TYPE: COMMITTEE HEARING

LENGTH: 22718 words

COMMITTEE: SENATE APPROPRIATIONS DEFENSE SUBCOMMITTEE

HEADLINE: U.S. SENATOR DANIEL INOUYE (D-HI) HOLDS HEARING ON FY 2002

SPEAKER:
U.S. SENATOR DANIEL INOUYE (D-HI), CHAIRMAN

LOCATION: WASHINGTON, D.C.

WITNESSES:

DONALD RUMSFELD, SECRETARY OF DEFENSE
HENRY SHELTON, CHAIRMAN OF THE JOINT CHIEFS OF STAFF

BODY:

 
U.S. SENATE COMMITTEE ON APPROPRIATIONS: SUBCOMMITTEE ON DEFENSE
HOLDS A HEARING ON FY 2002
 
SEPTEMBER 5, 2001
 
SPEAKERS:
U.S. SENATOR DANIEL K. INOUYE (D-HI)
SUBCOMMITTEE CHAIRMAN
U.S. SENATOR ERNEST F. HOLLINGS (D-SC)
U.S. SENATOR ROBERT C. BYRD (D-WV)
U.S. SENATOR PATRICK LEAHY (D-VT)
U.S. SENATOR TOM HARKIN (D-IA)
U.S. SENATOR BYRON DORGAN (D-ND)
U.S. SENATOR RICHARD DURBIN (D-IL)
U.S. SENATOR HARRY REID (D-NV)
U.S. SENATOR DIANNE FEINSTEIN (D-CA)
 
U.S. SENATOR TED STEVENS (R-AK)
SUBCOMMITTEE RANKING MEMBER
U.S. SENATOR THAD COCHRAN (R-MS)
U.S. SENATOR ARLEN SPECTER (R-PA)
U.S. SENATOR PETE V. DOMENICI (R-NM)
U.S. SENATOR CHRISTOPHER (KIT) BOND (R-MO)
U.S. SENATOR MITCH MCCONNELL (R-KY)
U.S. SENATOR RICHARD C. SHELBY (R-AL)
U.S. SENATOR JUDD GREGG (R-NH)
U.S. SENATOR KAY BAILEY HUTCHISON (R-TX)
 


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INOUYE: Mr. Secretary, General Shelton, we welcome you here this morning to discuss the Department of Defense's budget request for FY2002.

General Shelton, we recognize that this is likely to be your last appearance before this subcommittee, and so on behalf of the committee, I want to thank you for your service to our nation. You have been a great military leader, a soldier's soldier, and a true defender of military personnel.

Your initiative to reform military pay and health care will serve as your legacy for many, many years. The men and women of the armed forces will remember what you have done for them and thank you. SHELTON: Thank you, Mr. Chairman.

INOUYE: Mr. Secretary, although I cannot truly say I remember, I would suspect this is not your first appearance before this committee.

RUMSFELD: No, sir.

INOUYE: But I do believe it is the first time in 25 years. We welcome you this morning and look forward to hearing your candid assessments of the state of our military forces and justification for your budget request.

The FY2002 amended budget request before this subcommittee is for $319.4 billion in budget authority. This is $26.3 billion more than what was provided in 2001 and $18.2 billion more than what was requested in February.

Unfortunately, the budget resolution did not provide the increased funding requested in your amended budget. Instead, it stipulated that the additional $18 billion in defense funding could only be provided if funds remained above and beyond the Medicare and Social Security surpluses. According to CBO and OMB, since the Bush administration took over, a slumping economy and a large tax cut have eliminated all the available funds.

Mr. Secretary, this leaves this committee and the Senate in an untenable position. The allocation for this subcommittee is $20.8 billion below your request. If we are to abide by this allocation, we must cut your request by this amount.

The only way for us to live within this level would be to decimate your modernization budget or gut your readiness funding and eliminate the pay raises and some force structure. And, Mr. Secretary, I want you to know that I will not be a party to that.

I've served on this subcommittee for nearly 30 years. I've shared the responsibility for chairing it with Senator Stevens for the past 13 years, and Senator Stevens has been doing the same for the past 21 years.

Together, we saw the post Vietnam draw-down, the Carter cuts and then his reversal. We witnessed the Reagan buildup when much good was done for defense, but a great deal was wasted as that administration failed to make careful choices.

We saw the post Cold War draw-down and procurement holiday begun by President Bush and continued by the Clinton administration. And then we saw a return to minimal growth at the end of the last administration but at a level much lower than what was needed.

Now we are faced with an administration that says it wants to increase defense, but allocated all the available resources for a large tax cut. So we are told if we want to provide what is needed for defense, we must do so by cutting Social Security and Medicare revenues.

Mr. Secretary, many of our colleagues are going to be reluctant to cut into Medicare and Social Security to pay for defense. Politically, they worry that the voters will penalize them for raiding Social Security.

I, for one, believe it is essential that we provide the resources necessary for defense. I'm old enough to remember what happens when we fail to take care of defense. I saw the attack on Pearl Harbor. I remember June 25, 1950, when the North Koreans attacked.

There is one lesson I will never forget. If we want to prevent war, we must be prepared for war.

It would be easy to play politics on this issue, but this is too important. So I will not take part in any effort which could shortchange national defense for political gain.

Today, fewer than 1 percent of all Americans serve in the military. They protect the remaining 99 percent. It is a duty of the Congress and the administration to ensure that they are well paid, trained and ready, and equipped with the finest weapons to serve as a warning to any potential adversary that we will defend freedom throughout the world.

Mr. Secretary, as we receive your testimony today, we hope not to focus on the political debate of spending Social Security for defense, but rather on the nuts and bolts of your request. Many of my colleagues believe your request is excessive. They argue that 9 percent is too much growth.

They question why you need to increase missile defense by $3 billion in one year. They want to know why you have requested a 55 percent increase in defense health programs. And they wonder why a 5 percent across the board pay raise for the military is necessary when the services have met their recruiting and retention goals during each of the past two years.

Mr. Secretary, I pledge to you that we will do everything we can to get you the funding that you need, but we need your help. In your words today, you need to convince these skeptics that the $319 billion request before us is essential to maintain readiness and that it invests in the right mix of programs for the future.

And so, Mr. Secretary, General Shelton, this is a challenging assignment, but we are confident that you are up to the task, and we look forward to your testimony.

With that, I want to defer to my colleague from Alaska, Senator Stevens, for any comments he may wish to make.

STEVENS: Thank you very much, Mr. Chairman. I apologize for not being here on time.

I do join the chairman in welcoming you here today, gentlemen -- Mr. Secretary, Chairman of the Joint Chiefs, and Undersecretary Zakheim.

We have long followed this practice of asking the secretary to come before us prior to our markup of the bill to give the secretary the last word. I do think we ought to start off by commending you, Mr. Secretary, for having the courage to take the time to closely examine and assess the programs of the past and to try and see what we can do to determine what the future requirements of our country will be for defense. No one welcomes that tough scrutiny, but I believe a challenge to the status quo is always in order and was the right decision to make at the right time and for the right reasons, and we will welcome your assessment.

General Shelton, I join with the chairman, of course, in thanking you for your service and regretting that this may be the last time you're here. God only knows what's going to happen this fall. You may be back. But I hope not, not that I don't want you back, but I just don't want to continue this process too long.

We are in a very strange time now, I think. I applaud the statement the chairman has just made. I do believe it is a time for us to assess the needs of the nation in the future. I think we all have to keep in mind the enormous time that it takes now to deploy systems or make changes in the military structure.

The decisions that we will make based upon your request and your findings will affect the generations to come. As a matter of fact, I would predict that less than half of the members of this panel will be here when we deploy the systems that you're working on now. It's taking as long as 20 years now to get some of the major systems out to our forces.

Since the end of the Cold War, Senator Inouye and I have urged a successive number of administrations to pay close attention to the Pacific. I commend all of you gentlemen for the emphasis you have placed on that portion of the world, and I look forward to hearing your views on the priorities for our defense in that region.

Many are quick to point to China as the potential adversary should we develop new military concepts. As one who served in China and watched China for many years now, I do not think we should come to that automatic conclusion that they will necessarily be an adversary of our country in the future.

But the systems that we are going to review here today are important not only for the concept of the Pacific, but for our whole global world now as a nation. From India to North Korea to Australia, throughout the world, the complexities of our future require that we work together without regard to politics, as the chairman has said. I join everyone in regretting that we're in a situation where the budgets are going to be tight.

Mr. Secretary, I had the honor to be present on Monday in Berlin at a meeting of what they call the Atlantic Bridge. A group of our military officers and the officers and former officers of the German army meet together annually to assess the future. And it was really a sobering time to review the problems of Europe as they affect our future and to try and comment upon our view of what's going on over there now.

We have never really shied away on this subcommittee from tough choices, and we welcome the opportunity you're going to give us to make some. I think that the need to recast our military for the future is obvious. The need for really tough decisions on what weaponry we must prepare to assure we can meet the future needs of our country is also obvious.

But I hope that we can have the working relationship with you and your colleagues that will assist us in developing this budget now on a bipartisan basis.

My last comment would be that I do sincerely join the chairman with regard to his comments concerning the surplus problem. We're dealing with estimates, and the margin of error on any estimate of the complexity that we're dealing with here in terms of defense, is such that the differences between OMB and CBO are immaterial, and the statistical comparison of those estimates could lead us just as easily to a conclusion that there still is a surplus, as well as the conclusion that we may face the problem of whether we should invade it in order to assure that our defenses for the future are secure.

STEVENS: I intend to support the chairman in his comments and to work to try and ensure that we do set off now in this first budget after -- you know, this was our year for the goal of a balanced budget, Mr. Secretary. But if we go forward now in 2002 on a basis of continuing the decline in the monies available for our defense, I think it will be a sad mistake for future generations.

I welcome the opportunity to work with you, Mr. Chairman, and with you, Mr. Secretary, and the joint chiefs and the undersecretary and comptroller. It's going to be a tough call, but I look forward to working with you.

Thank you, Mr. Chairman.

INOUYE: Thank you very much, Senator Stevens.

Senator Leahy?

LEAHY: Thank you, Mr. Chairman. I want to welcome Secretary Rumsfeld here.

I'm looking around, Mr. Secretary, around this committee, and I see, of course, both Senator Inouye and Senator Stevens, as well as Senator Hollings and Senator Domenici. We were all serving here when you were first secretary of defense. You've not aged, but some of us have, and we welcome you back.

And I would say, General Shelton, you have done this country proud in your service as chairman of the joint chiefs, not only here in the United States, where we always look to the military for the best, especially at your level, but just by the nature of your role, you are, in effect, a worldwide ambassador. I know you've traveled all over the world. You're what many other countries, from their leaders on down, see as a reflection of our military when they see the chairman of the joint chiefs come, and that reflection has been a very good one you have from all of the services.

I appreciate the amount of time and commitment you have made and your family has made in your long and distinguished career. I'll have more to say on the floor, but I did want to say that with you here, how much I appreciate it.

SHELTON: Thank you, sir.

LEAHY: I'm also going to have a number of questions, Mr. Chairman, on the budget and land mines and military modernization. I should say initially I was troubled by the reports that came out on Sunday that the administration may turn a blind eye to China's nuclear weapons modernization for the sake of selling its missile shield plan. So, Mr. Secretary, I hope you will clarify the administration's policy on a possible Chinese nuclear buildup.

I would also ask, Mr. Chairman, consent that an editorial from the Rutland Daily Herald in Vermont of Tuesday, September 4th, be included in the record.

INOUYE: Without objection, so ordered.

LEAHY: I'd also like to mention to the secretary that Senator Hagel and I met with General Shinseki and Commandant Jones to discuss the administration's policy on land mines. I know there's a policy review underway. I sent copies of correspondence that I've had with the president and with Secretary Powell and Condoleezza Rice to you, Mr. Secretary, and I will make sure we give your staff copies again of those letters.

I think that we've got to look at where our opportunities are. The Pentagon is preparing to spend hundreds of millions of dollars on an alternative program to land mines, and when you look at the design, many within the Pentagon will state very frankly it's not going to go anywhere.

There are some existing smart weapons and sensor technology that could offer more cost effective solutions to the problem, but also could put us back into a worldwide leadership role in this whole issue of land mines, and could help the rest of the world that's suggesting we're not being positive acknowledge not only a positive role, but also acknowledge what we have done in everything from land mine clearing to things like the war victims fund.

So there's a lot of things in here, and, Mr. Chairman, I'm not going to belabor it further. But those are the areas of questions that I will have. I'd also ask consent that I put into the record my letters to President Bush of March 15th and my letter to Dr. Rice of August 2nd.

INOUYE: Without objection, so ordered.

LEAHY: Thank you very much.

INOUYE: Senator Shelby?

SHELBY: Thank you, Mr. Chairman. I, too, want to join in the chorus and welcome Secretary Rumsfeld back here. He's no stranger, and I don't want to take all morning, because I want to hear from him and also have the opportunity, Mr. Chairman, to ask him a few questions.

