Skip to main content

tv   Today in Washington  CSPAN  October 26, 2011 7:30am-9:00am EDT

7:30 am
we see high quality schools coming across in our country and it is depressing to see the attitude of the opposition to this policy. what we had with a new education secretary who said shadow education secretary said he would support preschools but he had to drop that altogether. he wants to know what the policy is now. he said what i said is we oppose the policy but some of them are going to be really good schools. run by really good people. we mustn't put ourselves in a position as a labor party of opposing the schools so they oppose the policy but support the schools. what a complete bunch of hypocrites! >> the prime minister explain why his secretary of health was able to make liberal democrats in the health field towing but was unable to recognize the need
7:31 am
for changes that was debated here? it is more about these deals instead of doing what is right? >> we are doing what is right for the and h s and y average waiting times for patients are down and for outpatients are down. hospital inspections at the lowest level ever. we got mixed set down 91% under this government. the number of managers is down and a number of doctors is up. if you want to see further improvements to the health bill there are plenty of opportunities. >> the young people involved in the riots had special educational needs. does the prime minister agree these underlying needs of complex solutions for education or underachievement? >> as i said we have to look behind the statistics and ask ourselves how so much could go
7:32 am
wrong in our society and education and special education needs to play a role in that but it is important and the public want to see swift justice and punishment handed out when people break the law. we did see that at the time of the riots and we should see all the time. >> order. 10 minute rule. julie hilly. order! order! just before -- >> on c-span2 we leave the british house of commons as they move to other legislative business. you have been watching prime minister's question time aired live when theys at 7:00 a.m. eastern while parliament is in session. you can see question time again sunday night at 9:00 eastern and pacific on c-span. for more information go to and click on c-span series for prime minister's questions and links to international news media legislatures around the world. you can also watch recent video
7:33 am
including programs dealing with other international issues. >> here's what we are covering this morning on c-span2. at 8:30 eastern, marine corps commandant james amos talk about the future of the marine corps up the council on foreign relations. at:00 director douglas eleanor discusses cuts discretionary spending at the joint deficit committee. uconn what those hearings live on c-span2 and online at >> although this headline proved false, do we's defeat by truman with iconic and impacted political history. on the contenders, follow the career of thomas e. dewey, phenomenal force in politics as three time governor and influence in national politics in the election of dwight eisenhower and richard nixon. the contenders' wives from the roosevelt hotel in new york city
7:34 am
at 8:00 p.m. eastern on c-span. >> european heads of states are meeting today in brussels for a summit on the debt crisis in hopes of crafting a bailout plan for robert dold. -- for grease. yesterday the debt crisis could affect the u.s. economy. witnesses including analysts from the brookings institution and the american enterprise institute. this is an hour. >> i would like to welcome our witnesses. mr. peter >> peter rashish is with the chamber of commerce and lead the team focusing on advancing the economic and commercial relationships that exist between the united states and european union in developing new opportunities in emerging
7:35 am
markets. desmond lachman talk about the global currency issues and development and lending agencies. desmond lachman served as deputy director to the imf and review department and in this role he was active in formulation of imf policies. he has written extensively on global economic crisis and the u.s. dollar and strength of the european area. doug elliott talks about issues surrounding private financial institutions. he was investment banker for two decades with j. p. morgan. he was principal researcher for the center of federal financial institutions. i would like to welcome you today. peter rashish has the bench for five minutes. >> thank you. you might want to move the microphone closer so we can hear this panel. >> is it on? how is that? >> we are on our way.
7:36 am
start again. >> thank you, distinguished members of the house financial service subcommittee on international monetary policy and trade. my name is peter rashish and i'm vice president of the u.s. chamber of commerce. the transatlantic commercial relationship is the largest in the world. the united states and european union surpassing $4 trillion in trade, investment and sales by foreign affiliates in those markets. u.s. companies have over a trillion dollars invested in the e you. in ireland alone the stock totaled $165 million at the end of 2009 which is more than the u.s. invested in china, india and brazil combined. investment imported 3.6 million jobs in 2008. investment in california supported 287,000 jobs while its investment in new york supported 265,000 jobs. the fate of the u.s. economy is intertwined with the fate of the european union and the euro
7:37 am
zone. because of the integration between our economies we will sink or swim together. the collapse of the euro zone would not only in the end of a common currency and efficiency it brought to the european economy but also lead to disintegration of one of the e.u.'s crowning achievement, single market enacted in 1990 to. without a single market at its core freedom of movement and people and goods and services and capital not only with the economy suffer but u.s. companies could no longer benefit from operating across the barrier of free internal market just as europeans do. europe's political commitment to finding a solution to the crisis is strong but struggling to identify the right policy tools to contain financial contagion short the banking system and fiscal deficits and losing economic growth. without economic growth no amount of budgetary austerity or financial rescue programs will provide long term solution to europe's economic woes. where can europe find what it needs to ensure u.s. companies
7:38 am
continued to reap enormous commercial benefit from its trade and investment with the european union? one avenue is for member states to pursue structural reform their economy and another path is for europe to invigorate its push to internal markets. most barriers are traded and have fallen, an important number remain in the service sector. creation of single market led to a surge in investment for and this dynamism is a key source of economic growth. the elimination of remaining barriers in the single market would have major benefits for its economy but also hours. there is one area that until now has been neglected as a source of increased economic growth in the you -- the e you and the u.s. and that is a trade relationship between two partners. of the trans-atlantic powers want to inject more dynamism to their economy in a non-inflationary way there is one quickstep to consider. agree to eliminate all tariffs
7:39 am
in trans-atlantic trade. these tariffs are low but because of the enormous size of the economic relationship even small steps yield large gains. according to a report by the think tank of international political economy such a trans-atlantic tariff initiative elimination initiative would increase combined u.s. e.u. gdp by $180 over five years. that is more added growth than we would receive from multilateral trade talks. they face serious obstacles to completion but trans-atlantic zero vero could do quickly issues in the pastel the bilateral trade like social labor and environmental standards shouldn't be a factor between the u.s. and the e.u.. the u.s. and the e.u. should be ambitious in eliminating tariffs and open a service markets to each other and create single investment area and pursue regulatory regimes. such an initiative does not have to be a free trade agreement
7:40 am
based on a single undertaking which could take years to complete of progress in one area depend on how far they have gone in another. to avoid the unfulfilled declarations that characterize the u.s. e.u. relationship the two sides should commit themselves in a legally binding way to achieve another barrier free trans-atlantic market. on november 28th the united states and european union will hold a summit meeting in which president obama will welcome e.u. council president and an announcement that transatlantic initiative for job growth including elimination of tariffs on trade would inject sorely needed sense of confidence into the u.s. and e.u. economy by producing significant gains on both sides. this would not freeze the e.u. at euros of lasting solutions to the crisis but would create prospects for growth without which the crisis will. the chamber of commerce looks to members of the subcommittee to seek benefits for american workers and companies. thank you very much.
