Let me just thank you so much, Michael. I deeply appreciate being invited here today to be in front of the Brookings Institute, and I appreciate all of you who have come to participate in this. I'm really thrilled to see the two panels that are following me on this because this it's a great array of national security experts, Department of Defense officials and members of our defense industrial base that I'm sure will give you even greater insight than I'll provide today.
What I'd like to do is provide the context of where we are with respect to this issue of sequestration. Our country is facing a grave threat to our national security, and the grave threat was created by Congress in the debt ceiling deal that we did last summer.
I am one who voted against that deal because, frankly, I didn't like the way this was set up from the beginning in terms of where it put our national security. I would have like to have seen us just do what we should do in terms of the fiscal state of the country and put together a strong responsible, fiscal plan for our country that takes into account the big picture, which obviously is not just defense spending, not just non-defense discretionary spending but also the 60%+ of our budget that includes mandatory spending. Until we do that, we're not going to get our fiscal house in order in the way that we need to get our country on the right track.
But today we're here to talk about this threat to our national security, and I want to put it in perspective because I'm not someone—I serve on the Senate Arms Services Committee, and also am the ranking Republican on the readiness of the committee—I'm not someone who says that we shouldn't cut any anything from our Department of Defense, but we have to put into perspective where we are with our Department of Defense right now.
In addition to this issue of sequestration, the President's proposed 2013 budget that has come forward has already been taken up by the Senate Armed Services Committee and the Hass committee as well in terms of the authorizing committees—that will be a cut of $487 billion of spending reductions over the next 10 years, and there are some pretty tough choices in those initial spending reductions. Our defense leaders and Secretary Panetta have testified before the Senate Armed Services Committee about the choices made in those reductions and they're difficult but doable.
What we're here talking about today is an additional $500–$600 billion in across-the-board fashion that will come in January of 2013 because of the Super Committee's failure to come up with savings, and it hits both defense and non-defense. My focus today will be on the defense end.
That additional 500 billion it gets close to 600 billion when you include interest. It's done in an across-the-board fashion so essentially everything gets cut. There's no strategic thinking to the way it would be implemented and therefore we do everything insufficiently. If you listen to what our military leaders say about it, starting with Secretary Panetta, he has said we would be shooting ourselves in the head to allow sequestration to go forward in January. He's described it as devastating, catastrophic. It would inflict severe damage to our national security for generations.
To understand why our military leaders are so concerned about this—again, I said I'm the ranking Republican on the Readiness subcommittee, and I've been particularly focused on making sure that we maintain the readiness of our forces to prevail in the conflicts that we're involved in today—we still remain in a conflict in Afghanistan—and to deter tomorrow's conflicts. When that deterrence fails to defeat our enemies decisively, that's why our national security exists, and we now have one of the most competent and battle-hardened military forces in the history of our country. I know many in this room have met our men and women who are serving right now. The training that they have, the courage that they've shown is phenomenal, and they are the very, very best. We cannot at this time, in this moment in the history of our country, gut our first class forces or break faith with our troops.
If you hear what our Chairman of the Joint Chiefs of Staff has said recently, it's pretty shocking. Chairman Dempsey has said that if sequestration goes forward, that our advantages over potential adversaries will diminish. It will diminish deterrence and "increase the likelihood of conflict." None of us wants to see that happen.
If you look at other times in the history of our country where we have reduced defense spending...let's go back to the early ‘90s. At that point we had ended a conflict, we had thought that we were going to take a peace dividend, and of course coming from we eventually had 9-11, but at that point there was a feeling in the country that we could scale back on defense spending, and here's where we are today. We're not in the same position at all.
We are in a position where according to Secretary Panetta, just last month he said that the threats to our country have not receded. Our troops remain engaged in the conflict in Afghanistan. We continue to confront a real terrorist threat emanating from Somalia, Yemen, Pakistan, and North Africa. As Secretary Panetta has said, "We continue to see the proliferation of weapons of mass destruction, threats from Iran and North Korea, and turmoil in the Middle East." We also see what is happening with the rising power of China and the investment they're making in their military in Asia, Pacific Region, and of course we have other conflicts like the conflict happening right now in Syria.
The course of where we are right now in our national security—this is not a time for us to make decisions that will undermine our ability to confront these challenges that we face right now. Let me talk briefly what this means and what we know so far will be the impact of sequestration on our various forces.
