[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] the Obama Administration submitted is 2016 defense under to congress, asking for 35. 4 billion for the pentagon. The request is 36 billion dollars more than budge cap . It comes as pressu ris on lawmaks to make it go by the end of the year that diverts the return of automatic spending cuts known as sequestration. The at menstruation neededs mo money to mernize the force and to counter chinese and russianan advances. Y programs include a new fighter for the air force and navy a new air force bomber, anand better missile defenses. The dod has asked congress to p military pay raises at 1. 3 and reduce basic housing for military members. Joining us to discuss the budget and the chance that congress will pass it is mike mccord, the pentagons comptroller. Why does the department need more money and what is different about this budget . This budget is consistent with the past we have laid out, the path we have told congress and the public we would be pursuing for this year. It is certainly more than we have for the past three years. Our leadership is united in saying that was not enough, that we have been taking risk in underfunding modernization that cant continue. This increase gets us back to the levels we were at during the first couple of years of this ration before we got run over by the budget control act and sequester train. Lawmakers are skeptical and a lot of the Republican Leadership has not made National Security or leadership Defense Security or defense a top priority. It may mean more unfettered domestic spending increases. How will you be making your case to members of congre and leadership to give you the additional money you guysay you need . Our case will be based on what we feel our National Security needs and the need to modernize the future, as well as digging out of the readiness trough we have been. We are p part of a larger political discussion where defense is its necessarily segregated from nondo ends in terms of what is doable. From nondefense in terms of what is doable. We are going to make our case about what is in our lane and why we think we need more resources. Do you think you help in making that case given russias obvious aggression and china increasingly assertive. Do you think all of those come together to help you make a case better than two years ago . I would defer to secretary hagel who gets out more than i do. That is his belief and i think it is correct. Whether it makes enough of a difference to get the whole budget approved, i do not know. What isappening in the middle east and ukraine has got peoples attention across the country. How do you respond to those that say the dod must spend more wisely before it gets any more dollars . I would say we need to do both. You are never going to eliminate any been efficiency outside of the defensese department. Starting with secretary gates through secretary panetta. We have had four rounds in the last war years. We are undertaking a new one that we are going to build into the fy 17 budget. This is about following through on all of the things we have underway. Tell us about the secretary Works Initiative in the 17 budget. We have a business for the has been looking at our operations from a big picture and defense business perspective as well as ininternal groups looking at each organization viewing its own operatioions. Everyone is going to report to the deputy, including myself for my organization. We are goingo look at ways we can reduce spending on common auctions like i. T. We will have a proposal for next years budget for that. I want to talk about the recommendations, which were intriguing. Dr. Carter said without more ney the National Security strategy becomes becomes an executable. When it comes to executing the Nation Security strategy, is it a binary thing where you cannot execute it . How does that translate from budgetary to execution of strategy . That is a tricky pointt this level it is ok and that level it cannot work. There is always a little bit of you wants in there. You can do a strategy at any budget level. We think the sequester level is not doable at the level you asked for. We have been consistent on that since dr. Carter left. We sketched out inin an area that supports this strategy wi increasing levels of risk. And thehe budget we have this year putss right back to that level. There is a perception that the budget deal, that a budget deal has to happen by the end of the year in order to avert the retu of the real base hard sequestration cu were everything is automatic acrotheboard. There is also a sensehatou do not have until thend of thee year, that lawmakers have a couple of weeks at most to be able to strike a deal so the authorization and Appropriations Committee can do theirork. What deal do we need, when do we need it, and what is going to be the role in the process of negotiation . , i dont expe to be people are going to have to work out there different positions. I dont expect a conclusion. We would like t to see a deal by the fall. Im not personally expecting it to happen. I think the Authorizations Committee will have to get started under an assumption they will have to make in concert with their own leadership in the house and senate or come in with something that looks like the budget conol act. And then work from there. Do you see that with supporting information . If there is going to be a major adjustment to the request we will be involved in a conversation with our oversight committees. The larger notiation with nondefense and entitlements on the table, i think the history is individual. That is a leadership white house type of discussion. What happens if ill sequestratn returns to the department . And happened and have you built any contingency plan in this budget where there is a prioritized list somewhere . Is readiness going t to get hammered again . We have asked that an brief some of the committees. The answer is we do not have an alternate plan. We have a budget that we think is rig forhe country and National Security needs. We want to come out of the gate and get dr. Carter cononfirmeded and up for his hearings in the next couple of weeks. There will ba time and place to talk about in what we would do and how it would be done. Readiness d mornization isis what you would he to do if you did have to o go lower. You cannot reduce the size o the foforce in a hurry. As you probably know this play out in 2013 with the sequester. Coming up, more with mike mccord on the dod 2015 we are back with the pentagons chief financial offir. You had a slight increase in readiness funding. Some Senior Leaders s have said fixixing theeadiness problem we hahave created for ourselves is more of a time issue than a money issue. That is true. Money is a part of it. I used to work on readiness. Longererm when you have an army focused on a certain type of operations. O not have the exexperiences they need to do every operation we expect of them. No matter how much money you give someone you have to give them tryry give them time to train for a high standard. There is a time constraint and you need people that have the right exrience. Some of our army lears he grown up remarkably. Not without experience but not with the same experience we need them to half. If they do not have that traini themselvethey cannot pass it down to their its. We need t the time to get people back into the swing of it. At iss why we believe it will take m more than a year. Savings are importantut there have been