7:41 am
>> without objection your written statement will be made part of the record. desmond lachman is recognized for five minutes. >> thank you very much, mr. chairman. thanks to miss mccarthy. i want to divide my remarks into four groupings. i want to talk about the intensification of the crisis in europe, i want to touch on the implications for the united states. i want to discuss what the europeans are doing to address this crisis and what their efforts might fall short and touch on the united states's role in this crisis. turning to the intensification of the crisis there is little doubt in my mind we have seen substantial and disturbing intensification of this crisis
7:42 am
that is likely to create real problems for the united states economy in 2012. among the indications of intensification of first that greece looks like it is on the cusp of defaulting. this would be the largest default in history and would involve $450 billion. one really has to dismiss the notion that greece is a small economy. the fact that it is a small economy doesn't mean it is not highly indebted. a lot of that sitting on the banks of the poor countries in europe which could have serious concerns. we have already seen contagion to portugal and ireland. if we include portugal, ireland and greece we're talking about $1 trillion of a lot of debt
7:43 am
with banks. what is concerning in terms of intensification is the crisis has spread to italy and spain. the europeans are trying to create the merits of italy and spain as innocent bystanders of the crisis when in fact they have got deep problems. italy you can look at, has serious problems. spain is exposed externally. we have seen strengthen the european banking system of concern if they get a big hit which will cause a real credit crunch and the imf is estimating the shortage of capital at european banks has wrapped up two hundred billion euros were market instruments run about three hundred billion euros. in terms of intensification we're seeing france and germany moving into a downturn. if we get intensification of the crisis that will cause germany
7:44 am
and france to moving to meaningful recession which will complicate the issues. for the euro zone. being briefed on the implications for the united states might two panelists have touched well on the trade channels and investment channels. i would emphasize the exposure we have got to the banking side through our banks. while the administration is indicating we don't have much in the way of direct exposure to the periphery the exposure of the financial system to the european banking system which does have enormous exposure to the periphery is huge and i would say the financial system has very big exposure. what i am referring to is money market funds have got something like $1 trillion lent to the european banks. u.s. banks have $1 trillion of exposure to germany and france and we have written our banks have written a lot of cbs and
7:45 am
other derivative products which expose us enormously if things go wrong. in terms of what is to be done, the agenda in europe is to deal with of the greek situation in a definitive way to try to export and that banks will capitalize and rectify all around italy and spain. i have my doubts as to how effective they will be this time around. the crisis has been characterized by too little too late response and there will be another indication of that. there are indications that the banks are resisting the $0.50 to $0.60 write-down the europeans are proposing. it is not clear whether the europeans will come up with $2 trillion that will direct a fire wall around italy and spain and that money is not going to be non conditional money that will give them a big bazooka and
7:46 am
our have misgivings about the way in which the bank restructuring is being done in france and germany and poor countries in the sense that this is too likely to provoke a credit crunch as banks are given time to raise capital on their own. they're the leveraging rather than raising capital that will produce their holdings. in terms of the u.s. role the u.s. has been providing support through the federal reserve as well as through the imf. it is not fair the united states should do a lot more. the problems in europe are of solvency rather than liquidity. throwing more money at this, i am not sure that provides a solution. we sternly would be putting taxpayers' money at risk which i am not sure that is a good idea.
7:47 am
europeans did not helpless in bailing out our banks in 2008-2009. i don't understand the logic why the united states should now help them. relying on the imf is not the most indicated course. they haven't covered themselves with glory the way they dealt with this crisis and i take issue with the fact that using the imf to lend more to these countries doesn't expose the u.s. taxpayer to risk. i would just note in these countries the imf has never lend as much money to a country as robert dold -- as greece plans to portugal and ireland has been huge to date so i wouldn't take much comfort in the track record that in the past the imf has always been repaid when you got exposure of this size you are really taking risks with the u.s. taxpayers's money.
7:48 am
thank you. >> mr elliott for five minutes. >> thank you, members of the subcommittee. the euro crisis is deeply concerning in part because the path it follows is likely to be the main determinant of whether we go back into recession. if europe were to be shaken by a series of nation the faulting on government debt i am convinced the continent would plunge into a severe recession. there recession would trigger a recession here because of a number of links across the atlantic. everyone before me has done a good job talking about those links so i will touch them briefly and move on to other parts of this. we export $400 billion to europe. we have about $1 trillion of things we own in europe. the financial flow we have about $5 trillion of lending and other
7:49 am
commitments to europe as a whole. a good chunk of that is the u.k.. but the u.k. is very closely tied to the euro zone. as we talked about there are the effects on business and consumer confidence partly that come through the financial markets. we saw in august how badly we could be hit. lots of people get scared about europe. let me be clear. i believe europe will probably muddle through, ugly as the process has been and frightening as it is. the problem is there are one in four chance that something really bad will happen. that would lead to a series of national default that run from robert dold -- from greece and portugal and spain and take italy as well. there is a small chance of an even worse outcome in which one or more countries leave the euro. my one in four probability
7:50 am
estimate is very rough. there are many different ways for things to go wrong. we have 17 different countries. each with their own political, social and economic systems. there are a lot of ways things could go wrong. each of them has a low probability but there are just so many of them that they add up to give the very serious concern. i think the actions that will be announced this week in europe are generally positive but i agree with desmond that it is a case of saying they will do more than they actually are. i have serious concerns about what has been proposed so far. the three steps they're taking are interlinked and because they have political constraints that are very binding they're not doing enough on any of them. for instance they are going to try to lever up the imf so they
7:51 am
have something closer to $2 trillion of euros to deal with the potential problems. however because they are not willing to commit the base amount of money they put in, they're not willing to increase that it makes it hard for them to do anything terribly effective. they are talking about providing insurance so that if you own a new italian bond you know that 20% of it will be paid. given that robert dold -- given that greece is about to have a 50% hit that will not bring substantial new investors and. it is an effective way of doing it that is being forced by not being willing to increase the $440 billion euros of base commitment of real money. this also means they don't have a lot to do with the banks. they are trying to shoot for $100 billion euro cap and the imf thinks the losses on
7:52 am
sovereign market terms are three hundred million euros. there is $1 trillion of capital already there so $100 billion is a 10% increase and there is a staggering $27 trillion of assets in the european banking system. you are talking about the 1 hundred billion euros which is less than 1/2% of the total assets. the assets are generally pretty safe. there are just a lot of them if they go wrong. all these things tie together and they are not going to be doing enough to deal with them. what ever else happens this week we need to be prepared in case the crisis worsens. we should continue to encourage the europeans to do what they need to do and they need to do a lot more. we should continue to provide the u.s. dollar swaps through the european central bank that will allow them to provide banks with dollar funding and
7:53 am
regulatory agencies should continue to monitor very closely our financial exposures but not do it in a way that causes a panic reaction that makes europe's situation worse. and i do think we ought to be prepared if needed to have the imf provide further assistance. the euro zone has the joint resources to do what they need to do but it is helpful to have the imf. it shows the market's there's more funding available and bring the availability to place conditions which a third part of the imf can easily do and the technical aid they can provide which is substantial is listened to much more readily if they provide money as part of it. so this is a european problem. they need to provide the backbone of the solutions but it is strongly in our interests to help in a reasonable way. thank you. i look forward to your
7:54 am
questions. >> in my previous statement i wasn't trying to underestimate the impact of greece. my comment was there are possibly 2% of the e you. yet if it is not handled properly it can be a significant impact and the e.u. has to somehow move rapidly to capitalized the joint financing or whatever resources are when they do it to make sure there is liquidity in the banks. if that is not done before hand they might be reluctant based on their own interests to not get further involved especially situation that might occur with italy and spain. they do not move rapidly and greece is first there might not be motivation on the part of the banks to move rapidly to help others if they know they will take a further hit on that. my question to all of you is what will happen to the u.s.