General Shelton, as everybody has said, you've served this country well. We're proud of your record. You've earned it. And you might be back here, and you might not. But wherever you are, we wish you the best.

Mr. Secretary, there are a couple of things that I will get into later. One has to do with the chemical demilitarization program that I'm very concerned about, because it affects not just my state and the Anniston Army Depot but some other states. We had a hearing on this here in this committee back in the spring, and I've written to you about this. I'll get into it later.

The other thing is, as we talk about the budgets and the future weapons, I'd be interested in your comments and also General Shelton's on the future modernization of the services and what role that the rotor craft, the helicopter, will play in this transformation effort and why would it play it. What role do you see helicopters playing on the battlefield of the future in light of talk about the increasing likelihood of urban operational environments and a push toward greater emphasis on joint operations? I'll get into that a little later.

Mr. Chairman, I ask that my complete statement be made part of the record.

INOUYE: Without objection, so ordered.

Senator Hollings?

HOLLINGS: Thank you, Mr. Chairman.

Let me commend General Shelton on an outstanding job you've done for the country, General.

Secretary Rumsfeld, we're back at the old BMD, ballistic missile defense, when you were the secretary under President Ford, and they had General Danny Graham (ph) in charge of it down at Huntsville, Alabama. So they all come and talk about a new initiative. The fact of the matter is that we don't have as many Americans as there are Russians or as there are Chinese. We can't match them man for man, but we maintain the security of our country with the superiority and technology. And I'm glad you're on to this while we've got world peace, generally.

Otherwise, I'm worried about Colombia. They have yet to learn the lesson that in a country, there's got to be one military force, and that's got to be in the hands of the government. David Ben-Gurion admonished Menachem Begin just of that in the early days when Israel had been recognized by the United Nations. Begin was ready to receive a ship offshore full of arms and run his own military, and David Ben- Gurion said just that, that in a country, there's going to be one military force, and that's going to be in the hands of the government.

The Colombians never have really agreed to that in their minds. They're trying to make peace. They're trying the cool (ph) periods. They're trying to give certain areas and everything else. And unless and until they agree on their own to clean that cancer of drugs and militancy out, I'm opposed to any more military. I've been there, and it's just like another Vietnam, and we're headed right down that road.

Otherwise, I thank you, Mr. Chairman.

INOUYE: I thank you very much.

Senator Domenici?

DOMENICI: Mr. Chairman and fellow senators, I appreciate an opportunity to just make a couple of statements about whether your numbers -- which I understand you are supporting the White House and the president's request -- whether they will fit in this budget, and I will do that in just a moment. I believe they do. I believe a point of order should not take precedence over your request, because according to the numbers, the Congressional Budget Office had assumed an increase in its baseline of $7 billion, and then what you have left over gives you enough to cover the outlays that are attributable to the increased funding.

It's outlays that affect the impact -- have an impact upon the surplus, be it Social Security's assumed surplus or whatever. So I believe for this year, you can get by with 18, and we can have a nice debate about whether it fits, but it fits.

On the other hand, I believe there's a far more important issue, and I think that's the issue of the American economy. As a matter of fact, we are now talking about using the surpluses of this great American economy for one thing. Everybody's talking about debt service. As a matter of fact, we have reduced debt in the past two years more than any country in civilized mankind, and we're on that path again.

As a matter of fact, with the pessimism that is being expressed by the budget chairman on the Democratic side, we will pay down the debt, accumulate a surplus of $165 billion. That's on the budget that we've been using, the budget we tried to balance under Bob Dole and under other leaders -- $165 billion surplus. All of that is now earmarked for debt service.

But what happens to education during a slump in the American economy? Do we say we can't fund it because we want to put all our money on the debt service?

Do we say -- the defense came forth with the proposal the economy is gobbling up our surpluses in such a manner -- I would like to have somebody produce it, because it's gobbling so fast. How fast -- $46 billion in outlays for next year will be gobbled up, not by his budget, not by an increase in the Department of Education -- all because the American economy is in the 15th month of a recession, not a technical recession, but from 5.1 growth, which yields resources to the federal government, down to less than 1, and now on a gradual 15- month path.

Incidentally, Mr. Chairman, I listened to your remarks about worrying about the Social Security and the Medicare surplus. Let me just suggest to you that the truth of the matter is that yesterday, we had a witness before us -- Congressional Budget Office. I said to him, "Mr. Crippin, did the president of the United States have anything to do with the current recession in the United States economy?" Answer, simple, no. "Did the Congress of the United States do anything that brought on this recession?" Answer, no.

What's happened is a readjustment in the world and in America on the capitalist side of the equation. As a result, we have $46 billion of the surplus we counted on gobbled up by one thing, the American economy being in recession.

Everything we do ought to be: How do we get the American economy to come back? I don't believe you cut spending. I don't believe you cut spending when you have this kind of recession. As a matter of fact, I might join with those who would say you should increase spending, but that may be my personal view.

But in this case, I believe it is pure folly to talk about the United States doing something to Social Security or Medicare when we are, as a matter of fact, paying down the debt, which is all you do with the Social Security surplus. That's all you do with it, pay down the debt.

We're paying now the second largest amount in American history. Which was the largest? Last year. The year we're in right now is the biggest one.

So I submit there is room for this budget. There is room for what we think, in both houses, should do the job. Is it the entire budget that they've asked for? I don't know. I have some serious questions about why they have ignored some of the nuclear weapons needs as they produced this budget.

But, frankly, I intend to support you on either count. If you want to waive what I consider to be a fictional impact on Social Security or Medicare -- a fictional impact -- if you want to waive that, I'll be with you. I'll do whatever you say. I'll do as much as you think you need of me.

If, as a matter of fact, you want to point out that the numbers themselves -- if you aren't concerned about just this year -- you're worried about the 2002 budget -- you can fit with the outlays and adjust the outlays where it'll fit. And the problem remains, not his budget, but when will the American economy turn back up and start yielding the revenues that we need to pay for education increases, to pay for military increases, and all of the other things that we need.

So, Mr. Chairman, I think it is relevant that we find out what's needed in this budget. But I don't believe we ought to be terribly frightened about the fact that we're $3 billion or $4 billion or $5 billion over, as I indicated some while ago, some fictional line when, as a matter of fact, the on-budget surplus is huge, huge at this point.

I thank you.

INOUYE: Thank you very much.

Senator Kohl?

KOHL: I thank you, Mr. Chairman.

Secretary Rumsfeld, we all welcome you here today. I'll just briefly make the point to you that I believe the American people need to hear from you why, in a time when we are basically at peace with the world and cannot make the case that there's some extreme urgency about considerably increasing defense spending -- why you feel that with money being in short supply, as it is -- and we all agree with that.

KOHL: No matter where we sit, we all understand and recognize that we do not have a great deal of money to spend this year beyond our needs which exist in virtually every category and which, I'm sure many people would argue, are equally as important as defense. Why, in light of all of this, would you like for us to allow the military as significant an increase as what it is you're asking for, whether it is force modernization or the missile shield defense system or all the other items that you have, which you believe are well justified, looking at it from the big picture, which, of course, you are very capable of doing and have always done?

We need to hear from you why it is that defense and its largest aspects deserve such a large chunk of our total expenditures and particularly when it is so much more than it has been in recent years. I think that when we come out from this hearing, we need to hear from you what the justification is for that. And I thank you for being here.

INOUYE: Thank you very much.

Senator Cochran?

COCHRAN: Mr. Chairman, I'm very pleased to join you in welcoming the distinguished witnesses we have before the committee today. I'm especially glad to have the opportunity to welcome General Shelton in his final appearance here and commend him for his 38 years of dedicated service to our country.

I'm pleased that the budget request attempts to address some of the concerns this subcommittee has raised in the past, including restoring military morale and improving readiness, as well as a robust development and deployment program for missile defense systems. But I'm troubled that in some areas, we are still falling short of the mark, particularly in ship construction.

I realize the Quadrennial Defense Review will not be completed until the end of the month, and discussions of force structure requirements might be premature at this time. But I'm deeply concerned about the continued downward trend in shipbuilding and its potential negative impact on our Navy's and our nation's ability to maintain a credible forward presence.

I'm concerned about the harm that the construction rate is having on our shipbuilding industrial base and its ability to meet future requirements. Furthermore, I'm skeptical of the proposed General Dynamics' acquisition of Newport News Shipbuilding. Even though it has the potential to create a short-term savings in the construction of nuclear powered ships and submarines, the resulting monopoly could have a long-term crippling effect on the rest of the industrial shipbuilding base. If this merger is allowed to proceed, I believe we will be paying significantly more per ship in the future.

Additionally, I think a commitment should be made as soon as possible to begin the DD-21 program. It will provide operating efficiencies and stealthy power projection that will enable us to prevail in future conflicts with less risk to our sailors and marines.

Mr. Chairman, I look forward to the testimony of our witnesses.

INOUYE: Thank you very much.

Senator Feinstein?

FEINSTEIN: Thanks very much, Mr. Chairman.

Welcome, Mr. Secretary, and welcome, General Shelton. It's good to see you both again.

I want to just make a few off-the-cuff comments, if I might, on the missile defense issue. I am greatly concerned about the testing, the cost, and the strategic and arms control implications of proceeding with the plan you want to proceed with involving missile defense.

The bottom line of the program is -- it seems to me -- is the world going to be safer because the United States has an over-arching ballistic missile defense system, or is the world going to be a more dangerous place? When I read that the administration may well support additional nuclear testing, China's additional nuclear tests, and would not object to China's moving ahead with the development of a missile program, I see where the world will be a much more dangerous place.

I would also suspect that the $60 billion put forward as the cost is just the first down payment on what's likely to cost literally hundreds of billions of dollars. And when I talk to men in uniform -- yes, even the heads of services, as I did last night -- they don't believe this is a number one threat. They're much more concerned about the asymmetrical threat, and one I spoke with was even more concerned about the concept of homeland defense, because they believe that the asymmetrical threat to the United States is much more dangerous and should be a much higher priority.

As a member of the Intelligence Committee, as chairman of the Terrorism Subcommittee of the Judiciary Committee, Senator Kyl and I have held three hearings on the commission reports with respect to terrorism. Intelligence has been looking at how we manage our counter-terrorism effort.

We have asked the administration -- Senator Kyl and I -- in writing for advice as to a program. We have not yet had a response. And yet, to me, this is a much more significant threat on the United States of America than the very remote possibility that Kim Jong Il is going to commit suicide by putting a Taepo Dong-3 in the air.

And yet we are faced with a budget that begins to put some deployment mechanisms into a ballistic missile defense, untested, in this budget, and I must tell you I have major concern about it. So I think -- and I will be asking some precise questions about that.

What's circulating on the Hill -- and let me be very precise -- is that this administration is going to use China to essentially justify a missile defense program. I very much hope that is not the case.

I do not believe -- and I'm a China watcher, too. I studied Chinese history in college, have tried to read everything that's been written, have been to China literally dozens of times, have had discussions with the leadership. I do not believe that China wants to be our enemy. We could make China an enemy. I don't doubt that.

But I have very deep concerns about the wisdom of violating or abrogating or pulling ourselves out of the ABM treaty, and I would like to know whether that's really the intent that's behind this program as well. So that's where my questions will be.

I thank you, Mr. Chairman.

INOUYE: Thank you.

Senator Bond?

BOND: Thank you very much, Mr. Chairman, and I very much appreciate the opportunity to join with you in welcoming our old friend and the new secretary of defense again.

Secretary Rumsfeld, we appreciate having you here.

I join with my colleagues in saying a sincere thanks to General Shelton. We've certainly appreciated the great work that he's done in service to the United States, as well as his work with this committee.

Mr. Chairman, I concur with Senator Domenici as one of his team on the Budget Committee. I believe he has stated it well, and I would join with him in supporting the budget as he outlined.

But as a member of this committee and as co-chair with Senator Leahy of the Senate Guard Caucus, I believe that our defense policy in the role of the Guard and Reserve in supporting our national military strategy is of the utmost importance. It's important to me, it's important to the people I serve in Missouri, and I think it's important to this nation.

Frankly, I've been very disappointed that we in Congress have not been consulted on many of the issues that concern our armed forces, and that the Guard and Reserve, in particular, have not been more fully engaged in the process of evaluating our national military strategy. These issues have significant implication to our national security and our nation.

Mr. Secretary, we are your strongest allies. We want to be your allies. But in order to help, as the chairman so aptly stated, we need to be included in the discussions. This communication and coordination would suffice. After all, we're all working in the same direction.

As you look for necessary savings within the Department of Defense, it's clear to me that we will fail to maximize potential savings if you fail fully to leverage the myriad numbers of capabilities residing within the Guard and Reserve. We have seen an increased use of Guard and Reserve capabilities in past regimes, and they've enabled us to do a lot more with less.

