Training and readiness. Lets take an air base. At an airbase, the air bases are open. They have guards at the gate. They have people in the tower. They have people in the fire truck. The lights are on. Were spending the money for all that. Where can you stop spending money quickly . Painting the buildings. Mow the lawn less often. That kind of thing. Importantly, you stop training. When you stop training, you have stopped readiness. We are protecting those in as we know are going to afghanistan and would be in a fight tonight on the Korean Peninsula if god forbid we ever had a wart on the Korean Peninsula. Were trying to protect the units most likely to find themselves in combat. For the others, we cannot afford to train them. That is risky because if something happens, those units will not be fully ready. Then we get to the civilian personnel part of a week ago, furloughs began for many of our civilians. Were far from washington, but our civilians live all over the country. They are not people that work at desks in washington. Theyre mostly people that fix airplanes and ships and do other essentials things. These folks have had their pay frozen for three years. They have had a hiring freeze. Now were taking 1 5 of their paycheck in the last quarter of the year. It is causing many to have to change their family plans and not do things they had hoped to do for the kids. It is a miserable way to treat people. I talk to audiences of civilians. I say, i do not know why you put up with us. Except i do know. They are there for the mission. They care about defending the country. Otherwise, they would tell us to go to hell and leave. But they care and are dedicated. They do not deserve this kind of treatment. These are the things that happen as a result of cuts that are very steep and fast. If we had more time to take cuts like the cuts weve already taken, we approach it strategically. We say what things do we not need any more . We can phase this out. What kinds of capabilities do not need any more . We get rid of the old and start buying the new, like cyber. That is the sensible way to do things. The sequester thing in the short term frustrates us. If you have said six months ago a betting person would not think this would happen, if you were to put money on the table now, excluding that fifth of your salary, you probably have to bet that the sequester will get extended. I am afraid you are right. This has become the new normal for you. How does that change the nature of the plan . You are right. Were taking very seriously the prospect that this craziness is going to continue into the next year. That is the path of least resistance for the political system. If a big deal cannot be put together by the congress that can be approved by both houses that the president can sign, then we will drift into next year with some continuation of what we have had this year. Our responsibility is to be prepared for that eventuality as we try to be prepared for others. Looking forward, you asked if this could go on. We started about four months ago, an effort to be prepared for exactly that. The president s budget has further cuts for us to meet the objective of deficit reduction. But they phase in gradually. From a management point of view, that is the sensible way to do things. I can shed people over time, i just cannot do it in one year. That we can handle. I do not know that the president s budget will be approved. It is july. You do not see a lot of forward motion. Were looking at the possibility this does become the new normal and our budget stays low. We are preparing for that. Were going to do our level best to make this strategic transition which is the paramount thing. Get rid of the things we do not need. Get new things. Treat our people as decently as we can. Recognizing we will have to shed people. I did not make it in until late last night. I hear from the discussion yesterday, one reason you might not do a nofly zone around syria is because you could not afford it under these circumstances. We would need supplemental funding, which is normal for a new contingency. This is a concept where you add money to the Defense Department when you have a new need, which is a sensible thing to do. There is no reason for us to have that money if we are not going to be using the units. The example i give people is hurricanes. We have a bad hurricane about once every three years. You could give us the money to be ready for hurricanes every year, but then we would waste it two out of three. What is sensible is you do not give us the money all the time and you give us extra money when something extra needs to be done. That is the concept we have applied to the wars in iraq and afghanistan, to readiness in the persian gulf, operations in the horn of africa, and so forth. It makes perfect sense when you have new, temporary things that cost money. Let me ask you to briefly put on your Political Science hat. Something has changed in the political culture. In the post9 11 years, the hawks in congress always outvoted the budget cutters in congress. When i was the White House Correspondent for the times, you would frequently hear president bush say, i will give my generals whatever they say they need. One might argue that is not necessarily a position the commander in chief should take, but you heard the line very often. Now in his own party and to some degree in your party, what you are hearing is budget cuts in first and defense second. Is this just a function of how many years have gone since 9 11 . What has changed in this debate . A couple of things. It is very noticeable. There was always a solid center of the opinion that supported defense that you could count on. Much less so now. In both parties. There are a few reasons for that. One is the one you mentioned, which is we have a competing priority, which is fiscal discipline for the country. Unfortunately, the