7:55 am
recovery if european countries simultaneously implement austerity programs and what can we do to protect the u.s. economy and u.s. exports if that occurs? we will start with mr. rashish and work right across. >> thank you, mr. chairman. i think one thing we can make sure to do is keep our markets open to trade and investment. there is time to close when major trading partners are going to challenge what we see right now. we want to encourage companies from europe and around the world to invest in the united states. we want to pursue export oriented policy of our own but what is attractive about trade policy in this context is something we can do together that we need to do with the
7:56 am
european union and european commission negotiate trade policy at european levels for 27 member states including euro zone member states. if you look at our trade policy agenda i think the good news is we passed the free trade agreement. we have the transpacific partnership on the table. but there should be some room for us to think about additional trade policy initiatives and with the european union recommending it, why not look at the policy tools in our immediate disposal which don't have any implication for the taxpayer or budgets but would instead liberate growth in the united states and europe so we put forward this idea. >> i think your question really goes to the heart of the problem
7:57 am
in europe and that is that the imf is imposing a massive amount of austerity on countries in a fixed trade system. when you do that amount of austerity and thinking about countries like greece and portugal and ireland and spain would you have to expect is deep recessions in those countries. we have seen that already in greece and ireland and we will see it in portugal and we will see it in spain. that has a material impact on both those countries's growth prospects but also a material impact on the european banking system. through that we get recessions in france and germany. implications for the united states should be there is a sense of realism in making our policy decisions. that we shouldn't be making policy decisions on the basis of rosy global scenario that is going to help the united states
7:58 am
get out of its difficulties but rather my mind would have bearings on how quickly one does the withdrawal of stimulus from the united states economy. that is one aspect one would have to look at but the other aspect is budget projections leaders and what should be facing this, not the rosy scenarios the cbo is doing but what is likely to happen in terms of growth the next year or two because of the european crisis. what that would argue for is very much more serious efforts in terms of budget consolidation because this is going to cause our budgets to blow out. >> my concern and is not being talked about much is we look at what is done to u.s. banks in 2008. they quit lending to each other.
7:59 am
a similar situation could occur in the e you if grease takes a huge hit first before they capitalize properly. i will let you try to respond and i am out of time. >> principally i am a financial sector expert. you asked me something i focus the lot on. i echoes something desmond said. i am quite worried the banks may be pushed to restore their capital ratios by shrinking at a time when we don't want them to be shrinking. so you're concerned. and it is a very valid one. >> that is my concern. >> they really are not. i am ready to see a larger fund available. this would give them an incentive to keep doing the
8:00 am
business and the ability to do it. in terms of the u.s. it is difficult to the 100% sure. our financial system is a lot stronger than it was a couple years ago. .. a lot stronger than it was a couple years ago. i do think we're much better prepared to handle the shocks that will come out of this but certainly, we ought to do everything we can to keep ourselves with a stable financial system. >> thank you very much. ranking member is recognized for five minutes. >> thank you. mr. elliott, just going back on something that you had said a little bit earlier. with the factors that are going on with the eurozone agreement, that measures a country's credit -- what it's worth. if not, should there be something in place so that the 17 countries that are coming together, so that everybody
8:01 am
actually knows, like we have the federal system. some people disagree with that, but when you're trying to deal with 17 countries and the solvency of those individual countries, how can they all come together when you basically only have one or two countries that possibly might be able to help them out? >> look, that's a really central question. my belief is that because the governments have not moved fast enough to show the markets that they'll take this seriously, they have blown several chances now by doing the minimum to get past the immediate crisis. that the market is going to force a great deal of fiscal integration, where they act more like one country. there are multiple ways that could be done. there is so-called euro bonds that would be backed by joint and several guarantee of all the countries. the central bank could simply step up very considerably its purchases of government bonds in
8:02 am
the secondary market. you would come to the same effect. or you could make the stabilization fund a lot bigger so that it could provide that. so there are various mechanisms. what i believe will have to happen is that the european leaders will have to come to the edge of the abyss. things will have to get considerably worse than they are now so that they see that they can either lose the next election by doing something their public is reluctant to do, or they can lose the next election by letting europe fall apart. so they might as well at least do the right thing. >> but when you talk about that, and i'm sure there are many members here in congress who are saying the same thing, but our country also, in my opinion, is in trouble, and yet we don't seem to be really doing a lot. to me i thought when you came to congress, you made the tough votes to do what's best for the country. if that means losing elections, so be it. >> i think the good and the bad thing is i think the u.s.
8:03 am
situation has a longer fuse. i think the european fuse is very short right now. >> mr. rashish, with the significant saddling of the euro zone countries and the need to recapitalize the european banking system, how do you think this will impact the u.s. trade relationship with europe in the near future? just one other thing. i asked this question before. do you lts salso see the underdeveloped countries filling that gap at that particular time? >> thank you, ranking member mccarthy. let me, if i might just quickly, add something to what mr. elliott said. i think one distinction between the united states and the european union is that we are institutionally mature whereas the european union is still building its institutions. it started out with the steel community in the early '50s, the common market, they moved to the single market, then passed the euro. i think one of the distinguishing features is that
8:04 am
in europe, you still have a large number of people both on the level of the public and the level of the leadership who are very strongly committed to creating a stronger european cooperation for the good of all. i think that motivates a lot of the decisions that are being made and motivates a number of the leaders, motivates the public, and i think that impetus to create more cooperation at the european level for the good of all is something that shouldn't be underestimated as a driving force, and so i think that if things go well, i think historians may look back at this time as one of those sort of crucibles where the european union found it had the strength it needed to move to the next level of european cooperation. let me say i think that is one thing that distinguishes the united states from the european union. my colleagues have spoken eloquently about the nature of the banking and financial interrelationships. clearly, if you're going to increase trade, you're going to have to make sure the financial sector is enabling and there is
8:05 am
going to be liquidity for our companies to take advantage of that. but i think that we need to be able to do more than one thing at a time. i think that the europeans need to find the solutions to the problems that are outlined here today and at the same time, i think that in terms of what the u.s. can contribute, i think certainly, i'm not sure contribute is the word but in terms of a u.s. role, i think that at the same time, as the europeans are doing things on their level of financial policy and institution building, that one of our roles can be in trade policy and to take initiative, joint initiative with the europeans in our common interest to liberate economic growth through trade. >> with that i yield back. >> dr. lachman, if short-term loans by the u.s. money market funds to the european banking system exceed $1 trillion or more than 40% of their overall assets, how could a european meltdown affect the average american?