However, we have yet to see a clear signal from this Department of Defense and you and your team that this philosophy will continue, and that this reliance will continue to be there, and I'm nervous. I hope you can assuage our concern.

Having commanded the Guard in Missouri -- I was commander in chief for eight years -- and having worked with them and the Reserve over the years, I know they bring tremendous capabilities to the fight, often at a great cost savings, savings above what you can get from full time forces. We need to address and assess adequately the depth and the breadth of these capabilities as we develop our military strategy and shape our military forces.

Furthermore, I think it's critical that we acknowledge the value of our citizen soldiers, sailors, airmen, Marines in sustaining America's own involvement and support for a strong defense. Our Guard and Reserve forces forge a link, a bridge, between our active forces and our citizens, and I saw that, Mr. Secretary, in the aftermath and during Desert Storm. The people of America were aware of, and they were mobilized, and they were vested in our efforts, because units were called up from the hometown, and I joined in greeting them when they came back as conquering heroes and heroines, as they should have been welcomed back.

This involvement, this citizen participation in our nation's military commitment is something that has a value much higher than any dollar amount we can put on it. And I just call it to your attention, and I hope we will see the Guard and Reserve fully involved in the military strategy, both for the sake of our defense and for the sake of saving dollars.

Thank you, Mr. Chairman.

INOUYE: Thank you very much.

Senator Specter?

SPECTER: Thank you, Mr. Chairman.

I thank you, Secretary Rumsfeld, for returning to the Department of Defense and undertaking the prodigious job and the way you're tackling it.

And I thank you, General Shelton, for your great service to the country.

My questions will focus, among the many, many issues which this subcommittee is looking at, on the issue of missile defense and the ABM treaty. I, personally, support missile defense, but I want to see the particulars as to how much it is going to cost, what the realistic possibilities are, and the plans on deployment.

Back in the mid '80s, I was part of the Shadow (ph) observer team in Geneva, when we had long debates about the narrow versus broad interpretation of the ABM treaty and participated in the floor debate, which was characterized by some as historic at that time. And I'm very much concerned as to what is going to happen with the ABM treaty, and I'm hopeful that we will be able to work it out with Russian President Putin and the Russians, being that it is such a major matter.

I had occasion during the August recess to travel to China, and our missile defense and what's going to happen with the ABM treaty is very much on the minds of the Chinese leaders. I found the same thing in South Korea, where the South Korean president was hopeful that we would take a little different tone toward North Korea and not pose them as a major threat, even though they may be, to try to work something out on diffusing that problem.

I think it is very important that there be an unequivocal statement from the administration denying -- which I think is the fact -- the policy of permitting or not objecting to a Chinese buildup on nuclear defense in exchange for not opposing our missile defense.

SPECTER: That country is the coming colossus -- 1,250,000,000 people. If they have a nuclear buildup, it'll encourage India as an offset, which will encourage Pakistan as an offset, and all sorts of problems.

And, finally, Mr. Secretary, I'll be interested in your views on abrogation of ABM, if it comes to that, as to the role of the Congress. There had been an historical policy of congressional resolution on abandoning treaties. Constitutionally, there has to be a two-thirds ratification by the Senate. That was changed by President Carter on the Taiwan treaty in 1978 and led to a furious (ph) lawsuit which got to the Supreme Court, and Senators Goldwater and Helms and Thurmond and Hatch all saying that the executive cannot unilaterally terminate a treaty, and we're far from that. But it's something which I think is worth exploring at an early stage.

Thank you for being here, and thank you, Mr. Chairman.

INOUYE: Thank you very much.

Senator Hutchison?

HUTCHISON: Thank you, Mr. Chairman, and I want to thank you for taking your time to come here, and I think this is a very important time for us.

First, I want to thank you, Mr. Secretary, for taking on the mammoth task of saying that the security threats of the 21st Century are different from those we have faced in the last century. And I applaud you for being very bold, because I don't think the United States has established what those security threats are in the past, and I don't think that we have even established our rightful place in the world in the post-Cold War era.

So I applaud that, and I know you're going to be very deliberate. And I want to say that of the things that I have seen in the paper, I am very open to a change in our strategy in two major regional conflicts, but I hope you will have intense briefings for us, if that is what you are going to recommend, and tell us why you think the threat should be different.

Secondly, I have talked to you about this, and I hope that part of your overall strategy for building our force will include assessing our overseas deployment and making sure that we are in full force where we need to be, but also pulling back from perhaps the numbers that we have had. Just because we have been there for 25 or 30 or 40 or 50 years doesn't mean that in this new assessment it will be the same.

And, third, I just want to say that I appreciate what the president and your support of the president are doing for missile defense, that you are being very deliberate. But I cannot imagine the United States of America seeing the potential threats and not addressing those threats.

And it's not as if we could all of a sudden, 10 years from now, say, "Oh, my goodness, there is a rogue nation that has an intercontinental ballistic missile," and immediately have a missile defense system for that. We have to plan ahead. That is our responsibility. That's our duty, and it's yours, and you're taking it, and I appreciate it.

So I'm going to be very supportive of your missile defense needs, your assessments, and it would be unthinkable to me that we wouldn't do the necessary things to prepare for the long term for a missile defense, not only theater, which protects our troops in the field, wherever they may be in the world, but intercontinental to protect our people who live in our country.

So I thank you for your involvement. I look forward to a lot more discussion and briefing from you, and I think once we have all the facts and your assessments that you will find the support that you need in Congress to prepare us for the 21st Century and the security of our people.

Thank you.

INOUYE: Thank you very much.

Mr. Secretary, now that you've heard the accolades of this committee and the concerns, I am pleased to have your testimony.

RUMSFELD: Thank you very much, Mr. Chairman, Senator Stevens, members of the committee. I have with me also Dr. Dov Zakheim, the comptroller of the Department of Defense.

I'd like to submit my prepared testimony for the record and then...

INOUYE: Without objection, so ordered.

RUMSFELD: ... make some summary comments. First, I want to join with you, Mr. Chairman, and the members of the committee in commenting on General Hugh Shelton's service as chairman of the joint chiefs of staff.

It has been remarkable. He is a courageous and talented individual -- two tours in Vietnam, a Purple Heart, leadership of infantry and special forces units all over the world, leading the 101st Airborne Division into battle in Iraq, commanding the joint task force in Haiti, leading U.S. special operations command, and then serving as our nation's highest ranking military man. General Shelton is, indeed, a model soldier and an outstanding leader of men.

It's been my privilege to serve with him these past months. I must say that I have benefited from his wise counsel as we've worked together to fashion a new defense strategy that we hope will help guide our forces into the 21st Century.

General Shelton, America is grateful to you for your dedication and your service, and I feel fortunate to work with you.

SHELTON: Thank you very much, Mr. Secretary.

RUMSFELD: I would very much have liked to comment on the very thoughtful comments and questions that were posed as we began the meeting today. There are two I think I should respond to immediately before making my remarks, just in case someone leaves the room with the wrong impression.

Senator Feinstein, I believe you said something to the effect that you have heard that the United States is talking about nuclear testing, and that -- I don't know quite what you said, but if you said that, it would be not correct. The president has indicated that he supports the moratorium. There have been no utterances by anyone that I know of in the administration about the subject of nuclear testing, and I would not want someone to leave the room with the impression that that is under debate or consideration, because, to my knowledge, it's not.

Second, with respect to the Peoples Republic of China and the things that are in the press on that subject, I had the benefit of being out in Senator Domenici's home state for a little vacation over the week and returned back to find the press filled with stories about this. I've checked with Secretary Powell, and I've checked with Dr. Rice, and the suggestion that the United States has or is poised to approve of China's military and nuclear buildup for some reason in exchange for something is simply not the case, notwithstanding what people are reading in the press.

And I think, Senator Specter, you asked the question, and I know, Senator Feinstein, you asked the question, and I just -- all I can say is I've talked to the two people in foreign policy who work very closely with the president on those issues, and that's not the case.

Mr. Chairman, when President Bush took office seven months ago, he made clear that one of his highest priorities would be to address and arrest the decline in our armed forces and begin working to build the 21st Century military that can help deter aggression and extend peace and prosperity. To begin reversing the effects of close to a decade of overuse and underfunding, the president first submitted the 2001 supplemental budget request, which was approved by Congress earlier this year -- and we thank you for that -- and a 2002 budget request followed. It includes the largest increase in defense spending since the mid 1980s.

This is an important step in getting the department out of the hole that the long period of underfunding has put us in, and it is a significant investment of taxpayers' money, as the members of the committee have pointed out. The 2002 budget includes funding for military quality of life, increases in military pay, housing, and health care, for training and readiness, for maintenance and repair of our aging equipment, for modernization and transformation in the R&D area. And, Mr. Chairman, we need every nickel of it.

The budget request does not solve the problems of the department. It begins to repair that damage that's been done by a long period of underfunding and overuse. In addition, it lays the foundation for the effort to transform the armed forces for the 21st Century.

As we work to transform the armed forces, we're working at the same time to try to improve the way the Department of Defense functions, to encourage a culture of greater innovation, to turn waste into weapons, to show respect for the taxpayers' dollars, and to speed the utilization of new technologies to help keep the peace into the decades ahead.

As you consider the 2002 budget, let me briefly share some of our priorities with you and how they relate to the request that's before you. As we prepare for the new challenges that have been mentioned in some of the opening comments, certainly U.S. homeland defense takes on an increasing importance, and I quite agree with Senator Feinstein's comment that the so-called asymmetrical threats are the more likely threats in the period ahead, and they run across the spectrum from terrorism to cruise missiles to ballistic missiles to cyber attacks, and certainly the department needs to address all of those issues.

The proliferation of weapons with increasing range and power in the hands of multiple potential adversaries means that the coming years will see an expansion of the risks to U.S. population centers as well as our allies and friends. We will face new threats, as has been pointed out.

Today, we're vulnerable to missile attack. That's a fact, and, as has been mentioned by the chairman, weakness is provocative and invites people into doing things that they otherwise would avoid. If a rogue state -- and you can pick any one you might like -- has that capability and demonstrates that capability, there's no question but that a terror weapon has the effect of terrorizing and altering behavior, regardless of whether or not it's used, and simply its existence forces people to change their behavior.

Think of trying to forge an international coalition to stop an active aggression. For example, when Iraq went into Kuwait, if we had known beforehand that Iraq had a nuclear capability and a ballistic missile capable of reaching Europe and the United States, it would have been difficult, if not impossible, to fashion such a coalition.

The alternatives a country is faced with, absent the ability to defend, are several. One is to acquiesce and allow a country to take over their neighbor. A second is to preempt, and that's a very difficult decision for a country. And a third is to put your population at risk, and then retaliate after you've lost a large number of people, if that happened to be the case.

What is at stake here is not only protecting the American people and our allies from attack, although that is critical -- what's also at stake, in my view, is the ability to project force to defend peace and freedom in this world. Winston Churchill once said, "I hope I shall never see the day when the forces of right are deprived of the right of force." And that is precisely what rogue states intend, to deny the forces of right the ability to stop aggression and defend freedom in the 21st Century.

The president's request for missile defense is less than 3 percent of the 2002 budget. For so-called national missile defense, that is to say, separating theater missile defense from it, it's something like 1.5 percent of the budget. More than 98 percent of the budget is for other priorities, including the other so-called asymmetrical threats.

But let there be no doubt the threats are real. President Bush is committed to ensuring that we develop the capability to contribute to peace, stability, and freedom, and without such capabilities, the United States could be driven inward at great risk to the world economy.

RUMSFELD: Senator Kohl mentioned the reason why a budget request with an increase in a time of peace makes sense. If you think about it, the world economy is what enables the American people to go about their business and have economic opportunities and provide for their families. We are a participant in that.

If we see an instability injected into the world economy because of war or conflict or because of the fear of war or conflict, the American people lose that. We lose that -- all the things that we value and that our fellow citizens value.

We have to remember that what underpins a prosperous economy is peace and stability, and what provides peace and stability at this time in the history of the world is the United States of America's capabilities. We are spending less than 3 percent of the gross national product of the United States on defense.

When I came to Washington in 1957, President Eisenhower was president, and during that period, my early years in Congress, we were spending 10 percent of the gross national product on defense, and we could do it just fine. Today, we're down below 3 percent of the gross national product, and the idea that we can't afford to spend 3 percent of the gross national product to provide the peace and stability that makes prosperity and economic opportunity across this globe possible, I think, is not debatable. We can.

As you know, we're working to reach an understanding with Russia by the time our development programs begin to bump up against the constraints of the ABM treaty. I don't know if we'll be able to reach an agreement or not, but certainly everyone is working on it. The president is, Secretary Powell is, I am. I've had meetings and will have more this month, and that's our hope.

The question as to whether or not we'll be successful, I would submit, currently depends on the perceptions that the Russians have. And to the extent the Russians develop a perception that the United States is not interested in going forward and providing defense against ballistic missiles, or that we're split on that issue, obviously, it's in their interest to not come to any agreements with us.