part of Government Spending that has been most politically easy to get to has been discretionary spending. Of course, there are revenues and entitlements also. Those are three parts of the federal budget. Much harder from a political point of view to get to the second two. A lot of the cutting has fallen on discretionary expenditures that pay for defense, Homeland Security, and all of the other agencies of the federal government. That is one thing. The other thing is time has passed since 9 11. People are tired of the two wars. They are tired of afghanistan and iraq. You do not see afghanistan in the headlines as it used to be. And when you do, it is usually about the pace at which we are leaving. Exactly. Then there is the last thing that is particularly true for the counterterrorism effort. In a funny way, the better we are, the less people will notice what we are doing. Every time i get dispirited by the fact people do not seem to pay enough attention and care enough about defense and interNational Security, i console myself with the thought that if were doing our job well, people get up in the morning and go to work and take their kids to school. They live their lives and dream their dreams without having to worry about physical security. What a gift that is. Look around the world. A lot of people do not have that. Security is like oxygen. If you have it, you do not think about it. If you do not have it, it is all you can think about. We would like to be in the former circumstance. That is kind of a paradox. It is very important in the counterterrorism effort, of which we are a part. Obviously the theme of this meeting. It is an Important Mission of the Defense Department. It is the balance of getting enough public support to do what needs to be done but not scaring people. The president said something riveting to me in a speech he gave on counterterrorism a few months ago. He said we now at this point, after a decade of fighting and learning what we have learned, we can proceed not on the basis of fear but hardearned wisdom. And we do, we have hardearned wisdom. We have gotten better. That is the foundation on which we build now. You briefly mentioned mr. Snowden before. After wikileaks, i was involved in some of the times coverage. We were asking a lot of people the question, how can you download 250,000 documents from the state department . My recollection is your old boss, bob gates, asked that question publicly and privately vividly. Then mr. Snowden comes along. It was not 250,000 documents, but it was documents at a higher level of sensitivity. Tell us what you think happened, why it was able to happen. Since you mentioned before the importance of defending your own networks. Tell us how you are changing or plan to change your practices going forward. Maybe make an assessment of how much damage was done. We are assessing the damage. I will tell you the damage is substantial. There is a criminal investigation involved. I cannot talk about that. The issue gets back to what i said about job one needing to be defending our own networks. This is a failure to defend our own network. This is not an outsider hacking in. It was an insider. Everybody who has networks knows the Insider Threat is an enormous one. This failure originated from two practices that we need to reverse. The first is in an effort for those in the Intelligence Community to be able to share information with one another, there was an enormous amount of information concentrated in one place. That is a mistake. We normally compartmentalize information for a good reason so one person cannot compromise a lot. Loading everything onto a server by people each cleared in their own department creates a Security Risk of decompartmentalization. That is thing one, and thing two it is something we cannot do because it creates too much information in one place. The second thing is you have an individual that was given substantial authority to access that information and move that information. That should not be the case are either. We are acting to reverse both of those things. It is clear those are the to the root causes of this. What do you have to do about it . You have to compartmentalize more rigidly. You have to have a system like what we have for handling Nuclear Weapons. We have no load zones, the two man rule. You will see a red line and if you cross the can get shot. There are areas where you are not to be. The proximity to Nuclear Weapons is too sensitive and momentous a thing to be allowed for individuals. There is always some aberrant individual somewhere and you have to recognize that fact. When it comes to Nuclear Weapons, we watch peoples behavior in a special way. We do not let people all by themselves do anything. Nobody ever touches a Nuclear Weapon by himself or herself. There are always two people rated in the same specialty so everybody can see and understand what is being done to the weapon. It has been that way for decades. Here we had a case where a Single Person at one installation in the Intelligence Community could have access to and move that much information. Both of those pieces are a mistake and have to be corrected. You mentioned Nuclear Weapons. Your old specialty before you had to go into the world of budget cutting. In the berlin speech, president obama announced about a month ago the next big step he envisioned, which was bringing the american arsenal down to just above 1000 Nuclear Weapons. But he added to that that it could only be done in concert with the russians and getting similar cuts. Almost the next day, we heard president putin reject this approach. From your study of this, what would be the risk of doing this unilaterally . If you are not going to get russian agreement to this, would the United States be significantly less safe with merely 1000 weapons against the current russian arsenal . How do you deal with the russian