Hornberry welcome to brookings. Im Michael Hammond of the Foreign Policy program. I have the privilege of back mac thornberry, republican from the 13th district x testis from the 13th district of texas. The first texan ever to have that role. Texan whose family goes back to ranching in the 13th district as far back as 1881. Probably wonder what he was doing in rainy washington when he could have been back in texas during springtime, but we are grateful for your service. Its a momentous time in american Foreign Policy. To matters quickly of Defense Budget, defense spending, and where the entire debate may go with the release of the president s budget and congress gearing up in its normal hearing season on these subjects. Join me in welcoming the chairman to brookings. [applause] budget, iget to the thought i could ask you to summarize here i position, reform bill of last week, headlines you wanted to make off that and one additional aspect to my question might be, i remember last year when you were here and elsewhere talking about your efforts with senator mccain and others. A lot of what you emphasized was , it saves money, thats nice. I was struck in this bill that you are trying to help the taxpayer with reforms and efficiencies that may save money, looking hard at various kinds of requirements, Logistics Matters and how to purchase regular supplies. I wonder if you could explain the latest reform proposal in the context of how you think about acquisition reform. Sure. Maybe i will start with a broad bit of context. As far as congresss responsibilities when it comes to National Defense these days, we essentially have two. One is to help rebuild the military and second is reform to help the military be more agile and innovative. The budget largely deals with the ribbon deals with the rebuild. A the agility side, we face world with the widest array of complex challenges weve ever faced, and a world where and adversaries can invest in capabilities at a much faster pace than they have before. All of that requires us to be more agile and that is why acquisition reform is so important, as you point out, its about getting the best our country can provide into the hands of the war fighter. We owe it that. A lot of what weve done in the past two years has focused on. He big acquisition programs this years bill focuses more on the daytoday sorts of things. Probably the thing that will resonate the easiest with folks, one of the reforms we proposed is to allow d. O. D. To buy things online, like on amazon. There are several other competitors like that. You can go off the gsa schedule, many costs more and which companies have decided they are not going to participate in because of the requirements. You can go through that contracting process, which takes forever. None of which is the definition of agility. The things that will allow d. O. D. Folks to go back commercially, offtheshelf items, online, on these online portals heard we also try to audit, the Way Companies are audited on the costs they incur. Theres lots of different sorts of audits at d. O. D. But this one starts bringing in private sector Audit Companies to do some of this job. Its happening in other agencies and it ought to be able to have been in dod. Of of the lifecycle costs programs are on sustainment. Its on everything it takes to keep it operating over its lifetime. One of the changes is to require you conserve containment costs from the getgo. Service contracts of all things that dod contracts for, 53 of it is services, not weapons and equipment. If you ask d. O. D. , what are you spending this money on, and lots of other logical questions, they cannot answer it. We try to get our arms around the Service Contract thing that. Io does dod does as you know, we will have a conversation up here for a bit longer and then go to you for your questions. I think weve got slides up that are showing some of what you presented and proposed. Even if they dont come up for what ever reason, let me summarize what i understand to be the state of play with your proposal. As we all know, President Trump uote, 54a quote, uqno million increase to the Defense Budget. Lets say president obamas level, its only about a 20 billion increase, which israel money, only a few is real money, and what you are now suggesting is that President Trumps proposal is not enough and you want to add 37 billion to what he suggested. Layout aif you could little bit of the major components of that 37 billion would be and then we can talk a little bit about each of them. Again, just a little bit of context. Last year, as House Republicans were putting together an agenda to run on, the speaker asked our committee to look at what we think needs to be spent on defense. What would it take to repair the damage that has been done from eight years of cr,s, five years of the operational budget control act. His charge to us was, lets figure out what it would take. President trump is talking about a specific size navy, etc. How muchid was to show money would a cop which the hass that President Trump set forward, but could be responsibly spent in fiscal year 2018. That is where we end up at 640 million. I think the budget the administration will propose is roughly 3 more than what president obama is suggested for this year, roughly eight 5 increase over current year funding. A 5 increase over current year funding rate its the obama approach with a little bit more but not much. Whats the difference . We tried to lay that out, and i think this shows some broad categories. About 10nce is billion above what president obama suggested. These are broad labels, thats not just more airplanes, that includes the maintenance and operations, the training thats required for us to go against high and adversaries like russia, china, which we have not done so much of in recent years. Thats the reason you see these here. Ries some of that are bringing our Ground Forces uptodate. If i were to look at this today, looking at what happened with north