And so I would hope that we would go through this period strengthening the president's position in his negotiations with the Russians so that we can move beyond and establish a new framework for the relationship between the United States and Russia, a relationship that's based not on the Cold War and not on mutual assured destruction, but is based on the future and the relationship that makes the most sense between two countries that are, indeed, not enemies.

The 2002 amended budget moves us on a path toward transformation by undertaking urgently needed immediate repairs of our existing force and by investing now in some of the transformational technologies and R&D that will be needed. Regrettably, we can't build the 21st Century force unless we first begin repairing the damage that's been done by overdrawing the peace dividend in the 1990s.

We spent much of the 1990s living off investments of the 1980s, and we allowed our military capabilities to be slowly degraded as we overused a shrinking and underfunded force. To their enormous credit, America's dedicated service men and women dutifully did more with less, putting off needed investment in training, infrastructure maintenance, and procurement to keep up with the proliferation of missions.

A number in Congress and certainly on this committee have worked hard to give them the resources they need. But notwithstanding those efforts, the reality was that they were overworked and underfunded over a sustained period.

The result has been a serious backlog in maintenance, deferred procurement, a deteriorating infrastructure, and lost opportunities for transformation. For example, basic research funding has declined 11 percent since 1992. RDT&E funding levels have declined by 7.4 percent in the same period. The deferred maintenance for DOD facilities, which is the cumulative amount that's not been funded from year to year, currently stands at $11 billion.

DOD is failing to meet the current standard to maintain a steady state of 310 ships, as Senator Cochran mentioned. Without added ship construction, it's headed toward an unacceptable steady state of 230 ships, which is obviously unacceptable.

Every year the U.S. government puts off addressing these problems, the cost of catching up grows worse. We need to change it. In addition to the various risks associated with our ability to execute war plans, the department must also develop the ability to take into account the risks to personnel, the risks to modernization, the risks if we fail to transform. We have to develop the skill and the ability to weigh an expenditure today for modernization of a weapon against the risk of being in a conflict three years from now and being struck deaf, dumb, and blind because we didn't make the proper investments in information technologies and interoperability and anti-jamming capabilities. That is not easy to do, but that's the process we're going through.

In February, the president proposed a $310.5 billion baseline budget that includes $4.4 billion in new money for military pay, housing, and R&D. The request before you raises that investment to a total of $328.9 billion, an increase of $18.4 billion in budget authority. Taken together, this is $22.8 billion in new money for the department in 2002.

Among other things, the request increases spending for military personnel from a level of $75 billion in 2001 to $82 billion, an increase of 9 percent, including funds for needed targeted pay raises and improved housing allowance. It requests $4-plus billion to improve the quality of family housing, a 12 percent increase. It requests the congressionally required increased spending on defense health from the 2001 level of $12 billion to $17.9 billion, an enormous 48 percent increase of $5.8 billion.

I was asked why such a large increase in health. The answer is the Congress passed legislation providing for a set of health provisions, in one case, for example, for the over 65 lifetime health, and the estimates are very difficult to make. But the cost of that program, while difficult to estimate, is clearly enormous, and it is going to have a significant effect on the defense budget over the coming period.

The budget before you begins to reverse the neglect of maintenance and repair. It requests increased spending on operations and maintenance from a 2001 level of $107 billion to $125 billion, a 16 percent increase. It fully funds the Navy and Air Force optempo costs. The Army made a decision to be slightly below full funding with respect to tank hours and helicopter hours.

The reality is that we cannot transform the armed forces unless we also transform the way we do our business in the department. The department used to be a technological leader in innovation. Today, with few exceptions, the department can barely keep up with the pace of technological change, much less lead.

Since 1975, the department has doubled the time it takes to produce a weapon system at a time when the pace of new generations of technology have shortened from years down to just 18 to 24 months. This virtually guarantees that many of DOD's newest weapons will be one or more technology generations behind the day they're fielded.

The combination of internal inefficiencies and external constraints on the department together ensure that DOD operates in a manner that is too slow, too ponderous, and too inefficient, and that whatever it does ultimately produce tends to be late and not respectful of taxpayers' dollars. The situation really can't continue, in my view.

In the coming weeks, we'll be laying out a plan to address the waste and duplication of effort in the department. We'll undertake initiatives to encourage cost savings, to foster a culture of intelligent risk taking, and to begin applying modern business practices to the way the department does its business. We'll outline specific cost savings that we're undertaking unilaterally, as well as some structural reforms that will help lay the groundwork for further savings in the years ahead.

While there are many things we're doing unilaterally in the department, we also need some help from Congress. For example, we'll need support for our so-called efficient facilities initiative, requesting congressional authorization for a single round of military base closures and realignments in 2003.

Since the end of the Cold War, the number of men and women in uniform has come down 40 percent, but there's not been a parallel reduction in facilities. People who have studied the problem conclude that we have some 20 to 25 percent more infrastructure than we need to support the force.

That excess infrastructure is costing us unnecessary billions of dollars every year in unneeded rent, utilities, and maintenance. We estimate that after the first few years, this program could save us as much as $3.5 billion annually, money that could be better spent on high priorities like readiness, modernization, and quality of life for the troops.

We also need your support for the proposed revitalization of the B-1 bomber fleet. By reducing the fleet from 93 to 60 aircraft and concentrating the remaining aircraft in two of the largest B-1 bases, rather than in the five bases where they're currently scattered around today, we can free up funds for the Air Force to rapidly modernize the remaining 60 aircraft with new precision weapons, self protection systems, and reliability upgrades so that they can remain viable for use in future conflicts. There has been a good deal of opposition to this proposal, but it's the right thing to do, and we need to get on with it.

By undertaking both unilateral reforms and reforms in cooperation with Congress, we can bring the Defense Department to a more effective institution.

Mr. Chairman, we need to do it because of the harsh reality that the unmet needs of the U.S. armed forces exceed the funds available to address them. So unless together we can turn waste into weapons, we'll have to come to you next year and the year after that, asking you to appropriate still more of the taxpayers' dollars to meet unmet needs, many of which could have been paid for by trimming and cost savings from within.

Neither the transformation of the armed forces nor the transformation of the department is going to be easy. Change is hard, and if anyone doesn't believe it, just look at the turmoil that it can cause when one proposes change. A philosopher once wrote that there's nothing more difficult to plan or more dangerous to manage than the creation of a new system, for the initiation has the enmity of all who would profit by the preservation of the old institution and nearly the lukewarm defense of those who would gain from the new.

We really have no choice. We're entering a world where new threats can emerge suddenly. We need to have a military that's sized and structured to meet those challenges, and we need a department that's innovative and flexible and forward thinking if we're to meet those new and different threats. The time has come to reinvigorate the morale and readiness of the force and to prepare for the new and different challenges in this new and still dangerous and untidy world.

Mr. Chairman, I thank you for the opportunity to be here and look forward to responding to questions.

INOUYE: I thank you very much, Mr. Secretary.

May I now recognize General Shelton?

SHELTON: Thank you, Chairman Inouye, Senator Stevens, and other distinguished members of this committee. Once again, it is my privilege to appear before you today and report to you on the state of America's armed forces.

I'd like to highlight some key priorities from the written statement that I have provided for the record and then move right into your questions.

Mr. Chairman, I have been a soldier now for 38 years, and as I reflect on the state of the military today, I'm reminded of three important lessons that I've learned over those 38 years. The first is that in this legal profession of ours, our profession of arms, there simply is no substitute for being ready when the nation calls, as you pointed out so eloquently in your article that appeared in "Defense News" this past week.

The second is that the military is about people, about our great men and women in uniform and their families. They've never let America down, and they never will. We must properly take care of their needs.

And third, we must always anticipate the threats of tomorrow even as we deal with the challenges of today.

I share these lessons with you because we must not let this period of relative peace, as Senator Kohl commented on while ago, and also relative period of prosperity lead us down the path of complacency and blind us to a fundamental truth, and that is that the furies of history will return, and they will produce destruction and violence at a time and at a place and in a manner that we probably will not expect. We must, therefore, remain vigilant, and we must remain prepared.

Today, our military forces -- and I refer to active, guard, and reserve -- remain the best trained, best equipped, and most capable in the world.

SHELTON: But before we congratulate ourselves, let me also say about our readiness that our people in our forces are experiencing some challenges which, if not addressed quickly, may erode our present day advantage. I'd like to bring a number of these pressing issues to your attention.

First, if we should have to fight tomorrow, I'm confident that our front line troops are trained and ready. However, it is important to note that many other operational units are not as ready. These include our combat service support units; our strategic airlift fleet; our intelligence, surveillance, and reconnaissance aircraft and assets; and our training bases, all of which provide critical capabilities to our war fighting forces. These units are, in some cases, suffering the consequences of high optempo and the diversion of resources to sustain the near-term readiness of our first-to-fight forces.

We're also a very busy force. Since 1995, DOD has experienced a 133 percent increase in the number of personnel that are committed around the globe. And these are real world operations, not exercises, and we're doing it with 9 percent fewer people than we had in 1995.

This high operational tempo, on segments of our force, has increased the strain on our people and has highlighted the imbalance that we have today between our strategy and our force structure. Fixing this imbalance is part of the ongoing work in the QDR and, of course, one of the top priorities for all of the joint chiefs, because the challenge will only increase over time, and we owe it to our people to get it right.

In fact, through the QDR process, we are struggling to reconcile a number of competing demands: near-term readiness, recruiting and retaining our high quality forces, long-term modernization and recapitalization of our aging systems, transformation, and, yes, the infrastructure investments that are essential to preserve the world's best war fighting capability. Secretary Rumsfeld commented on the fact that we have been living off our procurement accounts from the 1980s, and this marked reduction that we have had in the 1990s in our procurement accounts means that the average age of most of our major weapon systems continues to increase. Of course, many of these systems have already exceeded their planned service life or are fast approaching it.

Let me give you just a few examples. Our front line air superiority fighter, the F-15, averages 17 years -- only three years away from the end of its original designed service life. Our airborne tanker fleet and our B-52 bomber force are nearly 40 years old. Our intelligence, surveillance, reconnaissance, and our electronic warfare aircraft, such as the RC-135, the rivet joint, the EP-3s, the P-3s, and our EA-6B prowlers, all critical to our war fighting capabilities, average between 19 and 38 years of service.

And, finally, numerous helicopter platforms -- going back to Senator Shelby's comment -- in all of our services have passed or are approaching the end of their original design service life. And, of course, these helicopters are a key part of our war fighting capabilities in each of the services.

In fact, most of the war fighting platforms that I just mentioned were fielded at a time when most of our kids were listening to a group called Three Dog Night. They were listening to it on the latest in technology, an eight-track tape deck, while sitting in the seat of their Ford Pinto. Technology has come a long way since then, and just like the 25-year-old Pinto, our aging fleets of aircraft, ships, and vehicles are requiring increased numbers of parts, and they're requiring increased maintenance support.

Let me give you a few examples that have been provided by our services reflecting a recent trend with regard to our aging fleets. Between 1995 and the year 2000, the Air Force's F-15C model has seen a 38 percent increase in cost per flying hour and a mission capable rate that has dropped from 81 to 77 percent.

The Navy EA-6B prowler has seen a 55 percent increase in cost per flying hour and mission capable rates that have dropped from 60 percent to 56 percent. And the Army's M-1 tank, at an average age of 14 years, has seen a 22 percent increase in cost per operating hour and a mission capable rate drop from 91 percent to 85 percent.

Now, while we have been successful -- and I would even say highly successful -- in meeting the demands of current operations, we've also been unable to significantly increase our investment in procurement, as Secretary Rumsfeld mentioned, in part, due to the increasing cost associated with these platforms. If we don't increase our efforts in procurement, then we are left essentially with two choices. We can either retire these aging systems, or we can continue to maintain the old systems, resulting in increased cost along with reduced operational capability.

The bottom line is that I don't believe we can efficiently sustain our current capabilities for much longer, much less pay for ongoing efforts to modernize and transform, without an increase in resources.

But it's also important to remember these readiness issues have a tremendous impact on our people as well, requiring them to work harder and essentially do more with less. So let me now turn to a discussion on how we can better support our greatest asset, our men and women in uniform.

Mr. Chairman, I believe that we have made real progress in the past four years, providing long overdue support for our people, as well as for their families. And I'd like to express my personal thanks and appreciation to the Congress and to this committee, in particular, for your outstanding role in helping take care of our troops.

Consider the following that we've accomplished: increases in pay and allowances, pay table reform, Tricare improvements, increased funding for housing, and making good on our health care promise to our active force as well as our retirees. But let me also say that I believe we need to sustain this momentum to preserve the long-term quality and readiness of the force. An important first step in this regard is a renewed effort to eliminate the significant pay gap that still exists between the military and the private sector.

