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tv   Defense News With Vago Muradian  ABC  February 14, 2016 11:00am-11:31am EST

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[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] vago: welcome to "defense news." i am vago muradian. the obama administration submitted its final defense budget to congress, asking for another $59 billion in wartime supplemental funding. for both amount figures was shaped by the budget deal late last year that slightly raised spending caps. the administration has said budget aims to fight isis and other terror groups while bolstering u.s. capabilities against china and russia as well as investing in new beaverhead capabilities and systems modernization. to do that on the fixed budget
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the budget dials back joint strike fighter purchases and army helicopters, i tbacks the air force's palmer as well as strike weapons and air defense missiles. republicans, however, are already labeling this budget as irrelevant and calling for dramatically more funding. we met last week with the pentagon comptroller and i asked him why the 2016 request was relevant and whether it charts a course of the followed by future administrations. .> i think it does i would list of the major move ,n this with respect to russia and that is within the secretary's of trying to really have us reorient a little bit so that we are thinking across the spectrum from now to 20 years from now. the fight against isil, of course, and the taliban and afghanistan. he is trying to focus us is well on competitors like russia and
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what we are doing with europe in particular on these so-called reasserted initiative is the biggest muscle move in the budget but it is also the mental framing to think about the highest competitors as well as the here and now. no secretary is ever going to escape the demands of the here and now. what is happening today in europe and the middle east. to think ahead is where secretary carter is trying to push us and the thing across the spectrum, and all that remains going from air, sea, land, and to think about the contested environment and to think about cyberspace as a contested environment. he is challenging us, the military, as we know they are, to be versatile and agile across every imaginable dimension -- time, space, geography, domains from the physical to the virtual. vago: there are folks on the hill who applaud that portion of it but
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secretary did not go up and meet with the chairman, which is customarily and historically something that secretaries to. some are concerned that the facts and figures secretary has used are inaccurate. do you think either one of those complicated your ability to sell this budget on the hill? >> i started this week and i talked to three of the committees so far and one more staffow to walk the through what we are trying to accomplish. i've not picked up that kind of feeling from the staff, i would say. it is customary, not universal, doesn't always work out that we have a meeting with all the chairman and ranking members beforehand. we were planning to do one and the secretary was frustrated that the budget rollout took a week, which conflicted with his plans to be in europe where he is now. i think what he is doing in europe right now is what members would want him to be
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you enlist greater support in the fight against isil and our collective challenge to deter russian aggression. he is working should be this week and it is unfortunate the schedule didn't work out. going forward it will be forgotten some months from now. i think the product we have is a good product so i am confident it will get a good reception. certainly not universal. likeone is not going to everything in it. but we have a strong proposal within the fiscal constraints we were given and i hope the focus will be on the substance of what we are opposing, whether people agree with our ideas are not. i think the scheduling conflicts from this week will be forgotten as we move forward. vago: you guys did have a challenge and you did -- "balance" is the phrase you have used and the administration has used repeatedly to characterize the trade-off in a fiscally challenging environment, but there are those who say the biggest loser was acquisition
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and 2017, a decrease in acquisition programs, and there is concern that i continually cutting and defining programs from the administration is causing a wave across the road from -- across the programs and a time when the nation may not have the money for debt reduction. is there concerned that in pushing this stuff out from you are potentially dangerously delaying modernization and also reading a wave that made -- that made the too big to address in the future? >> there was a way that was pre-existing and that is the nuclear monetization wave. the replacement for the summer infant one at a time over a dozen years or so, as well as the other 2 legs. something
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secretary in particular has been working hard to understand and start exploring the different ways to solve it. more resources would be the top solution to solve it because we look back to what was done historically in the first and 1960's to the mid-1980's, when it was recapitalized and it did not come at the expense of conventional force. the ideas we would be able to do that again. the fiscal situation with the baby boomers in full retirement road is going to be a challenge for sure. it is a most inherent in budgeting, right? we often talk about the three big ones being readiness of the force, size of the force, and how much you are able to modernize it. i think of a fourth one as well, and that is compensation. it is about one third of our budget. compensation of civilians, you are up to almost half the budget.