korea, im not sure we put enough into missile defense, increasing the number of ,nterceptors in current systems which are woefully short, and research into other here. Kinds of systems that will hopefully be more effective and cost effective. There was a little bit and munitions and appropriation bill that just passed. We put some here, but we have some significant ignition shortages and various items if you look at it very thats the reason there are these categories. Im afraid when we talk about budgets, we get into these numbers games. What we lose sight of is what these numbers mean, and which capabilities are we willing to forgo with a different level of budget trait i think we have to be can create about that. The men and women on the front lines will have their life affected by what we are not facing, by the new capability we are not getting, and whatever choices we make. We need to make it more concrete. That sort of thing, which is usually the way this debate evolves. Michael so this is the base budget. This does not include war costs. We are talking about the base budget for the department of defense. You wouldillion recommend would have an additional 60 billion in overseas Contingency Operation costs. Chair thornberry yes, i think all the estimates roughly 65 billion in operating for the oak oh account. Youre correct, this is under budget categories the 050 account, which includes the nsa and department of energy and some other things. This is not trying to change the longstanding there are some people who have been saying, what we should try to do is take the quote, unquote war costs in the overseas contingency budget, and tried to do proper budgeting and put them back in the base. You dont have enough money here to do that, right . Chair thornberry it does not accomplish that goal. That is a worthwhile conversation to have. There arerns me is if transfers into the base budget and people call it a defense increase, it will not be accurate. You the facts,l which is you havent increased anything at all, you just change the label on the money. Its a worthwhile conversation to have a cause putting base requirements makes it very and meansto plan, money has not been spent as efficiently as it could be. We have become very dependent on that over the years to get around the budget control act. The 2018 proposal you are offering is designed to find things we know we can do reasonably well in reasonably short order. Is it fair to say this is consistent with the candidate 300 50shipon of a navy, general goldfines proposal to increase the size of the air force, getting the army active duty000 soldiers, are those part of the Structure Goals behind us . Chair thornberry yes. You cannot accomplish those goals in a budget or two. It takes time for it general goldstein told us it takes 10 grow and 10 million to fighter pilot. The air force today is roughly pilots short. This takes time. If i make one other point on we hadarlier this year the chiefs who testified about the state of our military, one of the points that the vice chief of the air force made is that air force pilots today are receiving fewer training orders than they did during the military of the 1970s. That was my reaction. I went back then and looked. We know about the military of the 1970s and nobody would suggest that we have equivalent problems and so forth. There are a remarkable number of parallels between the damage done today and the damage that was done then. What did it take to get out of that . The last year of jimmy carters administration was an increase in defense spending. President reagan has a 17 . Next year and 18 . And then three more years of 10 . Thats what it took to overcome the neglect and damage done in the 1970s through our military, helpsat sort of context us with the size and duration of what sort of repair work is needed for the problems we have created. Michael in an aviation week and space technology, there was more data about which aircraft has which Mission Capable rates. Do you think we need to get more of that data into the public . Also trying to be specific about the defense needs. How should we handle that . Chair thornberry ive been. Ushing for more openness ive had some debates with leadership and the pentagon about this because they are concerned about telling our adversaries too much about what our problems are. I focused being more political than theirs is, to get political sub or we need to have this sort of rebuilding like they did in the 1980s, we will have to be more explicit about that. I will say, when you have things that happened last month, you have a fair number of pilots go on strike because they believe the aircraft they were being asked to fly were not safe. Weve had a number of classified andfings with my committee, i think the more people know about the facts, the more urgent fixing this problem becomes. Army brigade combat teams. For the last two or three budgets, the army has been saying he wants to send a third of its combat teams per year to the National Training center to do the full unit, threeweek long exercises and training that is a combination. One would think if we are trying to fund that for two or three years and doing 1 3 of the brigades per year, we would start to catch up. Apparently were not. Apparently the army is talking today in the same tones it was two or three years ago about the state of readiness, the lack of full unit training and exercise. Whats going on . Is it cousin of the continuing . Esolution hasnt the army been able to start to catch up . Chair thornberry i think you are right for part of it. We have not been spending money efficiently and for units to rotate through the training center, you have a plan for that. Part of the reason i believe the readiness problems are deeper than most of us have realized, just as we are cannibalizing parts off of lanes to keep other arees flying, we cannibalizing army units in order to make those that we are sending on deployments for. You talk to the commanders