For the next seven months. If the yearlong sequestration goes into effect. That is just one of hundreds of examples. Were going to hear today that the military service was are already taking actions to mitigate the impacts of the continuing resolution and the impending sequester. For example, the department of defense has instituted hiring freezes, reduced or eliminated temporary or Term Employees and deferred Facility Maintenance and began postponing or canceling maintenance of ships, air and ground vehicles. They will also implement furloughs for most pleas, cut backs in flying hours and other military training and contracts. In addition, hundreds of investment programs, acquisition programs and research and Development Projects may become unexecuteable. Even if many of the short term actions are still reversible if we act promptly they will have longterm costs. The longer congress postponed action the higher those costs will be. For example, the army informs us if sequestration continues through the end of the fiscal year, twothirds of it brigade combat teams will fall below their acceptable levels. Air force will experience decline in the air drop and refueling capability. The strike groups will not be ready for scheduled doe employments for later this year, resulting in negative impact on moral and retention. By the end of the summer, the department of defense says it will be unable to pay its bills and be in a position to deny service to military members families and retirees. There are Bipartisan Solutions to both to continuing solution problem and the sequester threat. We cannot afford to look the other way and pretend there isnt a huge, looming problem. A yearlong c. R. And sequestration will undermine the National Defense. The danger of the International Situation is highlighted again yesterday when north korea had a very provocative nuclear test. We cannot allow these actions of sequestration and a yearlong c. R. To occur in the middle of this kind of a world. It will create a huge problem for our men and women in uniform and their families and it is incumbent on congress and the president to find a solution together. Senator . Yes, thank you. Weve talked about how to work through this mornings schedule. At 11 00, senators who are scheduled to have, perhaps four maybe even five votes. Were going to have very short question period after our open statements and after your opening statements. It is possible, at least, that we can finish after a few minutes after 11 00. If that doesnt happen, we will adjourn for perhaps an hour. Come back perhaps 12 00 or so for another hour. I hope that doesnt happen but it very well may. We have a Large Committee and everyone is interested in the solution to the sequestration and the yearlong continuing resolution threat that looms before us. So that is the best were going to be able to do this morning. I now call on the senator. Thank you mr. Chairman. There are 16 days remaining between today and march 1. 16 days that will define our military strength. Secretary of defense announced he has indefinitely delayed the truman Carrier Strike in the middle east, denying the two Carrier Force presence that our commander has requested over long period of time. Im going to run through this quick. The admiral made a statement i know of no other time in history that we have come this far, this fast in the Defense Budget. There could be for the first time in my career, incidents where we may be asked to respond to a crisis and we will have to say that we cannot do it. The secretary of defense in the hearing that took place the other day on ben began city made it clear benghazi that we dont have the resources to product and defend and offer security to our people. That is not acceptable. The department of defense has absorbed almost 600 billion. Were looking at up to over this period of 10 years, a 1 trillion cut and it cant take place. Mr. Chairman, this hearing is critical to allow the joint chiefs to provide an honest assessment to the services. The loss of capabilities or readiness in the mismatch of the resources were going to have to Work Together to ensure the that the American People understand how serious this is. Thats reason for this hearing today. Last week led by the senator, senators mccain, graham, eni introduced a bill that will end sequestration that will provide the department to allow to work under a solution. It is not a perfect solution but it is better than doing nothing. There is growing concern that the president wont increasingly negotiate on a compromise until after sequestration takes place on march 1. Each member of Congress Knows the pain that is affected on the constituent but the real pain will be felt in the men and women serving our country when they see they wont have the resources to defend our nation. I will have questions and one of them is going to be specifically, i hope you will be covering this, this is the request, not to hold back, show how tragedy this is, show the increase of risk and the increase loss of life. That is what we expect out of this hearing. Secretary carter . Thank you, mr. Chairman. Im going to be very brief because i think what would like to get to and we would like to get to is the specifics of the impacts of these two budget circumstances that we face, first of all, sequestration and the possibility of the continuing resolution going on for the entire year. I thank you for this hearing and i mean that from the bottom of my heart. We welcome an opportunity to describe these impacts. Secretary panetta and i have been using the word devastating for 16 months now. I testified last august to the consequences of sequestration, if it was to occur. Now the wolf is at the door. You, who know us, who understand us, and know National Security inside and out by virtue of your service on this committee, are critical because im hoping when we describe what the