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protected. we look at the three lovers of the secretary has talked about commend the deputy, that we made different choices in different respects and we may want to talk about those on the air force site, we were balanced slightly towards the capacity site. on the navy site, slightly towards the navy site from where we were. but if you look at historically where there were budget gyrations up or down, procurement in particular is the most volatile. that is true historically and the reason that is true historically is relevant to the situation as well. was adget deal we got feel for 2016 and 2017. we're talking about the fy 17 budget here. that deal gave us zero guidance as to what would happen on into the future. we know that the budget control act caps off still the law.
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consistent that we cannot live with those caps and we do not support living with those caps come in the budget profiles has been consistent, probably as consistent as any administration has been looking at our 2015 budget, 2016 budget, 2017 budget. where we need to go over the next five years has been remarkably -- we are talking .bout one billion difference opposition has been consistent. then you get the short term budget deal and you get less money. it will get much of what you want but not all of it. how do you react to that, how do you make reduction? compensation is not a good short-term -- you wouldn't give people a pay cut. vago: well, in fact, you guys have a pay increase in it. >> yeah, we have a pay raise. that lever is not available
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reduce compensation. size of the force is the biggest lever there is. if you have a smaller force you need less facilities, you have less people to pay, you need less rifles and ammunition and aircraft. when you have a short-term signal that the budget is going to be adjusted, say, 3% down, as it was in this deal, with no information about where the future is going, that is not a propitious time to say my reaction would be i will make the forced smaller permanently, because making the forced smaller is a big muscle move, a heart muscle move from it involves getting people out of the force, voluntarily or involuntarily. i would not say it is a last resort but it is a very difficult step to do. where that tends to leave you is go to the acquisition accounts. they are more adjustable in the short term, or one or two year change in the supply of money. not so much a change in demand
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but a change in the supply of resources. that is what historically has happened and we can talk about it for the first time, the particular choices we have made. it is not unusual to say that procurement is my short-term shock absorber. vago: coming up, more with the we're family. we'd do anything for each other. but this time... those bonds were definitely tested. frog leg, for my baby brother don't frogs have like, two legs? so they should have two of these? since i'm active duty and she's family, i was able to set my sister up with a sweet membership from navy federal. if you hold it closer, it looks bigger. eat your food my big sis likes to make tiny food. and i'm okay with that. open to the armed forces, the dod and their families. navy federal credit union.
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vago: we are back with mike mcco rd. while the obama administration's 2017 budget request is in line with the spending caps, dod is planning to get $20 billion to $30 million more in funding over the coming years. that optimism is why the administration had to make up a $20 billion shortfall between what it planned to spend and what the deal allowed. ord whether it is sent to get more realistic to avoid making lasmi
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and delays that often only increase costs. >> welcome i think we are in a reasonable realm. there is not a lot of criticism that our budget requests are too far off, or for that matter, most of the choices we have made . these two has been over the last three or four years -- we have never gotten 100% of what we have asked for since the budget control act was adopted. but we have never gotten the worst case either. every year there has been some adjustment and we end up in the middle. that does argue that our position is a reasonable one. we could just for some other number that would be lower than we need. we're strongest to start of saying where we need to go. obviously we need for gas to work the final decision of where we will live between what we ask for and what the budget control act calls for. vago: let me take you to how you
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decisions. how did you decide how much to take from each of the services billion, $5 billion or so internally, and then you have to turn to services to make cuts. how much did you say everybody cuts, what they should cut? >> the primary way we look at our program and how to adjust it is we call portfolio, so things like space, ground forces, that is air forces, and one of the tools that we use, but it is primarily where we think we are, have too much risk, or that we have an investment -- and what sort of fields of endeavor could an investment really make a difference. it is looking at the margin of where we think we have to much where there is progress that could be made. vago: it wasn't necessarily equal
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services -- one third, one third, one third? >> no, it was not. vago: how much of this -- are you concerned that the f 35 in particular has been targeted? some in the department are referring to it as a piggy bank. the plan was to buy 60 this year. that has dropped to 48, i think is the number for the animal -- for the annual company air force. beenof these have curtailed and everybody has seen this play before. the reductions, reduce it, and then it is vital to this program. is there a danger of the department destabilizing this by continuing to buy the movie to this new generation? >> i wouldn't say there is no risk. i don't personally worry that this is going to end