A second related quality of life issue is the condition of our vital infrastructure, which continues to decay at an alarming rate. For quite some time now, budget constraints have forced us to make some hard choices, and we've had to redirect funds from military facilities and infrastructure accounts to support readiness requirements.

A quality force deserves quality facilities, and that's why I believe it's essential that we provide the resources that are necessary to stop and reverse the deterioration at our posts, our camps, our bases, and our stations. One way that the Congress can directly help is to support DOD's efficient facilities initiative to dispose of excess bases and facilities.

And, third, I would ask your support to help ensure that all of our men and women in uniform, single, married, or unaccompanied, are provided with adequate housing. Unfortunately, this is not the case today. In fact, currently, 62 percent of our family housing units are classified as inadequate, which means that an astonishing percentage of our families are living in substandard housing. We simply cannot let this situation continue.

And, finally, the other program that will greatly enhance the quality of life for our people is quality health care. Today, one of the most valuable recruiting and retention tools a corporation can offer a workforce or a potential employee is a comprehensive medical package. Our armed forces are no different. For that reason, the chiefs and I strongly urge Congress to fully fund the defense health program as a strong signal that we are truly committed to providing health care for our troops. I can't think of a better way to renew the bonds of trust between Uncle Sam and our service members and retirees than this commitment to military health care and to quality health care.

With your continued support of these initiatives, I believe we can sustain our quality force and ensure that America's best and brightest continue to answer the nation's call. They truly represent our present and our future security.

Since my last testimony, we have been reminded of the human element of national security in several profound ways. Last December, two U.S. Army helicopters crashed during a nighttime training mission in Hawaii, Senator Inouye's home state. Nine soldiers perished in that crash.

Some ask why would the Army put their soldiers in harm's way during a dangerous training mission in the black of night? The answer is that's what we do. We train for the most difficult missions that we may be asked to carry out. We must know that when America's interests are at stake, or when America's interests are threatened, we will be ready to go, day or night, and that failure is not an option.

Last March, five of our soldiers and one New Zealander were killed during a nighttime training incident that took place at Eudore (ph) range in Korea during a close air support training mission. Some may ask why would you schedule such an event? Why would aircraft be dropping live ordnance on a range in the Kuwaiti desert? The answer is because that's what we do. We train our troops to launch our aircraft 24 hours a day, often in unfamiliar surroundings, often with night vision goggles, and often in difficult weather, precisely because we don't know where the next fight may take place and under what conditions we'll ask that of our great soldiers, sailors, airmen, and Marines.

We must know, however, that when America's interests are threatened, we'll be ready to go any time, day or night, because failure is not an option. And that, in fact, is the legacy of the honored dead that I have just mentioned. We must work hard to minimize the risks to our great volunteer force, but we must train the way we anticipate fighting, and we will fight at night.

I'm very proud of the performance of these men and women and many thousands of other individuals who proudly wear the uniform of our country. They are, as they have always been, America's decisive edge. Indeed, they are so good at what they do that unless there's an incident or an accident, we rarely take notice of their daily contributions to our national security. They sail their ships, they fly their aircraft, they go on patrol quietly and professionally, and America is safe and enjoying great prosperity in part because of them.

Mr. Chairman, as we consider new budgets and new national security strategies and new ideas of transforming the force, it's important that we always remember that the quality of people in our military is critical to all that we hope to accomplish. And if we take action today to ensure that our men and women in uniform are properly taken care of, I'm confident that we will prevail regardless of the challenges that we face in the future.

We have an opportunity in the succeeding weeks and months to build a foundation that will sustain the U.S. military supremacy in the decades ahead. Our professional, highly trained, and motivated young Americans in uniform are counting on us to make the right decisions.

If we are successful, we will help underwrite the continued peace and prosperity that our nation currently enjoys well into the future. And I would submit that your support is needed now more than ever.

As this could be, Mr. Chairman -- and I emphasize could be -- my last appearance before this committee, I would like to express my profound gratitude for the opportunity to work with all of you during the past four years. And I thank each of you and Secretary Rumsfeld for your very kind words, and I can tell you that coming from such outstanding public servants as they did and such strong advocates for our troops, they mean a great deal to me.

I have a great feeling about what we collectively have achieved, and I also feel great about turning over the reins to General Dick Myers, a superb warrior and a visionary leader. It has been my great honor to represent the hopes, the needs, and the aspirations of our great American service men and women, and I thank you for making your priorities their priorities.

Thank you very much, Mr. Chairman, and we look forward to your questions.

INOUYE: Thank you very much, General Shelton. And, once again, I thank you for your service to our nation.

SHELTON: Thank you, Mr. Chairman.

INOUYE: I will be asking all members to limit their questioning to five minutes because of the limitation of time.

Mr. Secretary, as several of us have indicated, the budget resolution states very clearly that we may allocate the additional $18.4 billion if this would not use up the Medicare surplus. OMB and CBO have both indicated that it will use up the Medicare surplus.

If that circumstance continues to the moment we consider this measure, we have few terrible options: a general reduction, going back to the drawing board and looking at priorities; another declaring an emergency, which I think would be a farce; and seeking a waiver of the budget provision, which I have recommended to this subcommittee, and that would require 60 votes.

What would you suggest that we do, sir?

RUMSFELD: Mr. Chairman, I'm here to present the budget for the Department of Defense, and, of course, your questions and the important questions that others have raised relate to the federal budget overall, which is the purview of this committee and this Congress, as well as the president of the United States.

RUMSFELD: All I can say in response is that there is no question that the Department of Defense needs every nickel of this budget. You are correct in your opening statement.

The president has been unambiguous on this subject. He has been very forthright. It is not possible, given the totality of the budget, to say which department's budget is the one that is pushing against the self-imposed constraints of this Congress.

What we do know is that the president said his priorities are defense and education, and he has said it repeatedly, and I certainly agree with him.

INOUYE: In other words, you would not suggest any reduction in defense spending?

RUMSFELD: Absolutely not, Mr. Chairman.

INOUYE: That would mean you would reject a general reduction across the board?

RUMSFELD: That is, of course, not for the secretary of defense to even opine on. That's a presidential decision as to what he wants to do. But what he has said thus far is very clear, that his priorities are defense and education.

INOUYE: Would the secretary of defense and the administration object if the Congress decided to waive the restrictions set forth in the budget resolution and allocate the funds notwithstanding the fact that the Medicare surplus has been depleted?

RUMSFELD: Well, Mr. Chairman, as I have indicated, that is a presidential decision and not one that I can make myself.

INOUYE: And you have received no indication from the White House.

RUMSFELD: Other than what I have stated, that his priorities are defense and education.

INOUYE: Mr. Secretary, in your prepared testimony, you mention efficient facilities initiative of 2001. Am I to assume this covers base closures?

RUMSFELD: Yes, sir.

INOUYE: What are your thoughts on base closures?

RUMSFELD: My thoughts are several. First, it is the last thing in the world anyone with any sense would like to propose to the Congress, that they go to their House and Senate members and suggest that they have to close some bases in their districts when they don't want to close them. So I did not do this willingly. I do it out of necessity.

There is no question -- everyone who looks at this, every one of the chiefs of staff, the chairman, the vice chairman, every single one comes and says we simply must close some bases. The estimate by the experts -- I'm no expert, but the experts suggest that somewhere between 20 and 25 percent of our base structure is not needed. I certainly agree that we ought to address the base structure around the world as well, but we have to address it in the United States, in my view, and that's why we've come forward with it.

INOUYE: Are you recommending that certain bases be closed?

RUMSFELD: I am recommending that the initiative that's been put forward to Congress, which is for an additional round of the existing legislation, be approved by the Congress so that a proposal can be made ultimately to the Congress for base closures.

INOUYE: The committee has been advised that there are -- I notice that my time is up, sir. So may I now call upon Senator Stevens?

STEVENS: Mr. Secretary, there are a great many of examples of systems that have been in R&D since the 1990s that have not come out of R&D because we have stretched them out. Both the administration and the Congress agreed. The Comanche, the Crusader artillery system for the Army, the V-22, the advanced amphibious assault vehicle for the Marine Corps -- the pressures that we've had -- and that also applies to the LPD-17 for the Navy. It was originally funded in '96, and yet construction only began in the year 2000.

You've inherited a lot of postponed programs. I assume that you have reviewed them as part of your current review. Have you come to a conclusion about any of those that ought to be terminated, or what to do about getting into a position where we can move them from R&D into production and deployment?

RUMSFELD: Senator Stevens, the way this process is working is that the Quadrennial Defense Review is coming toward a close. The defense planning guidance has been given to the departments and the components, along with some specific guidance as to things that the administration believes they ought to budget for and fund for.

The services and the components are then asked to come back in the normal budgeting process, and that will take place later this month and in October and in November in preparation for the 2003 budget. The services will be making their recommendations to me and to the deputy secretary and to the department's senior officials as to what they think their priorities ought to be. In that process, they will recommend, I am certain, that some things be discontinued and some things be brought forward.

But you're quite right. It's not unusual with research and development that a number of things get started, and only some of them eventually are fully funded and deployed.

STEVENS: We'll await that report. Let me move on to another thing that I've been working on for some time, but unsuccessfully. The current rate of production of new vessels for the Navy will sustain only a fleet of about 250 ships by 2010. The rate of replacement is woefully low, and the process of acquisitions is really almost stalled.

We have had poor performance on several of the shipbuilding programs. Your budget request before us now has $800 million solely to pay for cost overruns in ship procurement.

I have tried to get the Navy to adopt the procedure followed by the Coast Guard for a long time. It's called advanced appropriations. It deals with putting into play the acquisition of multiple ships and not fully funding each one as we get the authorization.

The Navy now tells us they're going to have to have another half a billion dollars needed to pay for cost overruns on ships prior to construction contracts for 2002. It's my understanding the administration has turned down the concept of advanced appropriations allowing us to go forward with multiple ship acquisitions through a concept of annual appropriations. Why?

RUMSFELD: I may have to get Dr. Zakheim to comment on this, but it is correct that at the present time, the Office of Management and Budget does not favor the idea of advanced appropriations for ships. It has a number of advantages, obviously, from our standpoint, from the Department of Defense's standpoint, because you can begin the process of moving along with a more robust shipbuilding program than you can without advanced appropriations.

The argument they make, I suppose, is that it creates a mortgage for the future that concerns them, and it is something that is being discussed within the administration.

STEVENS: I think the current system encourages cost overruns. I can't think of one single Navy ship that's been built since I've been here that didn't have cost overruns.

But if you turn around and look at the fixed price contracts for the Air Force or for the tanks, we have been able to have some sort of cost control. The problem is that they get the money, they put it in the bank, and they don't care when the ship comes off because they've already got the money. Now, I think there ought to be something done about that, and I hope that you'll take another look at it.

I'm running out of time, so I'll move along. We accelerated the deployment of the second interim brigade combat team, the so-called IBCT. This is General Shinseki's transformation initiative, approved by the chairman of the joint chiefs, which we think offers a great opportunity for us to move the Army into the full needs for the 21st Century.

First, do you support the whole concept of these interim brigade combat teams? They're interim because we still have a transition out there for the future. But do you support the creation of them?

RUMSFELD: I think that the approach that the Army has taken has been a good one, yes.

STEVENS: Will your budget fully fund the expansion of the concept announced by the Army?

RUMSFELD: As I indicated earlier, those are the kinds of tradeoffs that take place. I don't even know if the Army will propose that when they come back to us. But those are the kinds of tradeoffs that get taken care of and addressed during the budget build which is in the September-October period.

STEVENS: I'm done. I have a lot of other questions I'd like to ask. I do hope we'll have a chance to confer with you along the line before we face the proposition of confrontation at the very last minute on this 2002 budget.

Thank you, Mr. Chairman.

INOUYE: Thank you.

Senator Leahy?

LEAHY: Thank you, Mr. Chairman.

I appreciate the fact you responded to the concerns that I and Senator Feinstein and others raised about China. I must tell you, on Sunday, I was in Europe when this article came out, and I know you've -- you said you've talked to the others, including Dr. Rice, although her quotes in the New York Times article did not give a great deal of comfort to those of us who are concerned about China expanding their nuclear capability, and a number of European allies that I talked with were also concerned.

The articles, at least, give the impression that the administration feels that China needs to increase their nuclear stockpile to accommodate their comfort level about a possible nuclear shield or missile defense system here in the United States. Now, I think the future Chinese nuclear stockpile is one of the more worrisome aspects of all international security.

Frankly, the concern about a missile from a rogue state, one that would come here with a return address on it, is a lot less worrisome to me than an international nuclear arms race. I think we sometimes bend over backwards to look at a small problem and ignore a much bigger one.

If you're really into nuclear proliferation, I mean, I don't see how that helps us, especially when our defenses are more and more contingent on the ability of our intelligence to counteract serious terrorism threats. I'm not so concerned about a missile being lobbed by a rogue state, coming wobbling over the horizon at us -- we would know where it's coming from -- than I am about the small ship that comes into the New York harbor or off the coast of California loaded with a large nuclear weapon, just as I am concerned about a McVeigh or somebody like that in our own country that might bring about a terrorist attack.