about this, and part of their challenge is, they never have their full units. You have these people coming and going all the time great if they have a chance to go to the National Training center, they come back, a bunch of their people are taken away and plugged into other units. So they lost a lot of that benefit. General millie says what hes looking for, to increase the number of people in the army is not the increase for structure, is to plug the holes so you can keep units together, and units training together is whats required to go against these more sophisticated adversaries. Theres a number of other examples where our people are so good when you send them off on a mission, they will accomplish that mission. If you look at the cost, the damage that is done to accomplish that mission, whether it is mechanics working around the clock or cannibalization, that is part of the reason im convinced the damage is a bird than we understand. Michael one more part of the readiness debate, thinking about ,ow we do foreign deployments we are going to poland now. We still have that brigade in korea and its generally unaccompanied duration we consider some of these deployments to be permanent deployments . Hi. I see that you identify 1. 1 billion in unfunded medical requirements. Can you give any details on that . Chair thornberry one of the key things our troops have come to to be within an hour of receiving medical care if they are injured on the battlefield great its called the golden hour. You start looking at a variety of operations around the world, but it takes to maintain that golden hour, and it requires some more investment. Things thatof those i think we have to maintain, and it does require some more money. Thats part of it. Here in the front row, and work our way back. Chairman, to ask mikes question but more rudely because thats my role chair thornberry your role or your personality . Im just getting. Kidding. The one hand, as you say, the new administration has a shakeup discussion about entitlements. Obstacles to any budget change, including Defense Budgets. On the other hand, we have a president who is seeming to shoot himself in the foot on a regular basis. You have budget coming out very late. We have a skinny budget coming out earlier. It seems while there might be more room for an upside and great progress, theres a lot more room on the downside, possibly both extremes are greater. Just having lived in d. C. For a while, my gut is that things will get rather than better. Whats the best scenario you can see, blessed plausible scenario . Whats the worst case of gridlock, and where do you think the odds lie . As president rry bush said in a different context, dont be guilty of the soft bigotry of low expectations. Which, i understand, you can point to past failures and say, this is never going to happen, they will never get their act even some of my colleagues are saying, we are in for a yearlong cr. We wills our mindset, bring it to pass. I think thats a mistake. I cant tell you what will happen. Thati can tell you is there is wide agreement in both parties that we have cut defense too much. We are roughly 20 below what it was in 2010. Let me throw a couple other numbers that you, to back up for a second. If you look back at what we are spending now versus 2000, our Defense Budget has gone up about the over that same period, chinese Defense Budget increased four times. The russians about three times. Just in a bit of context, we spent three times as much on medicaid today as we did during bill clintons time. Thats where the growth has in, in mandatory spending, and its been with our adversaries. It has not been with our Defense Budget, and we are paying a price for it. What iis to describe think is necessary to fix the to be as and to try effective and advocate as they can be for the men and women who risk their lives on the front lines to keep us safe. Thats what im going to do. I cant tell you how the washington games will play out. , we haven tell you is some serious not just needs, but there is real damage the needs to be repaired, and our adversaries are not sitting still. Michael do we need a repeal, reformulation of the budget control act . Chair thornberry you can keep to get to whatever number you want to, but its not a good way to do it. Say, the budget control act was designed to bring mandatory spending under control. It is a complete failure. We ought to repeal it and try something else. This, 50 of of the cuts under the budget control act has been inflicted on 14. 7 of the budget. Im the ceo and president of government contractor. Thank you for coming and talking to us today. My question is about small business. I recently saw an interview with you where you referred to mid tier. Tier is a termid being thrown around it means inadvertently, the acquisition system currently punishes Small Businesses, inadvertently punishes Small Businesses for success. As soon as they pop out of the small business, they are big, but theyre not big. The Small Businesses and the mid tier group are some of the most innovative places. Can you address that subject and wait what you see for the future of trying to help that situation . Chair thornberry first, i completely agree with your premise. That much of the innovation withs going on today is small and Midsize Companies. How manyefine employees or revenue that is straight does a lot of innovation that goes on at the big 5. There is a time of innovation, especially for future systems, that goes on with Smaller Companies, and im sure the big Defense Companies will be able to adjust to whatever regulations dod puts out. They can hire more accountants, more lawyers, they can adjust. Its really difficult for Smaller Companies to be able to do that. And so, i talked to a number of companies that will put in bids for something, but they dont hear an answer for a couple of years. Keepre they supposed to the doors open while they are waiting to get a response to the bits they put in there bi