A front row seat to democracy. Next, a discussion on the navys priorities and budget for the upcoming fiscal year with Navy Secretary for Financial Management. From the American Enterprise institute, this is an hour. Good morning. Thank you for joining us. I am honored to have here today for our discussion the assistant secretary of the navy, assistant secretary of the navy for Financial Management and comptroller, otherwise known as navy comptroller. Weve been friends and colleagues for many years. He most recently came into the department of the navy from the Aerospace Corporation and previously worked at another think tank here in d. C. He actually began his career as a u. S. Infantry officer. Maybe i will ask you a few things about the army budget and how much money it is a pleasure to have you here for this discussion. We will also be taking questions from the audience, both in the room and online. You can go ahead and start emailing and questions, i think there is a link on the site where you can send them in by email and i get to read them off the ipad here. Then we will open it up for questions in the room as well later on. In the room later on. Lets jump right into it. I will start grilling you, all right . [laughter] this was, obviously, a more difficult than usual budget year , preparing the fy 25 budget requests. Not only did you have to prepare it not knowing what fy 24 would be, because congress was late appropriating, you also had to reduce how much were in the budget. Overall for dod, its 10 billion last. The navy seemed to fare pretty well. Within the department of the navy, the navy service was up slightly, relative to last years projection for fy 25. Marine corps, down slightly. You did a lot better than say the army, which was losing ground in the budget. So, my question for you is, why did the navy do so well relative to the other services and what does it mean in terms of dod priorities and how the navy fits into them . Mr. Rumbaugh such a great question, though i should have interrupted you to do my own. Thank you to you and aei for having me. I was worried how he was going to describe the bio with certain judgments, like when he didnt actually produce good analysis. Im glad to have skipped past that. Its a great question and, i think, a great story about where the nation is. We are at a time where we are a maritime power and we know the challenge is china and what we are seeing is actual strategic choices. We are budgeteers and the standard thing that we do is we have these strategic words, but when we go and find the numbers, its not supported. The easiest way you could always hoist someone is the service shares stayed the same. No war, cold war, why is there no change to that . What you are seeing is there is no change to that. They are trying to debate me into at the expense of the army. But thats not an important part of what it rings to the nation, that what we need more of our Nuclear Deterrent submarines, fast attack submarines, destroyers sailing in the red sea, a marine corps that can respond to a crisis like gaza and be there immediately. Someone who can be there with their new force design. When you run it down, you see how many of the efforts are in the need, its a huge credit to everybody up and down the line and in the legislative branch for recognizing the fundamental distant difference. You mentioned the red sea. Lets go into some tactical things going on right now. The navy has been doing a lot of work in the red sea defending against who the missiles, houthi missiles. I dont think we know the exact numbers or anything, yet. What is the navy going to need in terms of replenishing stock because of these operations in the red sea . Should we expect to see that in a supplemental request sometime in the next year . Mr. Rumbaugh in the next year . How about right now . Its like did they shoot anything last night . The number keeps changing and we are using expensive missiles, tomahawks, those things are pricey. First thing you have to say is would you rather expend them or have the bad guys stuff land . We obviously need to come up with new answers. The secretary of the navy has already been down to look at other answers. Having those ships and sailors in harms way, sorry, you will have to put up one of the navy cliches. Its an economy floating on seawater. To your point, the budget tactic of we are waiting on the fy 24 supplemental right now, something we appreciate congressional action on. You saw that, the navy got a 5. 4 percent increase over the base last year. So, from base to base, a 5. 4 increase. This at a time when cpi is 2. 4 . We are getting a real growth that secretary gates called for. You and i can agree that he kind of made that number up. Nonetheless, its a pretty good metric to use. We will lose that real growth if we have to replenish those stocks, the standard missiles and tomahawk built in south dakota, if we have to replenish those from within our own instead of congress realizing this is an extreme situation giving us that money. The shells builtin garland, texas, scranton, pennsylvania, money is in the senate path supplemental to replenish those stocks, even with the challenges around. We are you and i have grown up in a world where supplementals have been a regular thing. That supplemental is on the hill right now awaiting action. That is the first and most important answer to your question. You are mr. Harrison you are saying you need to 24 supplemental first and then we can come back and look at the 25 supplemental . Is that the game plan . Mr. Harrison is there a 25 . No, we are not in 25 yet. Are the level of operations going to continue . We know they can be. We will have a conversation on how to do that, especially with 25 being the cap year if we have these elevated global responses, where we have to be open to that. For now, and i feel sorry for my colleagues on the appropriations staff, the same joke i started with. What do we need . Well, what happened last night . We are constantly updating how big the demand is, we will just have to watch. Mr. Harrison lets talk more about the specific choices made in the fy 25 quest. The navy was somewhat