So can you assure us categorically, Mr. Secretary, that we're not directly or indirectly giving a green light to China to increase their nuclear arsenal without any concern being expressed by us?

RUMSFELD: Well, Senator Leahy, I suffer from not having read all of the articles about this. As you, I returned to town and saw the flurry of all these articles and statements and counter statements and what have you.

LEAHY: Well, presuming from the articles, is it the administration's position to give, either indirectly or directly, the signal to China that we are not going to resist their increasing of their nuclear arsenal?

RUMSFELD: I am told that there is no one in the position of authority in the Bush administration in the foreign policy area -- which I am not, but Secretary Powell and Condi Rice are -- who has any intention of giving a green light to China, period, or in exchange for anything. Now, that's what I know.

You mentioned the risk of an international nuclear arms race. It's quite the contrary, it seems to me. The president of the United States has indicated he wants to significantly lower the number of offensive nuclear weapons in the United States stockpile.

He has me engaged in a congressionally mandated nuclear posture review, which I am well along on and should complete well before the deadline at the end of the year. It is his announced intention to reduce the number of weapons. I know that from my meetings with the Russians that their intention is to reduce the number of weapons, and I think that the risk of a nuclear arms race is really not something that's likely.

There's no question but that China has been increasing its defense budget in double digits, and in -- not just ballistic missiles -- longer range and shorter range and nuclear, but mostly non-nuclear, and they are doing what they're doing.

RUMSFELD: And I also agree with you that it's unwritten exactly how China is going to engage the rest of the world and its neighbors, and certainly we ought to be doing everything we can to see that they engage the world in a peaceful and rational way.

LEAHY: There are some aspects of this that maybe I should discuss with you or your staff, because it would require going into some highly classified areas that I would not discuss here in an open session, and I will set up a time with some of your staff to do that. I also would like to hear more about the plans to modernize our armed forces, but especially the National Guard.

Senator Bond made some reference to this. He and I chaired the National Guard Caucus here in the Senate. I see them going on more and more efforts to carry out our national defense, especially as we go into other parts of the world, sometimes for short term, sometimes for long term. But they're using a lot of aging equipment, and I think of the F-16 -- it's beginning to develop cracks in its airframe and so on.

How will the soon to be released defense strategy address National Guard modernization, and will there be an increased transfer of equipment to them, more modern equipment? Are they purchasing new equipment? How are they going to figure in this? If they're going to be part of our strategy, are they going to do it with equipment that works or old equipment?

RUMSFELD: Those kinds of decisions, of course, are the ones that are being considered now by the service components and will be coming out over the coming weeks. In answer to you and Senator Bond, let me say that I certainly believe in the guard and the reserves and in the total force concept. As a matter of fact, after I left the Navy as a naval aviator, I was a weekend warrior in the reserves for the Navy.

As you also probably know, one of the brigades of the new transformational interim brigade combat teams is a guard brigade in Pennsylvania, as I recall. So the guard and reserves -- and they're active in Bosnia and Kosovo -- the guards and reserves. So they play a very important role, and the Quadrennial Defense Review did not have the time to address them in a thoughtful way, so it will be done as a subset and will proceed over the coming weeks and months, very likely, in a more thorough way than the QDR was able to address them.

LEAHY: Thank you, Mr. Chairman.

INOUYE: Thank you very much.

Senator Shelby?

SHELBY: Thank you, Mr. Chairman.

Mr. Secretary, a $1 billion chemical incinerator stands on the Anniston Army depot in my state. Big issues like buying F-22s and fielding a missile defense are very important to our national security, I believe. And because of their budget implications, they tend to dominate our discussions here and out in the halls.

But a very important issue, Mr. Secretary, to some of us is the chemical demilitarization program. You're very familiar with this, and I know General Shelton is. While I think most observers were pleased when you acted earlier this year, Mr. Secretary, to elevate the chemical demilitarization program to what you call an acquisition category one defense program under the control of Secretary Pete Aldridge, that cloud of distrust remains in the communities in the U.S., including my state, where the chemical stockpiles are.

I believe, Mr. Secretary, that Secretary Aldridge has assumed a central leadership role and so far has shown a willingness to reach out to the communities in my state and others. I hope he understands the problems which exist in Alabama and these other states with the Chemical Stockpile Emergency Preparedness Program. They call it, I believe, CSEPP.

The recent GAO report on the program should serve as a guide to fixing these problems, I believe. This program has not turned the corner and continues to be in need of deep organizational reform.

We are quickly approaching our burn date in my state of Alabama, and burn, as you well know -- they start burning the chemicals, and the people that live in these neighborhoods get nervous, as you would and I would. It's a point where I believe maximum protection must be in place for the community, and I don't believe it is today.

Meanwhile, Mr. Secretary, agreement on whether the right safety measures are in place is anything but unanimous. The facility in Alabama -- I can tell you, I can't wait myself until the last chemical round is destroyed, as you would be, at the depot. And I'm very concerned about where this program is right now in my state and some other states.

The secretary of defense is the person with the ultimate responsibility for the program. Could you share your thoughts with us about where the chemical demilitarization program is as a whole and take a moment or two to comment on the health of the CSEPP program, the preparedness, because a lot of people, when they start operating that $1 billion incinerator in my state of Alabama, Anniston, Alabama, are going to be nervous. Should they be nervous? I know that's a lot of it, but...

RUMSFELD: It's a lot.

SHELBY: But this is an important issue, too.

RUMSFELD: It is something that I recognize, from the standpoint of any community, as enormously important. And it is the responsibility of the Department of Defense to see that we are as attentive as is humanly possible to the proper safety measures and the appropriate protection for the people in the region.

It is a program that has had its difficulties, as you point out, not only from the standpoint of timing. It is also the kind of a program that I think is inherently going to generate a variety of views and opinions and controversy.

SHELBY: Concerns.

RUMSFELD: Concerns, legitimate concerns. It's just inevitable -- but also debate as to what is the appropriate safety measure and what is the appropriate approach, just as most things scientific and technical do.

Pete Aldridge is on top of it. I am told that the program is going to be addressed tomorrow at the Defense Acquisition Board by Secretary Aldridge, and he is a very talented and competent person who I know shares your...

SHELBY: But the people that live in these communities, 150,000 to 200,000 in that area, are concerned and should be concerned. Wouldn't you agree?

RUMSFELD: You bet. I mean, there's no question but that we're dealing with some very dangerous chemicals.

SHELBY: Absolutely.

General Shelton, I just have a minute, but I'm concerned about what General Ralston has called, basically, to paraphrase it, the growing gap of technology between the U.S. and our European allies. You're very familiar with all this.

Lord George Robertson (ph) said -- and I quote him -- "We have a glaring trans-Atlantic capability gap and an interoperability problem between the allies." What initiatives are underway to address this interoperability problem with our allies?

Since our allies', for the most part, current military structures and military budgets do very little to narrow this interoperability gap, and if the technological and budgetary trends remain the same, don't you think the services' unfunded requirements and huge costs of modernization become even more critical if we hope to be able to execute further contingencies and defend against threats? Isn't that real and a growing concern? Obviously, it is for the Europeans.

SHELTON: Well, yes, sir. And I think, as we saw during Operation Allied Force -- and this is when it really was brought to light. I won't say first came to light, because we had started working on that issue even before Allied Force, which was the Kosovo operation.

But Allied Force highlighted the growing gap between our allies and the United States forces and really got our attention focused on the way ahead and how we ensure that in this world of interoperability that we can keep that gap as narrow as we possibly can through tactics, techniques, procedures, et cetera. But also, simultaneously, kind of dual track approach through the Defense Capabilities Initiative that was initiated was to bring them into the fold, if you will, show them the direction in which we're headed, and solicit their voluntary participation in some of these programs, as well as continuing to stress the need to place adequate funding in their own budgets to not let this gap get too large.

SHELBY: But if it continues, the trend continues, they're going to fall further behind. That's just common sense.

SHELTON: And that has been a concern, but at the same time that we see this developing -- we don't want to send our people into harm's way with second class technology in any way, shape, or form. And so while we continue to modernize and try to stay on the leading edge of technology, we also look for ways that we can, through non-technical means, if you will, reduce that interoperability gap between us and our allies through either tactics, techniques, procedures, and work- arounds, if you will. And we've been successful in a number of areas in that regard.

SHELBY: Thank you.

INOUYE: Thank you very much.

Senator Hollings?

HOLLINGS: Thank you, Mr. Chairman. I'll use my minute just to comment.

General Shelton, with no reflection on General Myers, if I were the president, I'd reappoint you. We are lucky to have had you.

And, Secretary Rumsfeld, we are more than lucky to have you. I've been getting disillusioned. I've been listening to secretaries up here for almost 35 years, and you've given us a very, very comprehensive, visionary presentation of the needs of defense, and I'm going to support you in every regard that I possibly can.

Your problem is your commander in chief is running around hollering, "Cut spending. Hey, watch that Congress. They're spending. That spending Congress." That's outrageous nonsense.

He favors the $7 billion more we're going to need on agriculture. He favors and, in fact, sponsored the $7 billion more over three years that we need in education. And now you're coming and asking for $18 billion more, or whatever, and I'm trying to help you, and you're trying to get it, and you're saying every nickel is needed. And I know that everybody's going to vote for the farm, and I know everybody's going to vote for education, but you can tell from the questioning, everybody's not going to vote for every nickel, and that's going to cut you back.

So just ask the commander in chief to cut that shabby political charade out so we can get to work and really provide the money you need.

Thank you, Mr. Chairman.

INOUYE: Thank you, sir.

Senator Domenici?

DOMENICI: Mr. Chairman, might I say to Senator Hollings -- and I think I've been heard in the last couple of weeks -- I think in a time of recession, which we are now in, that it's better to spend more money than cut programs. That may be translated into agreeing with what you were just saying. But I haven't had a chance to ask the administration how they feel about these other add-ons, but there are going to be add-ons, and there are going to be add-ons in this one.

I'd like to make my case one more time, but first I want to say to the General that I made a mistake. In the emotion of my presentation -- which I felt comfortable about for a change, because I finally understand this surplus and what's happening -- I didn't congratulate you. I wrote it out, so since I'm here, I want to say congratulations.

And, Mr. Secretary, I'm glad you come to New Mexico frequently. I can't be there as often as you, of late, at least, because I have a little more work to do in other parts of the state than you do up in the Taos area. I understand you live in a beautiful part of our state part-time, and we're glad to have you.

Now, let me see if I can explain this a little bit differently one more time, very quickly. First, Senator Inouye, there is no point of order for breaching the Social Security accumulation as part of the surplus, and there is none on Medicare. There may be a point of order arise at a point in time when the total of the budget of the programs that the appropriators do -- we might exceed the budget allocation to the various committees, in which event there will be a point of order against the last bill through, which would probably be this one.

Now, let me see if I can explain a little differently what's happened to the Defense Department. We produced a budget resolution. We've had 10 and a half years of prosperity, which means we've been collecting enormous amounts of revenue, and so we're estimating in this budget resolution that we're going to continue to grow at about 2.7 percent.

And so what we say is there'll be plenty of revenues to pay for what the Defense Department needs, and members of the committee -- we sent a message to them with that budget resolution, "Go out and prepare the add-ons that you want for the budget and take into consideration five years."

DOMENICI: They're the only department in the United States government that has to put five-year numbers in this rather erratic appropriation and budget process.

So they went and did that. Everybody knows the 18.3 is less than they need, less than they want. They said, "We'll live with it," because they attached to it a tail which was the full five years of what they thought they needed.

Now, what happens? You can talk about the president's tax cut all you want. It's the right thing. Democrats agree with it.

But what really happened is that economic estimate that you were operating on went down, through no fault of the military, through no fault of anyone, as I just said. That means that the surplus went down. That means that today, we're telling you, after you've gone to the trouble of making this fit, four months ago, budget and trying to build into it continuity -- we're going to ask you to cut it because somebody is saying the economics have changed sufficient.

So I would ask the members here and I would ask the Congress do you really want to treat the military as a roller coaster, depending upon what the economists say the state of growth of the American economy is? I don't believe so. I think what they need, they need, and we ought to give it to them.

We're going to come back. This economy is going to come back. Do we want them to be anxiously waiting for an economic recovery so that they'll have money to fund their budgets? I think that's ludicrous. What we have to do is -- they did an honest job fitting in an honest budget that was changed by economic downturns. It would be a terrible mistake to send them back and say do it over again. For what reason? Because the economy faltered somewhat, but it'll be back in a year or two years, and then what do they do, try to build back and make harmony out of confusion. That's my assessment.

Now, let me say to both you and the general, I'm very worried about the way the military and the Defense Department treats nuclear weapons activities. Our good friend from California raised the issue, are we going to do nuclear testing?