consequences of these things are for National Defense as we see it and give you the information that you need. You will be able to communicate to your colleagues in the congress and we can move in the direction of a comprehensive solution to both of these problems that you referenced. Slewly, we will provide absolutely we will provide that information. We still and will be working through the consequences of this situation. As we do we will provide to this committee as complete information as we have organized in any way you want. Today is a start in that regard. The problem comes in two tears. The first is that sequestration, which is scheduled to kick in two weeks time, requires us to subtract from our budget for the remainder of fiscal year 2013, 46 billion. As the chairman indicated, to do it in the worst way namely, to take equal shares or proportionate shares from each part of the budget, which is obviously not what you do if youre trying to to be sensible. Secondly, the continuing resolution that were operating under now going into five to six months creates a different kind of problem for us. It has enough money in it overall but it does not have enough operation and maintenance money. You put those two things together and in this year, there is a drastic shortfall in the funding that we need to do training and training in turn impacts readiness and that is our capacity to fight in other places than afghanistan. Were protecting funding for afghanistan and as you know, under sequester the president has decided to exempt military personnel from sequestration. We made some other limitations in my direction to the department, we will protect wounded ware yur programs, we will protect operational needs. We will protect to the extent we can to capables that are critical but the reality is we cant protect much of, which is valuable to the country. In the near term of what you have is a true crisis in military readiness. If the cap is imposed a companys sequester are continued for the next 10 years as is the plan in the budget control act. Were going to change our National Defense strategy. Those cuts are too large, too sustained for us to implement the strategy that we crafted under the president s guidance just one year ago. I understand, mr. Chairman, and i have long under that the department of defense must contribute to the resolution of the nations fiscal situation. Thats why we have accommodated 487 billion in cuts last year. Before that, under secretary gates we made several hundred billion dollars in additional defense spending by largely removing unneeded or under performing programs. We did an historic adjustment of the winding down of a decade dominated by the wars in afghanistan. Were making that adjustment as well. I also understand that the taxpayer deserves careful use of every dollar we do get. Thats why we have striven and continue to strive to get better buying power for the defense dollar and the acquisition system. Both the strategic approach to reduction and the efficient use of defense dollars will be undermined by sequestration. What is particularly tragic that sequestration is not a result of an economic recession, it is not basis spending cuts is the answer to our nations fiscal challenge, you can do the math. It is not in reaction to a more peaceful world. You refersed the north Koreas Nuclear test this morning. It is not due to a new strategic insight or new technology, it is not because paths and entitlement spending has been explored and exhausted. It is not because sequestration was ever a plan that was intended to be implemented. All this is purely the challenge Collateral Damage of gridlock. For our troops for the force, the consequences are very real and very personal. I will give you a few examples, i told you that we intend and the president plans to exempt military spending from the sequestration but the troops will feel this in other ways. For example, you reference the cancellation of a carrier deployment. We had to do that because we had to recognize that were going to run out of operations and funds in the navy later in the year. We made the decision not to deploy the carrier but instead keep it here in the United States so that we would have the capacity to deploy it later, if we needed it. If we deploy it now, we would not have the capacity to have a carrier deployed there in the future. We had to make that decision. All the sailors on that Aircraft Carrier you were ready to go. Their families made plans on where they were going to live, schools, all those things that go with sending a loved one on a deployment. All that needs to change within a few days. Army units that are coming down, i visit them around the country, coming back from afghanistan are used to being at the highest state of readiness and what motivates them and what should is mission. By the end of the year, i think the general will detail this. They wont be training in the way their profession requires them to. So it will have a big eaffect on our uniformed people. For the civilians, a lot of people think d. O. D. Civilians are people who live in the washington suburbs who come in and go to work in the Office Building here. They are not. They are mostly people at depos and shipyards that are fixing our equipment. 