Press Briefing with Secretary Panetta

By The Pentagon, The Pentagon - January 10, 2013

            SECRETARY LEON E. PANETTA:  Good afternoon, everyone.  Earlier today, I was pleased to welcome President Karzai to the Pentagon, along with his delegation from Afghanistan, including Minister of Defense Mohammadi. 

            I had a long -- I think it was about an hour-long -- one-on-one meeting with President Karzai.  And we had the opportunity to discuss the ongoing transition to Afghan security lead, as well as, you know, the commitment of the United States to Afghanistan, the enduring commitment after the completion of the transition by the end of 2014. 

            I think it's fair to say that we made some very good progress on all of the key issues that we discussed.  Our meeting, I believe, helped -- will help lay the groundwork for President Karzai's discussions tomorrow with President Obama on these and other topics. 

            President Karzai and I believe very strongly that General Allen's plan that was adopted in Chicago by NATO is working, and we're fully committed to finishing the job. 

            I also assured the president that my successor as secretary of defense will be equally committed to working with him and Minister Mohammadi on achieving the shared goal of a strong and independent and sovereign Afghanistan. 

            On that note, I again want to commend President Obama on his decision to nominate Chuck Hagel to be the next secretary of defense.  I've known Chuck a long time.  I think he is the right person to lead the department at this time, not only because he's a decorated Vietnam combat veteran, but he understands Washington and understands the issues that confront our national defense.  

            And despite a lot of very severe budget pressures, which I'll speak to in a moment, we need to maintain -- and I believe he believes we need to maintain -- the world's most powerful and ready force to deal with the security challenges that we're going to confront in the 21st century.  

            This is a critical moment for this department and for our national defense.  I believe that we have put in place a new defense strategy for the 21st century that we believe can meet our fiscal responsibilities to the country, that can confront any threat to our national interests, and that can maintain the strongest military power in the world to protect the American people.  

            We face, as you know, a number of adversaries around the world.  But the most immediate threat to our ability to achieve our mission is fiscal uncertainty, not knowing what our budget will be, not knowing if our budget will be drastically cut, and not knowing whether the strategy that we've put in place can survive.  

            Let me be clear:  This department is doing its part to help confront the nation's deficit problem.  We have implemented in our budget plan the $487 billion in spending reductions that we were asked to -- to do by the Congress over the next decade.  

            And we can and we are doing this by virtue of the broader strategy we've put in place.  We designed a strategy, we know what the elements of that strategy are, we built a budget based on that, and we achieved our savings by virtue of that strategy.  

            As I've said repeatedly, if we face additional meat-axe cuts as a result of sequestration, it will seriously threaten our ability to implement that strategy.  

            The fiscal cliff deal has delayed sequestration from taking effect until March 1st, but that's now less than 50 days away.  While we appreciate the fact that both parties came together to delay sequester, the unfortunate thing is that sequester itself, and the sequester threat, was not removed.  So the prospect of it happening again is undermining our ability to responsibly manage this department in the current fiscal year.  

            Indeed, we are seeing the formation of what I would call a perfect storm of budget uncertainty.  With a sequester that could happen on March 1st, a continuing resolution that could simply be extended for the rest of this fiscal year, as opposed to having a defense appropriations bill adopted, and, thirdly, a debt ceiling crisis that could create even further turmoil that could impact on our budget and on our economy.  

            And the fact is, looking at all three of those, we have no idea what the hell's going to happen.  All told, this uncertainty, if left unresolved by the Congress, will seriously harm our military readiness.  And let me explain why.  

            First, the C.R. [continuing resolution] expires on March 27th.  If Congress fails to pass the appropriations bill for FY 13 and simply extends the C.R. through the year, our overall operating accounts would decrease by about five percent below the proposed budget presented by the president for our 2013 budget.  That amount roughly comes to about $11 billion that would come out of O&M [Operations and Maintenance].  An important part of our new defense strategy is to try to increase the operating accounts in order to maintain readiness, but the C.R. -- if it's just simply extended -- would really prevent us from doing that.  