Senator, we're not going to do nuclear testing, provided we get sufficient money to keep that part of the United States research effort in defense nuclear security headed by General Gordon, so we can have enough money to do the research to do what -- to tell Congress and the president that the weapons are safe and secure. That's called science based stockpile stewardship.

Now, whenever the military gets tight, they put more into regular defense and less for nuclear weapons. I submit that the nuclear weapons compound of America, including three national laboratories, including a big laboratory in Tennessee, are in desperate state of repairs. You did not put any money in for this in this $18.3 billion for that. And we must begin to have you worry about that just like you worry about tanks or readiness, because General Gordon has reached the end of the rope in trying to put together his new semi-economist agency that will protect us in the science based stockpile stewardship.

I don't expect an answer other than, Mr. Secretary, are you aware of this problem?

RUMSFELD: Senator, I am very aware of the problem. I've had at least three or four meetings with General Gordon. I have worked with OMB and the president on General Gordon's budget. As you know, most of his budget is in the Department of Energy and not in the Department of Defense.

DOMENICI: That's true.

RUMSFELD: But you're absolutely right. The worst nightmare would be to receive a phone call and say, "Secretary of Defense Rumsfeld, I'm very sorry to report that the nuclear stockpile -- we've just been examining it and reviewing it, and it simply is not safe or reliable, some element of it." What we need to do is make the kinds of investments you're talking about to assure that we do not have that situation.

DOMENICI: Mr. Chairman, might I ask if the secretary would be a little more involved. Right now, they're cutting next year's more than this year's. Right now, your budget does not cover any reconstruction of these buildings, including the dilapidated one in Tennessee, where the ceiling is falling in on the workers so they have to wear helmets even in service type jobs. You put no money in for that. This committee did. You put none in. It's a very serious problem, and I hope you'll look at it.

INOUYE: The time has expired.

Senator Kohl?

KOHL: Thank you, Mr. Chairman.

Secretary Rumsfeld, getting back to nuclear missile defense, which, theoretically would make us invulnerable to the rogue state's missile, what about chemical weapons? What about biological weapons? Are we invulnerable to that? And if we cannot address that satisfactorily, then why are we addressing this as if to suggest that that protects us against a rogue state's -- and isn't it true that during the Gulf War, Saddam Hussein, had he wished, could have released biological warfare against us, and that he didn't because he recognized that we would destroy his country in an instant.

So unless we can deal with chemical and biological weapons, how are we offering the American people any sense of protection by dealing with this missile shield defense?

RUMSFELD: Senator, you're quite right. If one looks at the world, the number of countries that have active nuclear programs and/or active chemical programs, weaponized, and active biological programs that they weaponize, is growing. All three are serious. All three are considered weapons of mass destruction and terror weapons.

They can be delivered in a variety of ways. They can be delivered on ballistic missiles. They could be delivered on cruise missiles. They could be delivered by terrorists. So to the extent countries that want to impose their will on their neighbors know that they really can't compete with the western armies and navies and air forces, they, not surprisingly, look for terror weapons and terrorism and the use of weapons of mass destruction and a variety of means of delivering them.

We are spending, I think, something like $10 billion or $11 billion to deal with terrorism in the governmentwide and force protection. We have funds in our budget to address subjects like chemical and biological weapons. They are very serious and very worrisome.

However, to go then to the next step and say, well, if we can't defend against everything, why should we defend against anything, is really a leap in logic that I can't make. The advantage of a terrorist is they can attack at any time, at any place, using any technique, and it is not possible to defend in every time, in every place, against every technique.

But, simply because we can't defend against everything, at every time, and every technique doesn't mean we shouldn't defend against that which we can defend against. And that is why we are investing the money we are for anti-terrorism. It's why we are proposing money for missile defense. It's why we're investing money for cruise missile defense.

KOHL: But wouldn't you agree that developing a missile defense system to render ourselves invulnerable encourages other countries to then develop chemical and biological weapons to make themselves effective in defending themselves against us?

RUMSFELD: I think the history of mankind...

KOHL: And I have to ask this question.

RUMSFELD: Yes, sir.

KOHL: Why would we then deny other countries the right to defend themselves with chemical and biological weapons if they cannot afford and do not have our missile defense system? Why wouldn't they then argue, well, then, if you are going to develop a missile defense system, and we cannot prevent you, or you will not allow us to prevent you, then you must also allow us to develop our own system of chemical-biological weapons and don't tell us we can't have them.

RUMSFELD: Senator, first let me say that there's no missile defense system that is going to make us invulnerable, in terms of -- there's no weapon system, defensive or offensive, either one, that's ever been perfect, that's ever worked 100 percent of the time. That's just not in the cards.

Second, the whole history of mankind has been that because there are people who want to impose their will on their neighbors and deny them freedom and occupy their lands, we have seen an offense and then a defense, and a new offense and a new defense, and a new capability. So it's always been evolving and changing.

It wouldn't really matter whether the United States told these countries they shouldn't have chemical or biological weapons. We've told them not to, and they still go right ahead and do it. They have them. They exist. There are countries that have weaponized those weapons in a way that they can, today, impose enormous damage on their neighbors and on others.

KOHL: So then why missile defense?

RUMSFELD: The advantage of missile defense is the same thing as the advantage of looking at force protection for your forces in the Middle East, for example. One might say, gee, the Cole was just hit. Why do we worry about that? Well, we worry about it because we would prefer to be able to take the USS Cole and steam it in the Persian Gulf and not have it blown up by a terrorist.

We lost -- I don't remember the exact number, but in Bahrain in the Gulf War...

SHELTON: It was 19 or 23.

RUMSFELD: Nineteen to 23 were dead, and some 60, 80, 90, 100 were wounded -- Americans -- by a ballistic missile fired by Saddam Hussein. And anyone who's lived in Israel and seen the ballistic missiles raining down on them ought to have a good sense of why it is that people don't like to have ballistic missiles raining down on them and would prefer to have a defensive capability to defend them.

KOHL: I hear you, and you know a lot more about this than I do, and you are a smarter man than I am. But I don't understand it. It is, to me, an effort to make this country invulnerable, in that respect, but totally not taking into account that any country wanting to respond to us can just go behind or go around missiles and deal with mass warfare in other ways.

RUMSFELD: Sure.

KOHL: And until we can address these other ways, it seems to me it doesn't make sense to start moving down this path as long as there are other paths that other countries can use, a lot cheaper and just as effectively. If the goal is to kill several million people, which a missile would do, they can do it with biological and chemical weapons and ensure the destruction as quickly from our country just as would be the case if they rained a missile down on us. So unless, it seems to me, we can proceed in all three ways in a convincing manner, it doesn't make any sense to go down just one road.

INOUYE: Thank you very much.

Senator Cochran?

COCHRAN: Mr. Chairman, I think I'll take just a few seconds to say that my impression is that in the Department of Defense budget, there are requests for funding of other programs that deal with biological and that deal with other terrorist activities. Isn't that correct?

RUMSFELD: Absolutely correct.

COCHRAN: And aren't we trying our best to marshal all the technologies and the best scientific minds we have available to us to come up with the answers to the challenges posed by these other kinds of threats?

RUMSFELD: We have, indeed, invested a good deal over the years. For some reason, missile defense has become almost theological and separated out from the others, while I tend to deal with them all across the spectrum, as Senator Kohl suggested, from terrorism to cruise missiles and ballistic missiles and any of the asymmetrical methods that one can use to get around a country that has powerful armies, navies, and air forces.

COCHRAN: It may be helpful, actually, for our debate when this comes up on the floor to have a comparison between the amount of money that's being requested or has been spent dealing with these other threats that are described by Senator Kohl and compare that with the investments that we're making in missile defense technology development and possible deployment of systems. Can we do that, or would that be possible to submit that for the record? Is there somebody who can -- Mr. Zakheim, is that something that can be done?

ZAKHEIM: Yes, sir.

COCHRAN: Let me go back to the shipbuilding issue. I'm glad to hear the secretary say that this is a major concern of his as well.

One thing that happened earlier this year that was a jolt was that there was a delay in the selection of the DD-21 program. It was scheduled for May. It's now been postponed so that the Quadrennial Defense Review can be completed.

Then there was some concern, even though in June, the testimony from the CNO, Admiral Clark, and the commandant of the Marine Corps, General Jones, indicated that this program provided very important new technological advances, modernizing war fighting capability, force projection, with support from naval forces that would be very, very important in the years ahead.

COCHRAN: And then there was a news conference by somebody at the QDR -- a former Air Force general talking about how they weren't certain at this point that there was sufficient evidence that the DD- 21 program would be a truly innovative advancement in Navy war fighting capability.

So it leaves one with a concern that the Department of Defense has publicly described differences of opinions between very high ranking officials and people who are given responsibilities for helping make these decisions. What I'm saying this for is to put an emphasis on the importance of this program to the future of shipbuilding, for the future of our Navy's capabilities to fight the wars of the future. And if we abandon this effort at this time, it's going to deal a death blow to not only the industrial base, but also the capability of the Navy to deal with the challenges of the future in a way that would avoid risk and make us more efficient in our efforts to discharge our defense responsibilities.

I guess I didn't ask a question, did I? I'm sorry I didn't ask a question.

RUMSFELD: Well, Senator, I can say two things. One is no decision has been made that I know of on the DD-21, and I think I'd know. It is something that the Navy is considering in their priorities, and then it will be brought up in the budget cycle.

Second, the fact that there are repeated news articles where someone in the Pentagon or someone outside the Pentagon in the contracting community or someone in the Congress who has an interest in the subject opines on this or opines on that is something that is part of our free press and First Amendment to the Constitution. There's nothing we can do about it.

It happens, and I know it can be disorienting and confusing, because, frequently, the articles are written in a way as though they sound authoritative, as though something has been decided. And, in fact, what generally is the case is exactly what you said. Somebody comments on something and says that's their view, and it may be a person who works in the building, or it may be a person who works outside the building.

COCHRAN: One of the recent experiences I had back in my state was visiting Camp Shelby, which is a National Guard training facility. They had created there a training program for the guardsmen who were going to be going to Bosnia to participate in peacekeeping operations over there. And I think it indicates the importance of our training for reserve and guard personnel, that they're being brought into the mix now of some real live experiences that are important to our nation's security and also our commitments that we have around the world.

What I wanted to ask, in addition to the C-17s that are being stationed down in Jackson at the Air National Guard facility that we have in Mississippi -- the first National Guard unit that will be given the C-17s. We had a celebration event the other day in that city.

But the state welcomes the opportunity to be involved like that. In many cases, the Air Force reserve personnel are asked to volunteer for missions, to provide airlift and support for troops in the field, as they did in Desert Shield and Desert Storm and other conflicts as well, and now are taking part in training exercises so they'll be able to add to and supplement the Air Force's capability in this area.

I'm just curious, General Shelton, if, so far, the activities of the guard and reserve personnel are proving to be confidence well placed. Are they doing their jobs, and are they being trained so that when they are sent out here into the field to do these missions, they can take care of themselves, they can do their jobs, and come home safely?

SHELTON: Senator Cochran, first of all, I don't think there's any question about the tremendous value added that our great guard and reserve units are. In fact, you might say their motto would be "Try fighting without us," because when you look at -- you mentioned the tanker fleet, as an example, during Allied Force -- a tremendous number of our reservists. And if you look in the -- we're involved in that particular operation airlift as well and do a superb job.

If you look in the Balkans on any given day, 25 percent to 30 percent of our force in the Balkans will be from reserve or guard units, and they've done a great job. And I believe that we've gone to great extents in recent years to make sure that they are funded properly so they can be trained and they can be ready for the mission that we assign them.

The vignette type training that you saw at Camp Shelby, which is great training for those that are deploying into Bosnia, is just one example, I think, of a myriad of types of programs we have now to make sure that when they are called that we have them properly prepared before they are deployed into the theater of operation. But, again, they make a tremendous contribution day in and day out, and a lot of our specialties are predominantly in the guard or the reserve.

If you look at civil affairs, 96 percent of our civil affairs capabilities, which are in heavy use in most of the types of operations we're involved in today, are in the reserve component, and it varies by type of specialty. But my biggest concern today and part of what we are looking at as a part of the study that the secretary mentioned is how much more could they absorb, or do we have them overtaxed. Certainly, as we look at the numbers we're calling up and the frequency, that is our major concern today is to make sure we've got the balance right in the various types of units.

INOUYE: Thank you very much.

Senator Feinstein?

FEINSTEIN: Thanks very much, Mr. Chairman.

General Shelton, I, too, want to say congratulations. I want to wish you well on everything you do.

I want to say one more thing. I remember well and will remember you for your classified briefings during military engagements, and, unlike some, you were always direct. You were to the point. They were easily understandable. They were well ordered, and I think your team was excellent.

