japan to take a more active role in the intersection. So thats the type of thing we need to focus on i think for that intelligence which goes towards building the Community Interest that we can leverage in other ways. Im going to wrap things up. Let me think first of all my call is for being here and all of you, and to see the rest of our policy series we have health care on tuesday, economic realities and priorities on wednesday, Financial Services on thursday, and in case you didnt have enough, polling of Public Opinion on friday. And if you really just didnt get enough on National Security front, do join us tomorrow. With a