concern of the hour nonNuclear Weapons would increase in precision . A good question. Several things. You are right. The president did say we are prepared to make further reductions below the new level in our nuclear arsenal, but he had the intention of seeking them in parallel or in tandem with russia. You are right. Putin said what he said, namely that the russians have some concerns that would need to be addressed in the course of the negotiation. I will get back to what they are. I think the fundamental point is we are not going to attack ourselves with our own Nuclear Weapons. The value of reducing them what were after is protection. If there is value in reductions, the goal was to get russian reductions. The goal, more widely, iran, north korea, stop proliferation, get people to control materials more closely that is what we want. Because those weapons and materials might be used against us. If our own reductions and being prepared for our own reductions can be a catalyst for Nuclear Security more broadly, that is a good thing. That is what the president wants. You miss the opportunity if you just do it to yourself. We will not attack ourselves. Will it save you considerably to decommission another 1 3 of the Nuclear Force . We may be surprised to learn nuclearweapons do not cost that much. Our annual spending for Nuclear Delivery systems is about 12 billion a year and coming down. Another 4 billion for the command and control system that goes with the Nuclear Weapons, the radar, the warning, the special communications to make sure the president can retaliate under any circumstances, especially if we are attacked first, and all of that. That takes you up to about 16 billion. It is not a big swinger of the budget. You do not save a lot of money by having arms control. The reason you do it is because these are the most awesome and terrible intentions of humankind. I am a physicist, as you mentioned. Physicists always felt there was some responsibility that went with having created this technology. They are part of our arsenal that deserves our most careful thought and treatment and responsibility, but they are not the answer to our budget problem. They are not that expensive. One more question and then we will go to the audience. At the beginning, we talked about afghanistan. You said you have to stay focused on it because we are still there. We know there is increasing debate in the administration about what some call the zero option. At the end of 2014, could you pull out everyone . There are down sides. One reason for keeping forces there is not only to be a tripwire in afghanistan but to have forces in place in case pakistan went bad. Tell us where this debate stands. Is the zero option a real option in your mind . Is it more of a negotiating position . We did it in iraq. Could you imagine a situation where we do it in afghanistan . Let me answer your question by backing up for a moment on afghanistan. It is something people have forgotten about. Not being critical. The plan laid out in chicago a year and a half or so ago was that we were going to wind down our presence in afghanistan. That is the coalition would. As the afghan force got stronger. The idea being that as we went down, they would come up in such a way that the sum of our power and afghan power would be greater than the enemys power. That is the path we are on. We are winding down at the same time that the Afghan Forces are winding up. The Afghan Forces are upwards of 300,000 now and are not just vanilla infantrymen. They are beginning to get more and more capability over time. Essentially all of the missions in afghanistan are led by afghans. Thats the whole objective, that we wind down and afghanistan eventually becomes capable all by itself of defending itself. That cant happen for some time, which is the reason to do it gradually. The question you are raising is a good one. The president hasnt made a decision about how exactly to wind down and where to. Part of the reason is, that depends on what afghanistan does. It needs to build up its forces so it can compensate, number one. And number two, if we are going to have forces there, we have to have an agreement that covers them. Socalled bilateral Security Agreement, which has not been completed yet, and which we have to have in order to stay. There are a lot of different variables. My own view, and ive been at this for four and a half years, and ive been involved in every little detail there, is to say that from the purely Military Point of view, having the capability to maintain the afghan state and a level of peace, that is within reach. Thats a hardearned thing. Many americans died, wounded. I think it is in reach, but depends on some other things. It depends on afghanistan, pakistan. There are other variables here. From a purely Military Point of view, it is within reach. I dont say that lightly because i have spent a fair amount of time there, working on the problems and issues. You have to, because your heart has to be in it, because our people were there. You think that we could, if we couldnt get that bilateral agreement, we might be able to live with the zero option . We have said that we need the bilateral Security Agreement. Not having the biological Security Agreement and having a joint plan between the Afghan Government and the coalition, is that a good thing . No, it will disrupt the ability to achieve this result within reach. That is not entirely within the president s purview. We need afghanistan as a partner. We need our coalition partners. Then there is the whole issue of pakistan. Lets go out to the audience, and ask you to ask your questions. We will start with jane. There is a microphone coming to you, jane. Ash, thank you for sharing your enormous talent with our country. First, a correction to david. Mark wells, chief of staff of the air force, did not say last night that we could not do