With respect to the Army—I told you that the initial 487 billion in reductions, that's going result in approximately a 72,000 reduction in our Army. Now everyone who's looked at this would agree with getting out of Iraq and a gradual decline in the level of forces in Afghanistan that we were going to do some downsizing of our ground forces, so the initial reduction of 72 thousand to our Army is happening. But with sequestration, General Odierno has testified that we would be facing an additional 100,000 reduction in our Army if we allowed sequestration to go forward, with 50% of that reduction coming from the Guard and Reserves.
I think this is an issue that governors aren't aware of fully yet, although elected officials at all levels in this country are becoming aware of it. In fact, the Council of Mayors recently issued a resolution on the effects of sequestration, urging Congress to come to an agreement on it. Think about it: 100,000—50,000 from the Guard and Reserve. The function that our Guard and Reserves play—we couldn't have fought in Iraq or Afghanistan without the Guard and Reserves and they also play a very important homeland function for our security, as well as responding to national disasters for our governors.
Now let's talk about the Marine Corps. Under the initial reductions that are likely to happen, the Marine Corps is going to be reduced at this point by 20,000. If sequestration goes forward, the Marine Corps will face, according to the assistant commandant, an additional 18,000 in reduction. But here's the thing that keeps me up at night. The assistant commandant for the Marine Corps came before the Readiness Subcommittee. I asked them about the impacts of sequestration and he said this: "Sequestration would render the Marines incapable of conducting a single major contingency operation." Think about it....Our Marine Corps. That to me is a shocking statement, and one that cries out for us on a bipartisan basis to resolve this issue.
If the Department of Defense choses to protect manpower accounts, when the Army and Marine Corps would have to cut even more deeply then into training, maintenance, and modernization funds, which of course would have a negative impact on industry, which we're going to talk about in a minute.
Secretary Panetta has said that sequestration would result in us having a Navy bringing us back to 1915, ground forces back to 1940 before where we were before World War II, and the smallest Air Force in the history of our country. We would have to potentially undermine contracts and agreements that we have, including the Joint Strike Fighter, the Casey 46A Supertanker and many of our modernization efforts that are underway right now that are very, very important to making sure that our men and women in uniform have the very best equipment to protect our country.
In conjunction with this, no one would say that the Department of Defense is an area where it's a jobs program, but the reality is that sequestration not only undermines our national security, it will hurt our economy and it could fundamentally tear our defense industrial base. That is of deep concern not only to my membership on the Senate Armed Services Committee, but as a member of the Small Business Committee.
Often with our essential weapons system it's not just the large defense contractors that will certainly be impacted by the sequestration cuts, but they rely many times on very small contractors and in some areas there's one contractor—a small company who's producing the component where you have a sole supplier—and when these businesses go out of business or they decide to do something else because they cannot deal with the uncertainty of where we are right now or they cannot address or keep their bottom line in a sustainable way because of the cuts that are coming, they go out of business and they don't come back. It's not easy for us to recreate that capacity so quickly if we suddenly find ourselves in a situation where we need that type of equipment, when we need that part and that just doesn't happen overnight. That's a deep concern not only for our large defense contractors, but for many small businesses throughout this country that serve those contractors.
So we're not just talking about the jobs issue, which is of course of concern to anyone who serves in Congress, we're talking about lost lives if we don't give our men and women the equipment that they need, the very best, and we don't stay on the cutting edge of technology when it comes to areas like ISR and other areas where we need valuable information to protect America. There have been several reports about this, which I think will probably be talked about today with the panel. The National Association of Manufacturers issued a report last week that studied the impacts of sequestration. The Bipartisan Policy Center and the Center for Security Policy have also looked at this issue. George Mason University has done a study to look state-by-state to see what are the impacts on jobs if we go forward with sequestration. Here's what the Nam report says: More than a million private sector jobs, including a 130,000 manufacturing jobs, will be lost in 2014 if we just continue to sit on our hands in Congress. Total job losses will increase unemployment by .7%, and GDP could be impacted by almost 1 percent lower in 2014.
Think about it. Where are we nationally with our unemployment? Over 40+ weeks of over 8% unemployment. Not only do we undermine our national security, but a lot of people will be out of work if we continue on this path. Just a couple of numbers—the neighboring state of Virginia is estimated will lose approximately 123,000 jobs, Ohio 18,000 jobs, Connecticut 34,000 jobs. I could go through every state in the nation. My own home state of New Hampshire: 3,300 jobs. We're a small state—I can tell you 3,300 jobs matters very, very much to our state, but we're one of the smaller impacts if you look around the country.