8:06 am
>> well, basically, what we could get if there were to be defaults in european banks, if they didn't honor their loan commitments to the money market funds, we could be back into the situation that we were in 2008-2009, where money market funds were to break the back so the consequences would be extremely serious, to say the least. so hopefully, the europeans aren't going to allow that to happen, but the fact that money market funds have got as much as 40% of their assets loaned out to europe is not a very comforting thought. >> okay. i would agree. mr. elliott, we talk about a plan about how to get out of the mess that europe is in right now, and they're trying to solve this issue, you mentioned that a
8:07 am
badly designed plan could do more harm, and so what types of provisions do you think should be included in any final plan but more importantly, what serious considerations are being given right now to things that should not be part of a plan? >> sure. well, let me start with the latter since it seems to be the core of your question. i do worry as i know desmond has also mentioned, that the way that the bank recapitalization is being designed is likely to send very strong incentives, very strong messages, that you're better off shrinking, because right now, it's very expensive to raise new equity capital in europe. if you're a bank and their system again has $27 trillion of assets. they have a lot of assets there. it's going to be fairly compelling argument to say well, let's just be 10% smaller, and then maybe we don't need the additional capital. >> right. >> because again, the 100
8:08 am
billion is about one-tenth of the current capital. so shrinking by 10% would be a very bad outcome. so that's one thing. i mentioned in passing this idea of providing insurance from the fund for, say, 20% of the value of the new government debt. i just don't think that's going to do any good. so it will tie up the funds that could be better employed in other ways without really solving that problem. in terms of what should be there, i think they need to bite the bullet and just say that they have failed to this point to do what has to be done. this is maybe their fourth try. and they have to really show that the eurozone is standing together, and multiple mechanisms, as i mentioned a minute to go, to do that but they've just got to bite the bullet. >> what can we do here in the united states, what can the administration do in order to try to help facilitate that?
8:09 am
>> it's really limited. it's like watching a family member who's about to marry somebody they really shouldn't marry. you can provide advice. there's not a lot more you can do. >> let me just take that a step further. dr. lachman or mr. rashish, please chime in if you would like. what can we do in the united states, recognizing the issues that are over in europe right now, and how potentially disastrous they could be, what can we be doing here in congress to try to help insulate that crisis for the american taxpayer? >> i think that what one can do is base one's policy on realistic assumptions. i would agree with mr. elliott that there's not much one can do about a dysfunctional political union with the problems, the political problems are huge. i don't think that it's a question of dithering
8:10 am
leadership. i think it's a question that you've got electorates that don't really have their heart in wanting to bail out countries, you've got really very deep divisions how the burden should be shared politically, that the germans have got a different view of the world than the french do. these are very deep differences that i'm not sure that there's a whole lot that we can do to resolve. the point is, they got themselves into a currency arrangement that made very little sense. they didn't play by the rules for ten years. i don't think that you can expect a very easy solution. these problems have been building for a long, long time and in my career at the international monetary fund, i have never seen such huge public finance imbalances and external imbalances in a fixed currency arrangement than we've got in europe, which doesn't give me much hope that this is going to
8:11 am
have a happy outcome. >> the one thing i would add to that is that the u.s. can in various forum, the g-20 and bilaterally with european union, make the case that it's in our economic interest, the u.s. economic interest and frankly in the europeans' own economic interest that in addition to austerity measures to consolidate budgets that the european union member states and the union as a whole need to take steps to liberate economic growth by, for example, getting rid of a number of barriers in the services sector by liberalizing labor markets and the professions. there are a number of steps individual member states can take and the european union can take across its single market which would be growth-friendly. i think that that's certainly a point we should be making. >> thank you so much. mr. chairman, my time has expired. >> this question is for the entire panel. what is it about the nature of the eurozone institution that makes this crisis especially difficult to manage?
8:12 am
>> if i may, or should we -- thanks. what they did is they agreed to merge their monetary policy and to have a common currency but they didn't do what you have to have to create the preconditions for it, which is you either have to have a group of countries that are very similar so that the right policies will be right for everyone, or you have to agree to operate in a much more closely integrated manner. so they set up a system in which each country could manage its own fiscal policy, decide what its budgets were, and within very loose limits, follow divergent policies and that simply doesn't work within one's zone. that's now recognized so the real question will be can they overcome the political limitations to come to an approach in which they have much more commonality. i will just say briefly,
8:13 am
remember, the constitution we're on which is so beautifully designed, is our second constitution. we had the articles of confederacy for a few years with the same problems. a states didn't want to be one federal union, so it assistant surprise me they're dealing with this now, but they've got to make some hard decisions. >> i would agree that initially, the mistake was to get's into a currency union without having the political union right there to start to support it. that was the original sin. but then they spent ten years flouting their own internal rules. they had a moss cricket treat requires not in excess of 3% of gdp. that didn't stop greece from having a budget deficit. ireland 40% of gdp. portugal, and spain, close to 10% of gdp.