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-- like it did when the unit price spikes up and people are not willing to buy anymore. i think there is some risk of that, and obviously in this program what we do is a key driver of what our partners to is also relevant. the analysis that our acquisition folks to was that the quantity changes in this budget were not want to materially affect the unit cost. we did not see ourselves as kicking off a bad spiral in terms of unit price, but i agree with you, it is not where we wanted it to be. we would certainly like to have been buying more. vago: one of the things dr. carter has talked about about what would be in this budget were going to be offsets and innovative teachers and innovations come in many forms. some of it is highly classified, as it ought to be. would you be able to give us a rough sense on how much of the department resources are going to think that could be characterized
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innovation initiatives were upset initiatives -- were upset initiatives? >> the amount of resources we are talking about is on the order of $3.5 billion. kind of in the 1% of our budget range. not enormous in terms of funding. theink one of the points secretary tried to make to us is innovations in his life is not just about money, it is about the way you think. to take a speech you are probably familiar with a week ago at the economic club, he talked about the strategic capabilities office, and what he likes about them is that they take the weapon they are ready have and use it differently. it does not take a lot of money to do that, if you had clever adaptations of you already have. the third offset, and the innovation writ large -- the primary yardstick is not necessarily money. most of the money in the department still
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support the force structure we have today to support large programs like joint strike fighters hit we are not taking them -- we not talking about taking 10% of the department budget and moving into aircraft and ships to new innovative things. much smaller, resource-wise. the import is a combination of the money, but also the mindset. vago: how long do you think it is going to take? readiness is an important thing. how long before that readiness that was done as the budget caps is going to be rectified? age service would have a little bit different answer but we are looking at roughly 4 years or so. pretty much toward the end of our five-year program when we get the full spectrum readiness. it is a function of a couple things. the budget control act caps, as well as the wear and tear, the demand we have had on the ground forces from 15 years of combat in iraq and afghanistan.
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that, of course -- i realm is the money side, but it is having people trained in available and equipment that was used heavily. there is a bunch of factors, and that is why we can't get there a lot faster especially by applying a few more dollars. we look carefully at the money side and we try to protect that some when i talked about the levers of capability, readiness was when we tried not to touch very much in the balancing of how to cut the $20 billion this year, because most people felt here and on capitol hill that the readiness recovery is already a little slower than we would like it to be. we did not want to disrupt that with spending cuts, but funding alone is one of the factors to get us there. vago: statement was more from mike mccord
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vago: we are back with more of our interview with pentagon comptroller mike mccord. the obama administration came to office pledging to eliminate supplemental funding requests to s.ver wartime operations cost it also covers non-war related costs. experts say this account is unlikely to be limited to, given that it allows lawmakers and easy way to boost pentagon funding. i asked mccord whether it was time to establish tougher criteria. >> we have had pretty firm criteria between ourselves and the office of management and budget over the course of this administration. we have largely left them in place. the signals have been very confused. i would say the situation is pretty confused if nothing else happens as we turn over this administration to the next
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what was done in this budget it was pretty unprecedented writing the numbers in advance of any particular requirement level the established -- being established. that is moving 180 degrees opposite of what the desire had been in many orders -- in many quarters coul. getting it back in the base is a good thing but it can be done with the budget control cap ask and we cannot ignore that kind of resources and for your viewers from we're talking roughly 10% of our budget in that category right now. to absorb to do billion dollars or more a year into our base budget without really, we have already had trouble getting the full base budget requests approved by congress. we don't see how it is possible to move that back in their on this you are going to revisit the whole budget control act structure. vago: there are members of congress that are disappointed