saving ascensions that have beenn criticized, including on thi program to a degree that you shouldnt spend money yo havent fully saveyet. Almost everyry leader, whehether it is bob hill and arnett ob halen or ash carter, how much has that presented and is that why you avoided inking or spending any savings you he actually accrued . We do feel it was time for cause in iosing a new upfront set of the secretary gates was a believer if you force people to act, we have some of those. We are working off ts of billio of dollars into each year. Over 50 billion of savis. They were taken out in the budgets that are d this year to the extent that people people do have to find the money someplace else. They are going to have to come up with that savings. We vent put another one in is year. You have admitted they have been keepiping thehe department hold. It has become a little bit of a crch. Is it ever actually going to go away after and is a solve the problems going forwa . We ha a plan to do so but it is wholly dependent on sequestration getting fixed. We dont think it is feasisible for us to bring any money back ininto the base budget. Theyre well below what we think we need for currrrent operations. Do you thi, there has been talk of fuel prices at historic lows, even though they have been trending up over the last few days. We talked about what fuel price sangs would be. You said even if it stays below 50 per barrel you will sav about 2 billion over the whole fiscal year. The question is whether that savings is used for other priorities. Are you likely to give peopla fuel discount or keep putting moneinto the funds thahat act as a buff for future incrses . F fuel is still roughly in the 50 range, closer to what we discussed earlier. The savings are on that basic order of magnitude ithey stay down all the wayhrough september. We havlowered the price to our customers who use the fuel at the beginning of february, just a cocouple of days ago some of that money is going to start flowing to the services to hopefully be able to reinvest that in some current readiness actities. The balance will be held by the partment and by me through the spring when we do our annual mimidyear review. We have never had a year where he dididnt have bills come up. We pent against our challenges d bills. How much money will that mean for the services . Do y you know what it breaks down to at this point . It t is not based on the size of the budget for the of the budget but the amount of fuell the scene. Their savings disproportionately large to the size of personnel. Coming up more with i stood outside, assessing the situation. I knew it could rough in there but how rough . There was no way to know for sure. Hey guys. Daddy, its pink but hey. A new house its a blank canvas. And we got a great one thanks to a really low Mortgage Rate from Navy Federal Credit union. Pink so shes a princess. You got a problem with that . Oorah oorah open to the armed forces and their families for over 80 years. Navy federal credit union. We are back discussing the Obama Administrations 588 billion bget defense request for 2016, as well as savings initiatives. You have participated in every one of the saving initiatives. We have a lot t of panels making big projections. What are some of the kethings to remember when you are trying to s save money, given howw difficult it is . We are a big organization. It makes sense to come at us more than one way. Personal opinion, the best way to makake savings in the defense partnt is to start with requiremts. What could we stop doing or do differently . That is probably the biggest hangup of trying to find something the department thinks we could do less of or that the white house agrees and the congress agrees. The circle is credibly small over these years. Pele arent willing to givup a task. And then you start try to figure out how to do it less. That is the best way to approach the problem. The otr way is benchmarking it. Benchmark agnst private entities that have a different operating environment. I dont think the Defense Department is like bei a cfo that answers to shareholders and runs of the restctions that we half. There was a briefing and a lot of work went into it, 125 billion in savings. Which of the rommendations were most attractive . Some of this stuff w works really well. Less if you have 535 guys on your board odirectors. Given the pace the world evolved, it always neededs to be looked at. To be more involved in working with the rest of us and working with opportunities. Not just the volume t where the money is is an important area for us. Are there any particular initiatives that may be a attractive at this point, or are you going to reserve judgment . To the extent that savings are based on getting rid of people, that is a challenge and people are alrea really stressed everywhere i see around the building with the pace of operations. I would be wary of how many more peop we can do with. Cant you reduce your civilian workforce . Anyone of thos recommendations at youre looking at right now and saying here are some elements w we really like . We had about one week teklook at it. We are having rkin groups locked in the room and working hard on this. We have only 60 da in the depapartment to come up with our views and an annalysis of what they have done and get a recommendation to the president and the president has to make a recommendation for each of the 15 to the congress. We are working prett hard d to understand the data behind it. The data b behind it t is just coming in. Retirement is a huge driver. We want to analyze that and see if it is accurate. There is a lot of hard work going on there. I would say the big rocks in that are thehe retirement is huge in healt care. We had our own proposed budget, different from theirs. That is probably the one that is going to be mosost most complited for us. We have l less than a minute left. First, where are you cant audit readiness where are you on audit readiness . And how ash carter what kind of defense secretary he is going to be . The big news for us is in december we were arded ent audit firms for the arent for the army nav and air force. This is a long of the lines of the plan we say we are going to foow. This is the first upon the road where we have outside auditors. We are looking for to having ash on board. He is a smart guy and someone who cares about the troops. He is an action orienented person. He will be a challenging boss and a good way. I think his expectations are high but he e has a good blend of brains and heart. Thank k you so much for joining us thahank you for having me. Sponsored by Navy Federal Credit union. 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If you h have any questio partners the Obama Administrations do natial security strategy, an interview withatos supreme allied commander, and coverage of the air force Associations Annual air worker symposiumn orlando. If y have any comments about the show or suggestions for future coverage, please email me. I will be back next w week at the same time. Until then, have a great week. [music] dr. Charles stanley how valuable are my friends . And the value you place on your friends will be evidenced by the way you treat your friends. Nothing you say, its the way you treat them. And the wonderful thing about friendship is this. Jesus is the best friend you and ill ever have. Male announcer today on in touch, thinking through your friendships. [music] oh, the blood still cleanses hearts of sin it still delivers fallen