86 dont live in the washington area. Later in the year in two weeks time, we have to institute a process of furloughing them, which we will do consistent with the law and our requirements to you. The net of it is many of them will be furloughed for as many as 22 days before april 1 and the end of the year. In other words a fifth of their paycheck. That is a real human impact. Ive said i cant be furloughed under the law because im a president ial employee but im going to give back a fifth of my salary in the last part of the year if people are getting sequestered. There is a big impact here. The last impact i would like to call to your attention is that on our Defense Industry. You know we depend on our Defense Industry because it is second only to the magnificent people we have in uniform is what makes our military great. The affects of sequestration are going to be very significant and we see it already on the Defense Industry. We depend upon them to attract and retain science and Tech Technology talent. We need them to be financially successful. But many of our Industry Partners are beginning to curve internal investment, maintain liquid position. The effects of this uncertainty are beginning to show up in terms of Investor Confidence in our industry. Their ability to attract and retain workers and the requirement to stretch programs, reduce buy rates and all of that reduces the efficient in the procurement system. For the force, military, civilian, and the industry the consequences are very district, very devastating. I want to close with an appeal that i ask you to convey to your colleagues in congress. We need to deal quickly and broadly with our deficit problems in a balanced way that the president can support and congress can support. We need to detrigger sequestration, we need to appropriation bills for all agencies for that matter. I understand there is probably not enough time to accomplish all of these farreaching actions before sequestration is triggered on march 1. But i urge at least that Congress Delay sequestration, but as i emphasize the cloud of uncertainty hanging over our nationses Defense Affairs is already having lasting and irreversible effects. Ultimately the cloud needs to dispeled and not just moved to the horizon. However this is done, the magnificent men and women of the department of defense deserve no less. They need to know that we will meet our commitments to them. Our partners in the Defense Industry and their employees need to know that were going to have the resources to pro cure the worldclass capabilities that we can do efficiently. Most important, allies, partners, friends, a and potential foes, the world over need to know we have a political will to implement the Defense Strategy that we put forward. Thank you. Thank you secretary carter. General dempsey . Thank you so much for holding this hearing on such an important readiness matter. If sequestration occurs it will severely limit our ability to implement our Defense Strategy. It will put the nation at a greart risk of coercion and it will break faith with men and women in uniform. We have and continue to be part of the nations economic recovery. Were committed to remaining responsible as treasuries. To do this, we need budget certainty. That is, we need the opposite of sequestration, a steady predictible funding scream. We need time to implement reductions over a manageable timeline. We need the flexibility to transfer money to our highest priorities. Readiness losses, everything needs to be on the table. Failing to act is a choice of itself. One that will eventually require a progressive contraction of security commitments around the world and a less proactive approach to protecting our interests. When i testified before this Committee Last year, i said if we failed to step off properly on this budget we will reduce our options and increase our risks. Our military power will be less credible because it will be less sub stainable. Were a few days away from making that a reality. We can do better. Our Service Members and their fam lis expect us to do better. Families except us to do better. Thank you thank you very much general dempsey. Do you have anything at this point . Ok, thank you. General . Thank you mr. Chairman. Nearly 18 months ago you charged me with leading our army and providing my best military advice. Over the course of my 36year career i have commanded at every level. I know what it takes to prepare this nations sons and daughters for war. I know what takes to grow leaders in our army. I know what is required to send soldiers into combat. Ive seen firsthand the consequences when they are sent unprepared. I began my career in a hollow army, do not want to end my career in a hollow army. Today, the Global Environment is the most uncertain ive seen in my 36 years of service. It is unpredictable and dynamic. We simply dont know when we will have to deploy soldiers to fight again. But history tells us that we will. We owe it to them to ensure they sister the proper resources to be ready when needed. The fiscal outlook with the u. S. Army faces in fiscal year 2013 is dire and to my knowledge, unprecedented. In addition to the cuts to the army lev vied by the budget control act of 2011 the combination of the continuing resolution, a shortfall excuse me a shortfall in oversees in funds for afghanistan and sequester in fiscal year 2013 has resulted in a 17 18 billion shortfall to the militarys operation accounts. As well as 6 billion cuts to other programs. All of this will come in the remaining seven months of this yeared the fiscal year 2013 situation will have impacts of readiness on all forces not serving afghanistan and forward in korea. Impacts that will have a Significant Impact well into fiscal year 2014 and beyond. Just a few actions we will be forced to take are for example, we will curtail training for 80 of ground forces. This will impact our unitses war fighting skills units war fighting skills. It will impact our ability to recruit soldiers into our army. We have districted an army hiring freeze and we will terminate 3,800 employees. We will furlough up to 150,000 civilians for up to 22 days. We will cancel maintenance which will lead to termination of employees and delay in equipment readiness for six divisions. For fiscal year 2014 and beyond, sequestration will result in the loss of at least, an additional 100,000 personnel, soldiers from the active army, the Army National guard and the u. S. Army reserve. Combined with previous cuts this will re