shielded but not entirely, there were some programs suffering reduction based on what was previously planned. One that got to me in particular was a virginia class attack sub. Instead of buying two, the plan is to now only purchase one. You know there is a long tradition in washington of using the monument strategy, where you cut something, you know its going to be terrible in the eyes of congress, they will be forced to put the money back, but then they have to figure out how to pay for it. Cutting the virginia class sub, was that Washington Monument strategy . Or are there serious justifications about why you need to cut it . Mr. Rumbaugh you could not have asked the question better. No, this is a real decision. A real decision that you can see proven out with the santos unproven list coming out and there is no submarine on it. This is not trying to play a game at the budget level. This is the navy and the department recognizing a fundamental reality. We have purchased two of these Division Class submarines since 2011 and for those who have played really paid really close attention, there were a couple of years where the navy did not propose two, but nonetheless we have always had two and that is not what we are hoping to have happen this year. 60 votes already appropriated. 14 already on contract. Tens of billions of dollars a backlog at the yards. And greater demand is coming as we move into full production for columbia as we work with the australians to make this a reality. There is just a fundamental tension and difficulty there that with our Industrial Partners and partners in congress that we need to work through. On basically every other question, we set hard choices, fiscal responsibility act, got to prioritize, but its not true on that class. Its a different dynamic where we are looking at the backlog and throwing more money at it is not going to produce outcomes. To outpace china, we have to get those subs out of the yards and to see. We believe that the best way to do that is to create a break, allow some of that to go through. Keep in mind its not that we are spending less on submarines. 9 billion in fy 25 for the submarine Industrial Base. 11. 1 billion over. We left the advanced procurements of the second vote in to make sure that we could grease the system as much as possible. So, we are instead of putting money into a sub, putting it directly into the yard. This is not walking away from Industrial Partners, not walking away from the undersea dominance. Its to try to get better outcomes. By the way, did i mention in the supplemental, 3. 3 billion dollars . 15 billion over six years. We get nothing from congress. Everybody weaponizes the value of making these direct investments to try to do better and get to better outcomes. It is not a Washington Monument ploy. It is a necessary moment that we with our congressional Industrial Partners need to push through to actually get strategic outcomes. Mr. Harrison a report came out this week, from the navy, looking at the delays in the shipyards. Its not just a virginia class program. Its kind of down the line there are these backlogs and it is taking longer and longer for ships to come out. What is it, now . Five or six years for a virginia class sub . It keeps taking longer. What is the fundamental problem . What do you need from congress in order to help fix that problem . Mr. Rumbaugh lets not just put the onus on congress. The fundamental problem will not surprise anybody. Its all the stuff everybody can see. Its workforce challenges, supply chain challenges, making sure we have the right information at the right time to make good decisions with industry, with congress. Its not some magic. What do we need to do . The same thing i just talked about. We in the department of the navy are a part of this. We are getting support throughout the government for this. That is why you see these incredibly large sums for investment. Workforce, we ask for 450 million for workforce training dod wide. Congress added extra money, right . Saw the money and added it. We know that we have to make investments to ensure even these outcomes. At the same time they have been clear that we need our Industrial Partners to help. We cannot just be putting more dollars on the backlog, reassuring investors that these are going concerns. We need to turn this into outcomes where ships and subs roll off the line. The review that tom referred to came out last night. It absolutely happened when the secretary realized there were a number of programs that were not meeting standards, so he sent them to do a comprehensive look and we have now come clean and said hey, this is where these programs are and we still need to work through the hardcore nittygritty of what we actually do to fix that. Like i said, its easy to see where the problems are. How to solve them is a difficult question. Mr. Harrison relating to that, building on it, the agreement between the u. K. , australians, to getting Nuclear Powered attack subs to australia, its very important, strategically, for balancing china. But does that just further complicate and add to the challenges in our ship ill ding Industrial Base . Mr. Rumbaugh i dont think so. I think we started with the right thing. A great strategic moment, lets get our allies and partners the best things out there. The virginia class runs laps around everything in the water. Thats great. Lets get allies and partners that we can trust with that technology who will go through taking care of of that technology. Thats what you have now, australians working with the navy. Does it increase the challenge in the out years . Yes. The sheer amount of tonnage coming out of the yards is unparalleled. Its just bigger. Even then, the truly national moments, like where we went through our tonnage, is just very, very high. That is far enough down the line that it is something we need to get through and be there. That is why we are making the investments now, why we are dealing with the delays now to make sure those lines are running smooth, by the time we actually get to the moment that the australians take their boats and we want that columbiaclass coming out every year