            Secondly, if Congress fails to de-trigger sequestration and we have this massive half-trillion dollar cut that goes into effect on March 1st, we would have to cut in this fiscal year another nine percent, almost $18 billion, from O&M and these operating accounts, as well. 

            And lastly, to protect funding for the war in Afghanistan from these cuts, we have an obligation, obviously, to protect the warfighter and protect what -- what we're doing in the war in Afghanistan.  We would have to, again, cut another five percent, another $11 billion, from readiness money available in the active-duty base budget, and more for the Army and for the Marine Corps.  

            So if you take the total sum of all these cuts, we're looking at 19 percent to 20 percent reduction in the base budget operating dollars for active units, including what looks like a cut of almost 30 percent for the Army.  The net result would be some very sharp cutbacks in training for all units that are not deploying to Afghanistan.  You know, we're going to try to protect not only the units that are in Afghanistan, but those that are about to deploy to Afghanistan.  

            But those that are not deploying to Afghanistan would obviously face some very serious cutbacks.  It would mean reductions, obviously, in ship training, except for our highest priority units, reductions in flying hours, in pilot training, and ships would have to be pulled out of maintenance, and disruptions to almost every weapons modernization and research program. 

            For the civilian workforce, the cuts would require them to be subject to furlough, which would further harm our readiness and create hardship on them and their families.  In a word -- in a word, we would be forced to do what I said we should not do with the defense budget, which is to hollow out the defense force of this nation.  

            To try, therefore, and better prepare for all of this uncertainty and this extraordinary budget uncertainty that we're confronting, the leadership of this department has decided that it must begin to take steps in the coming weeks that would reduce the potential damage that we would face should Congress fail to act to prevent the cuts that I talked about.  

            Regardless of what Congress does or fails to do, we still have an obligation to protect this country.  So for that reason, I've asked the military services and the other components to immediately begin implementing prudent measures that will help mitigate our budget risk.  For now, I've made clear that these actions must be reversible to the extent feasible and must minimize harmful effects on readiness.  But we really have no choice but to prepare for the worst.  

            These actions should include having to curtail facility maintenance for non-mission-critical activities, freezing civilian hiring, delaying certain contract awards, along with other steps.  In addition, I've directed components to develop more detailed plans for how they would implement sequestration if it's required, because there will be so little time to respond in the current fiscal year.  I mean, we're almost halfway through the fiscal year.  

            This includes a plan to implement potential unpaid furloughs for our civilian personnel if sequestration is triggered.  This action is strictly precautionary.  I want to make that clear:  It's precautionary.  But I have an obligation to -- to let Congress know that we may have to do that, and I very much hope that we will not have to furlough anyone.  But we've got to be prepared to do that if we face this situation.  

            The purpose of this intensive planning effort will be to ensure that our military is prepared to accomplish its core missions, including the ability to successfully deter aggression, if necessary.  I want to emphasize, however, that no amount of planning, no amount of planning that we do can fully offset the harm that would result from sequestration, if that happens.  

            I understand -- I really do understand how difficult the politics are on Capitol Hill to confront and try to resolve this very serious fiscal crisis that this country is in.  But all of us in Washington -- all of us in Washington have a responsibility to the American people to provide for our national security and to keep them safe.  

            So whatever the political differences, we cannot allow our brave men and women in uniform to be put at risk.  They're fighting, and they're dying, and they're working every day to try to keep this nation safe.  Those of us in Washington need to have the same courage as they do to do the right thing and try to protect the security of this country.  We must ensure we have the resources we need to defend the nation and meet our commitments to the troops, to our civilian employees, and to their families, after more than a decade of war. 

            The simple fact -- the simple fact is that this fiscal uncertainty has become a very serious threat to our national security.  And like any grave threat that we face, the American people expect and deserve action.  Congress must pass a balanced deficit reduction plan, de-trigger sequester, and pass the appropriations bills for FY 13.  

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