8:14 am
once you build up those imbalances in a fixed exchange rate system, it's too late, you know, to be talking about we should have more political union and the -- better structure. you've really got to address those imbalances. and it's very difficult to do that without having the benefit of a devalued currency that promotes export growth as an offset to the kind of fiscal adjustment. these countries are having to do four or five percentage points of fiscal adjustment in a year, right in the middle of a recession. this just doesn't work. >> well, if i may pick up on the history lesson mr. elliot was recounting, if you look at the united states, i believe i'm correct that we didn't have our federal reserve until the second decade of the 20th century, so over 100 years after our founding. it's only been about 60 years that the european union in any shape has been around. so while it's no question that the current challenges they face
8:15 am
are enormous, i think if we look at it in that perspective, i think that they have made a lot of progress, and that their record is that they've always met the challenges they've faced, although this is a serious -- most serious one they are facing. that they have ever faced. >> thank you all. thank you, mr. chairman. i yield back. >> i want to thank the -- mr. lynch, i was going to ignore you, wasn't i? i'll cut you a reasonable deal. how about five minutes? >> that's great. thank you, mr. chairman. i appreciate that. thanks for your kindness, again, and to the ranking member for your courtesy in allowing me to participate. i want to thank the witnesses -- you know, this is all very thoughtful testimony that you've offered here today. and very helpful. not always in agreement, but i think very thoughtful and extremely helpful. dr. lockman, in your testimony, you point out, i think, very astutely, that if what we are thinking is going to happen here, if we do have a greek
8:16 am
default, then i think immediately, you know, portugal and probably ireland would be destabilized to a certain extent. and if we had a further contagion, we worry about spain and italy. the end result for us, we would see a destabilized currency there. i don't know how they -- how they reconcile that. but it would certainly undermine the euro, and i think you've all written at some point about, you know, the you'euro as we know i would no longer be sustainable if you had all of these per i haval countries and the core countries also impacted. i'm looking at the u.s. interest
8:17 am
here. and in that environment with defaults going on, the european economy is going to retrench somewhat. that's going to affect us as an exporting nation, but it's also going to affect us as dr. lockman has pointed out, from a currency standpoint. we're going to have a very strong dollar by doing nothing, by just not defaulting. we're going to have a very strong dollar. they're going to have a very weak currency. it's going to put our producers at a strong disadvantage. and i think then it's going to -- then it's going to have a real impact on jobs here in the united states, as those -- as those facts play out. what is it that we could do to try to -- to try to adopt provisions that might mitigate some of those circumstances, in such a short amount of time? because that's the problem that
8:18 am
greece has. i think that's the problem that the eu has, is this has to turn around in a fairly short period of time. even the austerity measures that have been adopted or at least being debated, those measures will take a long time. right now, i think as dr. lockman has pointed out, the greek public debt is about 180% of gdp -- growing to 180% of greek gdp. that is simply unsustainable. and it's going take them a while to bring that down. just like in our country, we're struggling with this super committee, and we're going to drop some reductions, but it's going to take us a while to do that. but are there steps that we might take to cushion that impact in the face of these defaults in europe if they do occur? doctor? >> right. i'm pretty sure that the
8:19 am
defaults do occur, just given the very size of the ratio of their public debt to gdp has reached. putting this at 180%, we know that a safe level -- prudent level of public debt is below 80%. so a debt right now in greece of something like 60% is almost a certainty. if you get that default in greece, what that's going to do is have huge damage on the greek banking system, which is going to have to get nationalized. you're going to get capital flight. you'll then get the contagion to portugal and ireland, which will then have material impact on the european banking system, that is very likely to weaken the you're row against the dollar. i think that is very likely a economic area, having a banking crisis, very weak growth is almost certain to have a weak currency. i'm not sure that the united states can do much in terms of that currency arrangement.
8:20 am
but i would think that what it does is it heightens the concern about other countries in asia that are manipulating their currency. you know, we should be already putting pressure on those current countries to help this adjustment program. but i'm not sure that we can do very much about the bilateral united states/euro exchange rates. the united states is very much likely in those sort of circumstances to become the safe haven that it was in 2008-2009. all of the money would pour into the united states. it certainly would not be going to europe. but i think that what should be done is pressure should be -- greater pressure should be exerted on china to play a constructive role in the international adjustment process. that would be my suggestion. >> okay. thank you very much. thank you, mr. chairman. >> thank you. mr. mizula, you're recognized
8:21 am
for five minutes. >> i'm sorry i could not be here until just now to glean the rest of your testimony. but i have -- i have an intriguing question. perhaps it's more philosophical than financial or practical. but early, maybe in the past year, there were talks that greece would get out of the eurozone and go back to the d k drokma. i would like your thoughts on that. i don't think that's going to happen, but i think that could pinpoint some of the problems going on. that would be an alternative, but i -- whoever would like to handle that question. maybe none of you would like to handle it. >> no. i -- i should mention that i wrote a financial times piece two years ago, indicating the
8:22 am
reasons why greece would exit the euro, and sadly, events have already borne that out. basically, the problem is that greece, having as large a public sector deficit problem as they've got, you can't reduce that in a fixed exchange rate system, without promoting an enormous recession. greece's economy has already contracted by 12%. they have still got a budget deficit that's 10% of gdp. if they persist in the imf approach of not devaluing their currency, not riding down their debt, but simply engaging in savage fiscal austerity, they can drive that economy totally into the ground, creating political unrest, making it very difficult for them to meet their budget targets. the logical thing for greece to do would be to write down its
8:23 am
debt by 50, 60%. but if they would also be well advised to exit the euro that would at least give the economy a chance to grow through exports, through improving the tourist sector. otherwise, i'm afraid that greece is condemned to a decade of not a deep recession, but this is more like a depression. >> anybody else? is. >> yeah. if i may. and i'm a financial sector expert, more than an economist. so let me just say, dr. lockman is in a minority among the economists i have spoken with, as i think he would admit. that doesn't mean he's wrong. >> he seems like a nice guy. >> no, he is. and a tremendously smart guy. i just wanted to try to provide a little balance in the sense that most economists that i speak with and read think that
8:24 am
the transitional costs would be really awful. because there are so many things you have to get exactly right in making that change. it's extremely unlikely to work out quite that way. you also have political constraints. the damage of them coming out of the euro to the rest of the eurozone is quite considerable, partly because of contagion issues. the people then have to start worrying in portugal, et cetera, as to whether they'll find themselves with scudos again instead of euros, and that can create a lot of flight. in addition to the direct effect of that, it has a political issue, which is right now something like 4% of greece's gdp comes from regional aid from the rest of the eu. if the rest of the eu is really annoyed with greece, because they've just broken out of the euro and caused all these other problems, that regional aid may
8:25 am
or may not continue. there's a whole series of reasons to be concerned about the change, in addition to the potential benefits that dr. lockman has mentioned. >> i would also add that it is key, whether it's greece alone. because if it does lead to several countries leaving the euro zone, then what you're going to have is a kind of very hard -- currency area, in fact. dominated by germany and the netherlands and austria and finland who have very strong economies. and the lower exchange rates and interest rates, let alone the purchasing power that you had in the south of europe, because they had the euro is going to go away. and so the ability of the country like germany to be the expert super power that -- which has really been the main fuel for its growth, is unlikely to continue. and i think that would have very serious impact on the performance of the european economy as a whole. so i think we need to think, you know, about how it would impact all of the different members of the eurozone and what it could do to the competitiveness of the main drivers of growth right
8:26 am
now. >> dr. lockman? >> if i may say, i heard these arguments in december 2000, just before argentina broke from the convertibility plan. i heard similar arguments right around about the time of erm in 1992, when that broke up. i wasn't around during the gold standard, but those were the kind of arguments that ran around before countries left gold in the 1930s. so i think that there are political dynamics. it's not necessarily going to be the most rational choice for the country, but when countries are in as dire straits as greece does when its politics get polarized. when you see the kind of street action that you have in greece, you've got to expect politicians to be suggesting alternatives to the kind of approach that is being offered to them by the imf
8:27 am
and eu. we've just seen two years -- gdp has literally imploded, offering that -- you know, if that is the future that you're offering, people are going to want to take chances with different kind of policies. and i think that that's the reason why i see them both defaulting and in time leaving the euro. >> thank you. that was an interesting question, wasn't it? >> very good. i want to thank our witnesses. you've all been very excited about answering the questions, which is very rewarding, from our perspective. and you're a wealth of knowledge, and i appreciate your talent, your time that you have given us today and the chair notes that some members may have additional questions for this panel, which it may wish to submit in writing. without objection, the hearing record will remain open for 30 days for members to submit questions to these witnesses and to have their responses placed in the record. this hearing is adjourned. thank you.