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the administration to didn't ask for more but that was obviously part of the budget deal. if you end up getting more money, or one guest gives you more money, how much more -- or congress did you more money, how much more can they give you without the white house rejoining the funding measure overall? that would be hard for me to speculate on what the president's standards are going to become especially in terms of particular dollars. i think it should be flexible based on the requirement on the ground. if the nation decides that the present secretary and the president assad we are going to morgan the fight against -- president decides we are going to do more in the fight against isil and we need more resources, it should be based on that primarily. to base it on other factors sounds like it is reopening the budget deal. and to me that is probably a recipe for bogging down the appropriations process, even when we started off wit
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us to faster. if we open the deal, we are likely to move slower. the resourceving level be totally disconnected from what is happening on the ground. i think the secretary, first and foremost, will be looking to do the facts change from do we have a requirement for more activity that we now foresee? vago: obviously, fuel prices, energy prices are at an all-time low, that is why the department continues to charge a premium on fuel used by military services to cushion when fuel prices skyrocket, as they did a few years ago. you are using some of those savings for lower energy prices. what is that due to the overall fund -- what does that do to the overall fund? >> at this time we are in decent shape on that front. congress fuel savings in the ominous
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which was not unexpected given that prices had dropped and that was apparent to every american. we have done the same in this budget we have sent to congress. over $2.5 billion in this budget to allow us to mitigate the production to a considerable extent. there grateful that economics are breaking our way in terms of inflation and particularly fuel inflation. we have to worry about people getting overly optimistic in looking at the price and financial news today and assuming that is true for the next year and half and taking every last dime for a $30 a barrel crude price. that would expose us to too much risk because things can change and we need to have some shock absorbers when we are involved in ongoing operations. we are ok right now. vago: for much more of our interview with mike mccord, including a discussion on the pentagon's retirement and healt
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this week's money minute feature in our personal finance expert tells us did manage of giving personal and business finances separate. >> managing a successful small business is a challenge. keep things tight -- i'm talking organized money management, which means giving personal and business finances separate and all times. even if business is something you do for fun to generate extra income, you may not need to separate finances as long as you are giving good records. the main benefit of keeping separate accounts is to show the irs you are running a true business. this opens the door for claiming business expenses as the irs allows deductions for business owners. it makes things super easy to and it is ag income great tool to use to stay on top of your expenses without overspending. keeping things separate helps to identify issues good and bad
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. what changes can you make to get back on track? there are no downsides to keeping your personal and business account separate, only advantages. the first step is to talk to your financial institution about setting up a business account and then you are said to go for them prosper. vago: we will see you next week. if you have any financial questions, please e-mail i knew it could rough in there, but how rough? there was no way to know for sure. hey guys.... daddy, it's pink! but hey. a new house it's a blank canvas. and we got a great one thanks to a really low mortgage rate from navy federal credit union. pink so she's a princess. you got a problem with that? oorah oorah open to the armed forces and their families for over 80 years. navy federal credit union.
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vago: even before the obama administration cemented its budget request to congress, republican members claimed credit for increasing the budget while blasting it for not being robust enough. both are disingenuous statements. administration has often asked for more money than allowed under spending caps and sometimes more than gop lawmakers have appropriated. the administration kept within its budget limits this year by cutting $20 billion from its planned to 2017 budget. but the administration unrealistically
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billion to $30 billion more over the coming years. the administration argues that given funding uncertainties come it is being prudent budgeting for what it needs. perhaps, but begins and should also makes fiscal problems worse . every budget is about trade-offs. this one rightly sought to balance modernization, improve readiness, and keep from further tracking the force while investing in nuclear modernization and future programs. when you cannot have an honest funding debate when both sides are being disingenuous. dod budgeting is hard enough without having to juggle double sets of books or make last-minute cuts. the next administration must touch it more realistically if one guest is not going to give the pentagon the flex ability to retire aging weapons, the much-needed modernization readiness and personnel, it has got to find a way to give it more money. thanks for watching could i am vago muradian.
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[music] >> dr. charles stanley: every single one of us can start the day off with prayer. amen?


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