to get that new generational nuclear turn at sea. Mr. Harrison now it now i want to turn to something of a fun question. Fun for me. [laughter] mr. Rumbaugh if the rest of you will think a budget question is fun is an open question. [laughter] mr. Harrison there are just such fun names in this. There are a number of classified funding lanes lines in the budget. You used to track these as well, they have interesting names and its notable to me that the Largest Program elements in the Naval ResearchDevelopment Budget are called link tangerine and pirate fish. You look at the description of them, it just says classified. But they are not the only ones. Go down the list, there is rid track to maple, chalk coral, juniper chalk, eagle, i could go on. Lots of fun codenames in there. Two questions. One, whats up with the names . Two, what should we read into the fact that so much of the naval r d budget is going into these classified funding lines . Mr. Rumbaugh i think you already answered the question, didnt you . You said fun . Who doesnt want great codenames . Im not sure i would use this so much going in, do we act salute the exploit every advantage that we can to provide maritime dominance against potential adversaries . Some of those things achieve their best value if nobody knows about them, so we will not talk about them today. We will keep the advantage for real. There is a bunch of stuff we have a lot of stuff sitting in between where we are kind of talking about it, right . The Disruptive Capabilities Office is coming out of task force 59 to really try to leverage and get to the future. We are glad to be a part of the deputy secretarys replicator program. This is something where we can talk about autonomous, but am i going to tell you what the specific programs are . Now im telling you the things we are pursuing. But i assure you that the deputy herself has said that there are half 1 billion and 24, which the appropriations bill moved fast on. When you have a good story to tell, everyone can get into process at some point, but what people fail to recognize is the process moves slope and not everybody agrees with you. When everybody is like yes, thats a good idea, i can move through a process with no problems and lay the case out with the appropriate classification and make sure it comes out in a 24 beds it, even if it is six months late. That is taking advantage of something late. We are proud of those maritime programs and the navy would have backed them anyway, and they sit there with the edge of cannot talk about some of it but super excited to be pursuing some of it as well. Mr. Harrison are there things in the 25 budget request that are being funded because of the Replicator Initiative . You said that there is money in 24, but what is in the 25 request . Mr. Rumbaugh there is stuff in the 25 request. You asked the question in a great way, but we have to parse it a little bit. The department has been very cautious to not turn replicator into just a pool of money that they get to go and take. Makes it harder to answer questions like this, right . Its a very nice if there is a pot of money, we can tell you the Budget Hearing of here is your line and this is what you spend, but the problem is it gets filled with a bunch of programs where everyone is glad to take the money but its not clear that you have buyin in the except buyin. By accepting ambiguity, it shows we are serious, but what do you think . We want to emphasize that and i think there are a couple of cases where the navy is looking at something that they are curious about and that leadership retention ratchets it up. In the coming year you will see the navy internalizing that. They are not just responding to the deputy secretary. Its the new naval chief of operations. Secretarial guidance. You are seeing parallel efforts as we face the challenges that we need to face. Mr. Harrison i do want to see if there are questions in the audience. If you have got a question, you can raise your hand. I see one over here. Can we get a microphone . Anyone who has questions online, please email them in and we will be checking up here. Thank you for coming, its a great discussion. Specifically i want to know about not only the delays that came out last night, but the longrange shipbuilding plans that came out a week or two ago. Are those delays reflected in the longrange shipbuilding plans, or will they have to be reflected in the future based on last nights news . Thank you very much. Mr. Rumbaugh great question. Its a new development. Some of that will come out in the wash when the shipbuilding review takes marks on when we buy it. Some of that dying will continue on even as we try to compress the execution. On several of them, for example, the frigates, we rolled it out as up to six months. We were not willing to concede it. Certainly we were not willing to concede the delay on columbia. We need to look at ways to claw that back and get more efficient. We are trying to be honest and transparent with congress, with the american people, but we will fight to bring it back in, the steps that we take to materially improve outcomes and bring it back. You wont be surprised to hear that that is a bit of a tense conversation as we need to start pointing fingers and saying we need to do this, need your help doing that, talk at her at this point, it will be a powerful and important conversation. Mr. Harrison i want to ask you a related question what are the must fund things in the budget . The crown jewels . In the naval budget, you mentioned the columbiaclass program, having delays, but is that one of the crown jewels that you just cannot do without . Are there other things in the navy budget that no matter what, no matter how much the budget might be cut, you just cannot do without . Mr. Rumbaugh uh. Thats a great question, todd. Gets a bit into the philosophy of the budget. How much do you want me to live off of . We should talk about the u. S. Being the greatest nation on earth and continuing with the right investments in the department of the navy. But seriously, columbia would definitely be one of those. Columbia, whatever delay it is suffering doesnt come from a