8:28 am
[inaudible conversations] [inaudible conversations] [inaudible conversations] >> going live this morning to the council on foreign relations here in washington. marine corps commandant james amos will be speaking this morning about the history and future of the marine corps. live coverage on c-span2. >> good morning, everybody. >> good morning. >> welcome to today's session on the council on foreign relations which i know will be as dynamic and exciting as up to the council standards. just a couple of housekeeping matters. first of all, for those you with blackberries and pages, please turn them all the way off, not just to silence. the reason is we're using a wireless microphone system and even on the vibrate mode you interrupt.
8:29 am
next, for all the journalists including the, this meeting is on the record so everything that commandant says can be used and discussed and spread far and wide. the third issue is one of the reasons the council likes to have, i spent five years as a correspondent based in moscow and i run these sessions with a stalinist efficiency. we will be out of here at 9:30 a.m. sharp because the commandant has an important meeting back at the pentagon. the challenge for any preside are in introducing some of his career is as a lustrous as the train once and who is as well, what can you say about them, especially to an audience of interested folks like you who are here so early. so i guess all i will say is that over at the pentagon there are several chiefs, but just one commandant. here he is with us today. general james amos of the marine corps'. >> thanks, tom. >> the 10 years since the attack of 9/11 have forced the american
8:30 am
military to adapt and change as much as the adversaries have. it is what i like to call a new darwinism. adversaries learn and nutra, we have to adapt. they learn, back and forth. you have b-52's, strategic aspect. troops are getting out of their armored vehicles going on foot patrols. one of the adaptations that the court has had to make is in many ways you have given up your historic expeditionary role for heel to toe back-to-back deployments, operating out of fobs. in a post-iraq, post-afghanistan world, how do you see the marine corps getting back to its historic mission? what other changes are in dispute? >> first of all, we have been on the ground for 10 years now, and one of our corps senior leaders use the term we have become a second land army. that was coined as a marine, from a marine which i'd live to
8:31 am
rue the day those comments were made. but regardless -- >> the other white meat? [laughter] >> but regardless, over the history of the marine corps we have done the. we did that in france. we do that in vietnam. we've done that over three to time. but while we've been on the ground in afghanistan we've also had great units out in the pacific around the world doing other things. but they certainly have participated in -- we kept our amphibious roots, but we have been practicing that trade in a way to a level that we need to get back to. so as we come out of afghanistan, and secretary gates last fall when he passed the marine corps, he said build me a marine corps for post-afghanistan environment. we did that, and we've got about 10 months of analysis behind it. and impact it incorporates the lessons we learned for 10 years
8:32 am
both as counterinsurgency and irregular warfare, this hybrid warfare. build a marine corps that incorporates those lessons but also can be used the way the marine corps was designed to be used. that forward deployed, that forced that is out and about doing that nations bidding as representing the united states around the world. so our goal is to get back to that, and i intend to do that when we come out of afghanistan. in fact, we are not waiting until we come out. we are shaping the marine corps right now. >> walk us through the orders youth give and the concept you describe to get where you want to be. >> we've already begun to look at those units that would really get back to the pacific. it's an important part of the world for our nation. it's quite honestly it's an area the united states marine corps has been operating in for the last 60, 70 years. we are familiar with it. it's in our nation's best interests. to reorient back, so as we do that i been looking at units, he would be the units that would be
8:33 am
able to operate? we've got units in the right now, so first of all its identification of units, and then changing their training regiment back here. sat with her head trainer, that's our premier training area, and sat with ahead of training for the marine corps and said look, as we look at reorienting, that's going to need a different kind of trend. it's going to require more operation, more combined operations, and some of it is kind of the bread-and-butter of the marine corps pre-9/11. so we are we doing to rebuilding our training packages right now in anticipation of probably next year taking the first units and putting them into this training regiment, getting ready to go back to the pacific. >> that's interesting. this will have to be carried out in a time of less money. it seems to me that the public
8:34 am
is not yet engaged in dialogue as the pentagon have to cut at least 450 billion, and perhaps more after the super committee. it seems the american public might want to be engaged in a discussion if there's less money, military can't do everything it is doing today. what roles, missions, capabilities do you not want your military to do? how does that dialogue under budget affect your thinking? >> i think there is dialogue. i don't know if it's public dialogue but there's certainly -- >> i could change that spirit it will probably be public after today. [laughter] but there is, i mean, there's great effort underway right now between the department of defense and to align itself with the administration's vision and strategy for the mistakes of america. in the years to come, and in this environment and we are fiscally constrained. that's going on right now. so it's not, there's nothing
8:35 am
happens within the department of defense where they are unilaterally going we are going to go do this, and irrespective of the budget. that's not happening. it's informed by the budget but it's being driven by the national strategy that is being worked right now. i'm pretty comfortable that we are heading in the right path. but back to your issue about kind of the implications about the pacific, you've already bought the marines. you've already bought the ships. you've already bought the airplanes. you've already bought a sustained and supplies. in other words, the bill has been paid for that so it's a function now, what do you do with them? do you leave them back in the united states or to take the ships and those marines and forward deployment, and to the bidding of the nation? >> will that partly be driven by the available funds? i assume it's much more expensive to have been in forward deployed. >> there some ways you can do this thing actually a little bit
8:36 am
cheaper. i know that the navy is looking at actually positioning some ships forward deployed. in other words, home ports and ships. outside of the confines of the united states. they have summed up if you're looking at that. and that's one way and you don't have the. >> guest: time which is fuel, which is time away from home. so there are some things you can do. but the other thing you can do is look around the globe and say where are my greatest interest? in other words, where are the areas in the world that the united states needs to focus its efforts on? and i would say that the pacific is certainly one of those areas. so i think as you begin to try to balance all of this you look and say, we will say the pacific is where we need to be. >> talk about -- i know the marine corps with a very deliberate and thoughtful process in coming up with a glide path from 202000 down to
8:37 am
186. can you talk about some of the thinking and analysis that went into that number and why is it that 186 speed we did know to begin with what it would be. secretary gates said design and rankle post-afghanistan. we built up from 173,000 which is what it was on 9/11, up, and we started about 2006. so we were sitting about 176,000 as i recall in 2006. not knowing how long this is going to last. so when secretary gates said, out of afghanistan, or build a corps when you come out. you're not going to be 202000. so we set the group down, said okay, take the lessons, what are some of those things. we've always had, but it really shows its face, what we call low-density high demand critical skills. we call them military operational specialties. what would that be?