Some people may believe around here in Congress—when I say here, not here in this room but collectively in Congress—that this is an issue that we can wait till the lame duck session to address. But the problem is this: the Department of Defense and the Pentagon, they're already paralyzed by sequestration. They don't know if it's coming. They worry that we have the political will to resolve this. They're holding on right now in terms of action or inaction, and our contractors are already feeling the impact of it. Bob Stevens, CEO of Lockheed Martin, talked about this paralyzing effect of where we are right now with sequestration and he said, "The very prospect of sequestration is already having a chilling effect on the industry. We're not going to hire. We're not going to make speculative investments. We're not going to invest in incremental training because the uncertainties associated with $53 billion of reductions in the first fiscal quarter of next year is a huge disruption to our business." Yesterday, Bob Stevens came forward and talked about the fact that they are likely, Lockheed Martin is going to have to issue what's called the WARN Act notice. Our large defense contractors have a duty, under federal law, 60-90 days before a potential layoff occurs, they have to notify their employees that they may be laid off, and so there are potentially hundreds of thousands of WARN Act notices that could be issued before the November election.
I don't know if that's not a wake up to members of Congress that this is an issue that needs to be addressed now, I don't know what is. The bottom line is that our defense industrial base, they report to their board of directors. They have responsibilities to their employees. They can't wait until December to take the actions that need to be taken, and so we will feel the impacts of sequestration before the lame duck session. It's one of the compelling reasons why this is an issue that I hope will be addressed on a bipartisan basis before the election. We owe that to the American people because our foremost responsibility in this government is to make sure that they're safe and protected.
Let's not forget that without protection and safety our economy cannot thrive and grow. We all saw what happened on September 11— not only the loss of human life, but also the devastating impact on our economy of an event like that. There is a relationship not only in keeping us safe, but in making sure that we can continue to prosper as a nation.
So where are we and what's next? There are three proposals that had been out on the table. They are Republican proposals, mainly. One is one that I'm cosponsoring, along with Senator Kyl, Senator McCain and several other Republicans in the Senate that would deal with the first year of sequestration. To deal with year one, it's about $109 billion. It addresses both defense and non-defense sequestration because we appreciate that members may come to this to resolve it for different reasons, and some may come because they're concerned about the non-defense reductions and some may come, like me, because we're concerned about the impact on our security. In order to do that basically what we did was, Simpson-Bowles recommended for our federal workforce, for every three positions that came open that you would only fill one. Our bill would say for every three positions that come up come open, you can fill two out of three and we would keep a federal pay freeze in through 2014. That covers us for year one of sequestration.
Chairman McKeon in the House has a similar proposal. His is just implementing the Simpson-Bowles of for every three positions that come up open that you can only fill one. Then of course, Congressman Ryan and the House have actually passed, through reconciliation, a bill that would address sequestration.
What I would say is my hope is what will happen is that we will see a bipartisan group get together before this election because this is too important to kick the can down the road to the lame duck session for the reasons I just described. I also don't believe that this should be used as some kind of chip in the lame duck session where we have the tax rates, we have the Doc Fix, we have you name it. It's going to be up in the lame duck session, and our national security should not be put at risk with that.
Here's the issue of where we are. Some have said that they would not—I think on the Democratic end, particularly Harry Reid has said—without tax increases, increases to our tax rates, then we're not going to resolve sequestration. I think that's a false choice. There are those of us that have already said on the Republican end, we're willing to work with you on revenue, but we're not going to further hurt our economy by increasing tax rates. There were areas of revenue that the Super Committee came up with that we're willing to sit down and talk with you about to resolve this issue before the election.
I would hope that members of both sides of the aisle would see this is an area where we need to find common ground on behalf of our national security and not only that but this is not a time to further hurt our economy by devastating our defense industrial base. That's pretty much where we are. I appreciate all of you being here today.
The reason why I became so incensed about this issue is because I don't know how we can look the American people in the eye and say we are not going to put that foremost responsibility of protecting our country and making sure that we fulfill that responsibility. We should not allow our lack of courage on the big picture fiscal issues to stop us and that's what worries me around here—that we all have to show some courage and make sure that we look and address the debt—there's no question that it has to be addressed—but we also shouldn't create a national security crisis on top of our current fiscal crisis to do that.
I appreciate you all being here today and look forward to answering your questions. Thanks.
Speech taken from http://www.ayotte.senate.gov/?p=video&id=634.