And from those briefings, it really gave me a great deal of faith in the uniforms, and I think it's really your contribution, and I think one of the reasons that we had really no opposition to what was happening was the way you related to us. So I want to say congratulations, and this senator will miss you very much.

SHELTON: Well, thank you very much, Senator, and let me say quickly that, as you said, I was supported by a great team, and...

FEINSTEIN: Yes, you really were.

SHELTON: ... I was proud to be a part of it. Thank you.

FEINSTEIN: Thank you. Now, you mentioned that 62 percent of the housing is substandard. I'm glad Senator Hutchison is present. She is ranking and I'm chairman of Milcon, and I'm going to look at the budget tomorrow.

It would be very useful if I could have before tomorrow your priorities with respect to those requests that you believe are most important to upgrade the housing. I think it's extraordinarily important.

I've talked to General Miggs (ph) about his need to move a division south of the Alps. I understand that. I've talked to Admiral Blair about some of his concerns, and I would be very -- and I think Senator Hutchison would appreciate it, too, if we could have some of your priorities.

I've talked to the chairman of the House committee, and he feels similarly about doing what we can to upgrade the housing. So I think that will be the thrust of this Milcon budget, and we'd love to have your priorities.

Mr. Secretary, you mentioned additional base closures. I want to just share one thing with you. The environmental remediation dollars provided with base closure are remarkably short. California alone could use the entire nation's total.

The shortness of those dollars is truly responsible for why some of these bases cannot be transitioned into civilian use. And so in California, the process has really been stymied because of that. I won't use more of my time, but it is a real problem out there, and I want you to know it.

The other thing is there are many of us that feel that the administration has an obligation to say where the $14 billion additional in the defense budget should come from and what the administration's recommendation is with respect to what items we cut to provide that money. So I would hope you would have a recommendation.

RUMSFELD: If you're referring to the total federal budget and where the money for defense should come from...

FEINSTEIN: That's correct.

RUMSFELD: ... the president's answer, as he's repeated several times in the last month, is that his priority is defense and education, and that he -- that is the place that he believes the Congress should put their priority.

FEINSTEIN: But he has also said he does not want it coming from Social Security. He does not want it coming from the Medicare trust fund. It has to come from something else that's cut. And all I'm saying...

RUMSFELD: Or not increased or...

FEINSTEIN: All I'm saying is what are his recommendations. This is his budget. I think he has an obligation to tell us what he would cut. So, in any event, that's that.

Now, let me go back to missile defense. The articles, as you know -- the New York Times on its web site had an article. There are two articles in the Washington Post under the byline of Michael Allen (ph) on the subject of perhaps some games being played around the issues that we discussed earlier. If you haven't seen them, I'll make them available to you.

I'd like to know whether these are totally false, essentially. And I'll do that in writing...

RUMSFELD: I'll be happy to take a look at them. One thing I do want to comment on is in your earlier comments at the opening of the session, you said that you were concerned that ballistic missile defense deployment would go forward untested. I think that's roughly what you said.

I want to assure you that we're not deploying ballistic missile defenses. We're engaged in the research and development and testing phase of ballistic missile defense, and we have not arrived at an architecture, because these tests have never been done.

And, second, with respect to going forward with something untested, there's no question but that the goal would be to complete the testing, and then make a decision as to the architecture, and then make a deployment decision. The reality about most complicated technological things is that they evolve over time, and they are continuously changing. I mean, the F-16s of today are not the original F-16s. The M-1 tank is not the original M-1 tank. It's got the same number but a new mod or a new block number, and that would be the case.

The suggestion that's appeared in the press that the intention of the administration is to rush out with something that hasn't been tested is simply not correct.

INOUYE: I'm sorry. The time has expired.

FEINSTEIN: Well, I would like to, then, ask in writing a follow- up on this, if I may.

Thank you.

INOUYE: Senator Specter?

SPECTER: Thank you, Mr. Chairman.

Mr. Secretary, you can see at this session the considerable concern from the subcommittee on the issue of missile defense and all of its ramifications. When we were debating the broad versus the narrow interpretation of the ABM treaty back in the mid '80s, there was some thought that there might be some defenses to the Soviets. And then when it was considered too expensive and too complicated and unworkable to have the massive defense program, it was restructured to a considerable degree on the potential threat from North Korea. There have been some signs in recent months that we may be able to deal with North Korea.

I want to cover just two questions with you in the brief time allotted to me. If, in fact, there is some opportunity to negotiate with North Korea and to be satisfied that there is a verifiable system in effect, would the concerns about the other so-called rogue nations, Iraq, Iran, Libya, or anyone else, be a major concern to lead us to a missile defense system?

And the second question -- let me put it on the table before the time expires, and that is the issue that I raised in my brief opening comment with respect to abrogation of the ABM treaty, if it comes to that, where the long history with many instances where the executive branch had come to Congress, which, of course, has the responsibility to ratify treaties with a two-thirds vote, for congressional joinder (ph) in abrogating treaties. And that was changed, as I noted earlier, by President Carter in 1978, and then a large group of senators, Goldwater and Helms and Thurmond and Hatch and others, joined with the position that it required congressional assent to terminate a treaty.

SPECTER: I'd like to have your comments on those two questions.

RUMSFELD: Senator, with respect to the first question, the answer is yes. There are a number of other countries that are sufficiently worrisome that have been active in developing ballistic missile technologies and weapons of mass destruction, and you named some of them.

One of the interesting things about life, if you think back to Iran under the Shah, within a year, the Shah was gone, and the Shah had been a regional power, very friendly to the United States. Within a year, it was the Ayatollah -- total change in that country. When the Senate confirmed Dick Cheney for secretary of defense some 10 years ago, no one in the room raised the word, Iraq, and within a year, we were at war with Iraq.

If we know anything from history, it is that we can't predict the future. The nature of our world is that there's so much proliferation of these technologies that we can't know from exactly what country or at what moment a threat will come.

What we can know is that those technologies are proliferating. Therefore, our strategies are looking more at threat based strategies, which is historically normal, in the near term. But in the mid to far term, we are forced to look at capabilities based strategies and look at the kinds of capabilities that exist in the world that are going to pose a threat to the United States.

So the answer to that question is, absolutely, there are any number of countries that we can see that are worrisome, and there are any number, like in the case of Iraq and Iran, that can shift in a matter of a few months.

With respect to the treaty, I'm not an attorney, and I think I'll leave that question for the Department of Justice.

SPECTER: Well, that's something which is going to come before you, Mr. Secretary, because you are asking for very substantial appropriations on missile defense, and the ABM treaty is an integral part, and I can understand the legalisms involved. But there's a question of public policy in dealing with this committee and dealing with the Congress. Would you not suggest a position on it?

RUMSFELD: Well, I will certainly say this. The president has announced that his goal is to find an approach with Russia where the treaty will be mutually agreed to no longer inhibit the kinds of missile defenses which the president has announced he believes are in the best interest of the United States. And if he is able to achieve that kind of an understanding and either set aside the treaty or move beyond it with a new framework arrangement between the United States and Russia, that would be his first choice.

SPECTER: I see my red light is on. But, of course, a very brief concluding comment -- if there's an agreement, then you'll have the automatic concurrence of the Congress.

I think this is really not a legal issue for the Department of Justice, Mr. Secretary. I think it's a public policy issue which is going to involve Defense and State.

Thank you very much.

INOUYE: Thank you, sir.

Mrs. Hutchison?

HUTCHISON: Thank you, Mr. Chairman.

Mr. Secretary, I wrote you very early in the year to say that I had visited a number of our bases overseas, and at the time, you were also talking about the need to lessen the number of bases in America. And I thought it was very important, before we took any action lowering the number of bases in our country, that we know what our future force strength would be -- what would be the numbers, what would be the numbers based in America for training purposes, what would be the numbers based overseas, and where would they be. And I asked you to consider doing an assessment of our overseas deployments and report back.

The letter that I received back said that the chairman of the joint chiefs would be providing a master basing concept after the QDR results came in. I wanted to ask you what your impression is at this point, if you have an idea of what we'd be looking at, when you think the QDR and then the master basing concept would be able to be brought forward, and if you would suggest that we do any base closures in America before we know what our troop strength and our strategy and our QDR results will be.

RUMSFELD: Senator, the QDR is going to be concluded September 30th. There'll be some pieces of it, as I mentioned, like National Guard and Reserves, which will follow on. But the force decisions for the United States are going to be made in the '03 budget cycle, which is, as I say, September, October, November, so that the president can present his '03 budget.

Dr. Zakheim is going to Europe, I believe, next week to look at the European base structure situation, and you're quite right. There needs to be a -- we clearly need to have a good understanding of what our force structure is to be for the period ahead. We have to know with respect to that force structure which portions of it are likely to be based outside the continental limits of the United States. And then we have to review the base structure to see to what extent it fits that, and that's the process we're going through.

HUTCHISON: One of the things that struck me as I was visiting some of our bases overseas is the training constraint in some of those bases, whether it's airspace constraints or constraints on missile range on the ground. Will that be a factor also in how you decide where the best training would be for our troops, perhaps?

RUMSFELD: It clearly would have to be, yes, ma'am.

HUTCHISON: General Shelton, did you have anything to add to what the master base concept would be and when it would be available?

SHELTON: It will take a while, Senator Hutchison. I don't have a time line on that right now. A lot of that would be driven -- of course, the magnitude of it -- depending on what the decisions are that came out of the QDR. But certainly the capabilities with each of the bases would be something that would have to be considered, and that's becoming, as you indicated, in some areas, more and more of a challenge for us day in and day out, not only overseas, but here in the continental United States as well.

HUTCHISON: I think if you put that issue on the table, together with the fact that we have closed some bases in our country which we then, two years later, determined that we actually needed, and with the astronomical cost mentioned by Senator Feinstein of the environmental cleanup -- I would just hope that all of that would be a part of the equation before we go into making final decisions that could be more costly if we have to reverse them or try to seek another base because we've closed one that we actually needed.

The second question that I would ask you, General Shelton, is regarding a piece of legislation that Senator Inouye and I and Senator Stevens have introduced that allows anyone in DOD who dies in the line of duty to be fully vested. Today, you have to have 20 years before you can fully vest in your retirement, and yet people can be killed even in combat -- well, maybe not in combat, but in training situations -- before the 20 years and not receive their full vesting of retirement benefits for their families.

So I would just ask you if you do think that it is important that we pass that legislation, and will it have a big impact on the military budget if we do?

SHELTON: Senator Hutchison, from my standpoint, it certainly would be the right thing to do. As we've talked a lot about here today, in tight times, where we have, as the secretary and I have indicated, in many places, metal on metal contact, so to speak, in terms of the requirements versus the amount of funding available to carry them out, anything that adds an increase to the service budgets that's not currently projected causes great concern on their part.

Without knowing what the magnitude -- I haven't seen any studies that show what it will be. Certainly, from my best military advice, it's the right thing to do for our people. Again, we'd have to be careful that we look at the amount of funding required and identify a source for that funding before we implement it. But, again, I would recommend that we proceed in that manner, and I fully support the legislation that would provide it for our service men and women.

HUTCHISON: Well, I think the number of training accidents that we have is fortunately very few, and we know we'll keep it that way, so I would think it would have a minimal impact. But it certainly is the right thing to do, so we appreciate your support.

Thank you, Mr. Chairman.

INOUYE: Thank you very much, Senator.

Mr. Secretary and General Shelton, on behalf of the committee, I thank you very much for your presence here today. Your comments and your responses to our questions have been most helpful.

I'm certain from the questioning and comments you have gathered that we are concerned about the challenge before us, the balancing of defense needs and the budget situation. So I hope that we can continue to work together to come forth with a solution that all of us can agree upon.

And, once again, General Shelton, I must say that we are most grateful to you for the service you have rendered to the people of the United States over the years. You have made your career one that all of us can be very proud of, and we thank you very much, sir.

SHELTON: Thank you, Mr. Chairman.

INOUYE: We wish you much success and happiness as you retire from this career.

This concludes our scheduled hearings for the year, and I want to thank the members of the committee for their participation.

This subcommittee will stand in recess subject to the call of the chair. Thank you very much.

END

NOTES:
???? - Indicates Speaker Unknown
    -- - Indicates could not make out what was being said. off mike - Indicates could not make out what was being said.

PERSON:  DANIEL K INOUYE (94%); TED STEVENS (59%); ROBERT C BYRD (57%); ERNEST F HOLLINGS (57%); PATRICK J LEAHY (56%); BYRON DORGAN (56%); TOM HARKIN (56%); HARRY REID (55%); RICHARD J DURBIN (55%); DIANNE FEINSTEIN (55%); ARLEN SPECTER (54%); THAD COCHRAN (54%); CHRISTOPHER (KIT) BOND (53%); PETE V DOMENICI (53%); MITCH MCCONNELL (52%); JUDD ALAN GREGG (52%); KAY BAILEY HUTCHISON (51%); 

LOAD-DATE: September 9, 2001