8:38 am
that would be counter intelligence, human intelligence, signals intelligence, the guys that listen and do all kinds of things with radios and space and closely affiliated with the nfa. needed those guys. we needed explosive ordnance. we only had like i think 200 of them to begin with. we are at 875 today. military police, truck company. all these kind of things, uavs. and we said okay, let's take those lessons. let's put them in. let's build them in this mix, throw them in, and then let's determine what are the of the lessons we learned. one of the things was when we began in 9/11, our man and our units were sitting right around 90%. 90, 91%. to our equipment readiness was probably a little less than
8:39 am
that. but on any given day in indiana, infantry squad or whatever you call it somewhere around 88, 85% manned. so as we went to war we started putting these units, putting them in forward. we had to borrow. we would take units people from your squadron and put them in my squadron or your battalion and put them in my. [inaudible] >> so we came to the inescapable conclusion quite honestly that the many levels were built for a reason. so let's increase the men in the unit to what it is supposed to be so i don't have to be borrowing. so i am always ready. so we build units in this 186 that were ready. then we took a mission in the marine corps which is to be our nation's crisis response force, to respond to today's crisis with today's force today, not next week, not a month from now. don't ask me to do something and i say thank you very much, it's going to take me about three weeks and i'll be able to train them and then will be able, no,
8:40 am
the nation has a marine corps respond today. that's what we do. with a very high level of ratings and the nation expects us to be able to do that. whether it be responding to the terrible earthquake and tsunami with our friends in japan, and we went overnight. whether it be libya no-fly zone, we did that very, very quickly. so we put that in the. so i told the guys, all right, bill that, tell me what that number is. i did not give them a number noted the secretary of defense or the secretary of navy. it came out to be 186. we reduce the number, collapsed 21 headquarters, get away with with the general headquarters. nobody told us to do this. we just built this to be more efficient. when we went in with the reserves we kept the number of reserves at 39,500, but we shaped the reserves so that we could take these lessons learned and incorporate those. so that's what 186 issue.
8:41 am
it gives you a heck of a force that in my estimation is what our nation needs for the next two decades. so we built it at that and with a lot of analysis. i feel comfortable about the never. >> is that really the floor? i asked because it's, personnel costs in such a huge part if the government came to you and said you have to loosen more to make the budget work to is that possible? >> the way the pressures being applied, the reality of where we are budget wise right now is, and i think everybody knows that there's at least a $450 billion plus bill that's been levied on the pentagon, we've got to pay for the next, over the next 10 years. so to do that i've only got three letters. i can either die down manpower, or i can tell them procurement which means i buy less things. which for us is pretty significant.
8:42 am
we been on the ground for 10 years. we don't have extra equipment. our stuff is in afghanistan. i've got twice as much equipment in afghanistan that a normal unit, if you, let's say you have 100 pieces here. in afghanistan the unit has about 200 pieces. because we are spread out. we are spread out, the climate is harsh, the airy is very unforgiving on vehicles and equipment. so i've got to we settled that. as we look at this, as i take a look at hiding them procurement and modernization or even recapitalization, that's a strength of the other one is operations and mena's. in other words, i could cut training, cut ammunition, i could cut those kind of things. those are the three dials. so one of the dials is manpower. if this continues to increase i'm going to end up reducing the marine corps below 186. i guess the good news is we have a model. we at least have a system,
8:43 am
framework that we can judge what would be the capability, that necessary capabilities or the capacity that we want to pull out of the marine corps to get into some numbers we can pay our bills. so i'm not sure it's 186 is the floor, but i can tell you in the audience is 186 has more rigor and more analysis than any effort that's been done that i've seen by anybody in the department of defense in the last five years. so i'm comfortable, confident in the number. it's been three to the secretary of defense, gates come in february. he uprooted and that was before we got in the fiscal crisis we're in. >> you didn't talk about your special operations. it's been operational for a couple of years. report card? >> i visit them all the time. i'm huge fan of them, and back to the point where we are -- this 186 though, there's a lesson learned of 10 years.
8:44 am
we drew the marine corps down. we put a thousand more marines into marine special operations. they are sitting about 2600 go to about 3600. we're going to go from cyber warfare from where we were about another 600 cyber. back to mar sock. i visit them. i was with them last month in afghanistan. will see them, spent things getting within. running around helmand. they are just, the report card is very, very strong. very high marks. but i'm very please with them. tell you, they are the ultimate economy of force organization. and by that for everybody, i mean instead of taking an infantry battalion of 900 marines and running them on the field somewhere, or up in a zone, the trend for marines, special operations arenas. its seals and rangers and navy, i mean the green berets.
8:45 am
because we worked together. that you put small teams of these guys in and they can occupy space and have an awful lot of effect which allows the general purpose forces to do the other things on the battlefield. and face the enemy. i am very pleased with marsoc. i feel like a proud father of those guys spent i want to ask about the global posture. that seems to be the current theme or focus. secretary clinton had a very powerful essay on foreign policy. you as well. censure because that would talk about the president come just two weeks ago deployed 100, mostly special operations to uganda. to help enable, build partner capacity. spent i think africa and south america are two primary what the marine corps can really help with whatever our nation's bidding is there. and i say that because we are reasonably inexpensive.
8:46 am
we are prepared, we do training, we do that well. we had over 1000 marines in central africa over the summer training with african nations. we know how to do that. we live where we don't need fancy hotels court air-conditioned who choose to live in. we are more than welcome, more than willing to live hard. so you get a lot of bang get a lot of bang for the buck for this. we can go in small areas. colombia is a great example that a south america. we have been working with colombia for the last obligation or 11 years. look what happened in colombia. the country has turned around. we are working with a renewed right now so we're working in africa. i think what, kind of penny packets of small units of marines doing what our nation would like you to do with regards to training and assistance in africa and south
8:47 am
america, is clearly a nation the marine corps would excel at. >> your comment on obscure environments, rc south in august come here most typical sort of afghanistan days in august, 126 degrees, does is blowing, body armor. i was talking to a soldier from oklahoma, my home state, he said my grandpa fought in france in world war ii. how come we don't get to invade nice places anymore? [laughter] and i thought for a second, i love the army, i love all the services but you wouldn't hear someone from the corps say that because you never get to invade nice places spent you've got to think about where we train. we go to twentynine palms in california. we are used, you're right. spent that raises the next set of question which is the procurement aspect. clearly not only resetting and rebuilding what has been in afghanistan and iraq but looking to future needs. there's a list of weapons systems at 35 b., talk to us
8:48 am
about how you are trying to assess your needs, requirements and how you're going to put your funds up against those. >> if i can start big and take it down small, our nation needs military first of all that can do what earned nation needs to do. then it needs a military that is not going to break the bank. four years, the marine corps, i mean for decades the marine corps was known as some circles as the chief force. they were known, i call it the frugal force. that's a little bit more esoteric, but that we were known to be the penny pinchers. so, to begin with we are going back to that. we've had 10 years of what i call cultural planning. and i don't mean we've been squandering this are refusing to nation's wealth, but i do mean that we have been tied up in afghanistan and iraq, and that
8:49 am
does cost a lot of money. it does require a lot of new stuff. and some money has not been a problem. it is now. so we are going back to our culture. i promised the senate and the house was that i will not ask for anything i don't need. excuse me, i will not ask for things that i want. i will only ask for things that i need. and that's what i promised the leadership and that's where we are. so 2.0 we've gone back now, we have, for an example we have 40,000 vehicles, that's tanks, seven-ton trucks, humvees, mraps, the whole thing. we're going to have, we don't need 40,000. we need about, for this 186 force, we need about 30,000. so, we're not going to recapitalize all those vehicles. i told the court, i said you take a look at what's good enough, what is it that is good enough to get us through the next, say, eight to 10 years.
8:50 am
you know, big temptation would be okay, take all that stuff out of afghanistan and will put in a lot over here and we'll sell it. meanwhile, we will buy all this new stuff. we can't do that. we understand that. so we've gone back in and build a plan that we can afford. based on our budget. and it's all dealing with affordability. there are some vehicles that are going to have to be replaced. this is for everybody here. this pulls out the hearts of congress and moms and dads. we've got some great humvees, all these high mobility multi-wheeled vehicles that have been up armored and did in iraq and saved lives. but as the ieds got bigger and they we transition in afghanistan when the ieds are huge, we've evolved to these, we've been seeing these homemade explosives. they will take a humvee, i don't care how much armor it has on
8:51 am
it, and will destroy. so as we look to the future in places we might deployed where a nation might say marines, we are going to have to have some vehicles that have some heavier protection on them, but have a higher mobility than in mrap has on. mraps very difficult if not impossible to take off-road. so that's one thing when it comes in. >> the army? >> we are working a deal right now. in fact, we have work to do with the army. now what we're doing is going back to congress and sing okay, we've got the two largest services that are in cahoots on this, and now what we need to do is go back to congress and get their support on it. but we are going to buy, if congress allows us, we are going to buy a slice of those 22000 humvees, a slice of them, weigh
8:52 am
less, the number is probably around 5000. and that within suffice and will take the rest of the humvees and the rest of the seven-ton trucks and we will live with it. then if we go someplace where we really need that extra protection in the have a joint attack. if we don't will have the humvees. if we don't we live with good enough. that's how we're living within our budget. our in the 22 always seems to come up. by the way, i have flown all of afghanistan, uss wasp, 10 days ago watching joint strike fighter fly off the loss. flew out in a mv-22. it's replacing 44 year-old helicopters. think about that. those helicopters were introduced in 1968 in vietnam. we are still flying them. they have got to be recapitalize. our c-130s are just about completely recapitalize. the ones we took to war in 2003,
8:53 am
i had one when i was a wing commander. i have one we took in 1956. so we are actually pretty good stewards of our equipment. so we have equipment that is got to be recapitalize. our fleet of tactical jets. we made the decision in the late 90s that we would skip a generation of airplanes and not by the f-18. we said that we're going to keep our f-18 a's and seas, our carriers and our prowlers and we will keep those and we're going to invest, save our money, and really save billions of dollars for the department and by the f-35. we are that close to seeing reality now. the airplanes we have right now our f-18's begin to run out of service life in the next 10 years. out of service life. they will be done. the harriers run out of service life in about 2024, 25. they are done.
8:54 am
there's nothing left on the. the prowlers, we are just limping the prowlers along. we are working right now on okay, how do we buy, was an affordable by rate, and i mean that's kind of the big ticket items. >> smaller procurement and he big procurement. you and i both have the same hikers compass on our watch so i guess we don't like being lost. >> right. i'm okay here. it's just whenever run around reservoirs spent at the high-end, it's probably a question more for your sister service, the navy, that takes you around the world. as you talk about the pacific the rise of anti-access weaponry. that has to be a concern for you. it's the asymmetric advantage of a big adversaries like china. what is the corps thinking about in the world of anti-anti-access?
8:55 am
>> if you're looking at actions you tend to gravitate to a weapon. you tend to think okay, i'm going to pull a. off the coast and if something is going to come flying out at hypersonic speeds and it's going to sink me. but what you really need to do is kind of back out of that and say okay, how do i make a targeting problem for the adversary? in other words, how do i make myself still? >> how do i make myself, confuse the enemy? how do i disperse my forces such that the enemy doesn't know where i am? how do i take the enemy's overhead capability to watch me away? how do i take the enemy's command and control away? how do i sneak in to his ability at how can i confuse him? the pacific is huge. i mean, 70% of the world is covered with water and the pacific is the greatest body of water out the. if you start talking and i ask is you tend to think oh, man, i'm going to be driven 1000 off
8:56 am
the coast. not the case. there are capabilities which we can't talk about in here, and, that we have, that can deny the enemy ability to just say, okay, i'm going to push it out there and you can't come anywhere close to me. so it's more than just a single weapon pushing toshiba or a vessel out, or a single weapon that is going to target a single airplane out there. there are ways you can, that you can decrease the degree of difficulty for the enemy to deny you access. and that's where we all fit. that's the entire joint community is working on right now. it's everything from cyber the weaponry the stealth, i mean, it's a variety of things that we're doing. and again, a bunch of it is the things that we can't talk about, but i will tell you that there is no expectation, it doesn't mean it's been easy. it doesn't mean we're not investing in capabilities.
8:57 am
but what i will promise you is that it's not going to be insurmountable. >> one last question before i invite the members and guests to join the discussion. is a bit of breaking news last night on capitol hill, a vote about the marines. can you bring us up-to-date and describe the action for a? >> that's pretty exciting. for the audience, the 1942-1949, president roosevelt, just before the, right around the early part of 1942, signed a proclamation telling the department of defense -- the marine corps wind at it kicking and screaming. but we did. between 1942-1949, we went across the nation and recruited african-americans to join the corps. now, but we didn't send them to our own but can't because we
8:58 am
didn't want. we sent them to the camp in fayetteville at a small point of land that is on the new river town in north carolina right next to camp lejeune. they had to build your own but can't. then we put structures are the top of them. their training was certainly every bit as hard as what was going on in san diego. and probably many ways harder. and then we kept in segregated units and we deploy them in the pacific and things like ammunition companies and artillery batteries. and a 1949, we quit, we close down montford. 20,000 marines had come to montford point during that bit of time. this is an organization, we lost a lot of it by now. as you can imagine, they are well in their '80s. and they were true heroes. coming, they were american pictures 50 talk to them today, i had fashioned a breakfast at
8:59 am
the end of the summer, and they just agenda, we just wanted to join. we wanted to join the best service. we want to join the marines. we heard about them, we saw them on a newsreel, read about them in "time" magazine and we wanted to be a marine spent and they came to the hill last night? >> to give them to congressional gold medal. so the house passed it 422 do nothing, and then it's over in the senate. so if there any senate staffers in a today, i need your help on this. we need to get this through the senate and give him awarded the congressional old metal. just like to the tuskegee and buffalo soldier but i'm as proud of them as i can possibly be. i'm very grateful spent that's a fast increase of history. thank you very much. now will join councilmembers. please way for me to call on you. wait for the microphone. stand and give us your name and your affiliation, if you would. and very


info Stream Only

Uploaded by TV Archive on