The undersecretary can do better justice than i can. There are classified and unclassified elements to it. I would say we are talking about pretty far down the road. Not as an alternative to the joint Strike Fighter but what follows the joint Strike Fighter i dont think there is a conflict between it. I was mr. Kendalls battle buddy. You know what he says. It is be on fighter aircraft. It is how to dominate in air combat. There is a whole list of things about driving and developing technology for 15 to 40 years down the future. If we dont do that today, we will not stay ahead of our potential adversaries. Thank you. I have a question about strategy and the challenge posed by emerging china. Can you tell us anything about in this project the strategy . The specific strategy . We dont use a budget exhibit which may be why you asked that describes which items are part of the strategy in which are not. Let me describe some of the major things that have been consistent in our budget. We first describe this in our 2013 budget, something we have been pursuing for many years. We have an pretty consistent on it. Shifting the assets we have from the naval assets to being 5050 toward 6040, that continues. One of the insistent moves that we have had, anywhere in the world, have been at Camp Humphreys and the government of japan from okinawa to guam. We have progress to report on that front since mr. Hill presented his budget with general ramsey in terms of the landfill permit and other political progress and environmental studies being completed. Many of the assets we described we went quickly through some of the things were going to buy in this budget, the submarines their craft the aircraft, the longrange bomber, applicable worldwide. I think you hit the high points. We have had a robust to dramatic effort diplomatic effort. We are going to remain very engaged. What i neglected to mention thank you. This weekends newsmakers will focus on several military topics, including the pentagons budget the fight against isis, and the nomination of arson ashton carter. Our guest is the top democrat on the Armed Services committee adam smith. You go back to the budget control act of 2011 when it said that a certain amount of deficit savings had to be achieved or sequestration would happen, we have achieved far more than that amount of deficit savings. The goal of the budget control act has already been achieved. Unfortunately, the way the law was written, you had to specifically did before the end of december 2011 or became a law. Sequestration doesnt make any sense. For defense or a domestic budget. It is having a devastating impact on infrastructure. How to get around sequestration at this point when there is no consensus . Republicans continue to insist that to insist that number one, they will not get rid of it and to, any savings that comes from sequestration has three replaced by other cuts and spending programs. The second problem is, sequestration is there and we are living with it. The pentagon is scrambling, trying to figure out how to put together a sensible strategy and budget. They come up with these ideas and you mentioned a couple of them worried there is rearranging the there was the idea to lay up several marine corps and navy vessels. Idea after idea after idea. Congress fights every single one of them. My goodness, if you want to move like five c130s out of the base somewhere, a local member of Congress Goes crazy and tries to block it. If are not going to end sequestration, we are also going to tell them that they can make cuts, and lastly, we not going to offer any reasonable cuts as an alternative. What that does is it lines up leaving the pentagon with no choice but to cut readiness. You can see all of our interview with represents an adam smith tomorrow at 10 a. M. And 6 p. M. Eastern here on cspan. The seven Armed ServiceCommittee Looked at military retirement pay. Their proposals include scaling back pensions by 20 walk while conserving the commission has also suggested the creation of an investment account similar to a 401 k plan. The hearing is just under two and half hours at the end we plan to get your thoughts on the issue by phone, facebook, and twitter. You can look at that by the 00 eastern 3 00 eastern. Good morning. The Committee Meets this morning to receive testimony on the commissioners of the military compensation and retirement modernization committee. I went to thank each commissioner for your diligence and hard work over many months to develop the recommendations he will present to us today. Our witnesses are the honorable larry pressler, Stephen Boyer michael higgins, general peter to rally, and i understand that bob cary is snowdened in in new york. And Retirement Benefits. As we do, and courage the members of this committee and my colleagues in the house and senate to keep an open mind. We are also eager to hear from any military or other organizations that have constructive ideas to improve the current system. No one has a monopoly on good ideas and we all come to this debate as patriots who love our Nations Armed forces and went to improve the lives of all those who serve and their families. We pledge to keep their wellbeing foremost in our thoughts as we deliberate the commissions recommendations. But upholding our sacred obligation to them does not mean resisting change at every turn. We must not strength from an opportunity to create a modern system of Retirement Benefits that would provide greater value and toys for those it serves. Congress established the commission to conduct a review of the military compensation and retirement system and to make recognitions for modernization. We asked them to develop recommendations to ensure the longterm viability of an all volunteer service and improve the quality of life for Service Members and their families to ensure successful recruitment, retention, and careers for those numbers. And three to modernize and achieve fiscal stability. The militarys current compensation and Retirement Systems are decades old and maybe less than suitable for modern military members. We have a 70yearold military retirement system and try icare was implanted in the mid1990s. Both retirement system and tri care were appropriate for the time but times have changed. We are here to learn how to make benefits better for the military members and families of our Current Forces and forces of the future. Moreover in a world of increasing threats we count on Young Americans to serve. As this committee evaluates the commissions evaluations to modernize, we must carefully consider how any changes will motivate young people to serve in the 21st century. In a constrained fiscal environment, we must consider how best to achieve the proper balance between paying for military modernization and readiness, effective equipment and advanced training that will enable our military to respond in moments of crisis and keep our citizens safe. We can meet with of these and we must. I have asked Center Graham to hold a series of hearings in the near future to explore all of the commissions recommendations and greater in greater depth, especially in areas of retirement and health care. I think him and i think him on his leadership. Their recommendations come to us unanimously after nearly two years of hard work research, and debate. I encourage the commissioners to speak freely without reservations, some of them i know will do that. Thank you again for your extraordinary efforts. Senator reed. Center carrie arrived senator kerry arrived. Thank you mr. Chairman. Let me join you in welcoming the witnesses and thanking them. I think it is incredibly important to i think it is extremely important to have this meeting today. This comes after yesterday the budget for 2016 was submitted. While we await the full details, there are a few immediate notable requests. First, the request for 35 million above the control act 35 billion above the control act spending cap. It was 499. 8 billion dollars. It represents no growth. They have requested 35 billion more. It shows how deep the funding was overrun. Particularly in the modern training accounts. The department submits these proposals last year. Congress reported some and elected for others to have this recommendations. Many members on both sides of the aisle have been reluctant to support compensation reforms requested by the past several years while this commission deliberate and suggests we sit way until this report was submitted. This is the context in which today we hear from this very distinguished panel. These issues are of paramount importance to the nation and military members and families. We charge the militarily fighting and winning the nations wars. Implicit in that responsibility is recruiting and training the best in military service. And ensuring their trained and equipped for the missions and arduous duty we ask of them. Usually when we talk about caring for men and women in uniform, discussion is focused entirely on their pay. But these other elements are equally important. If we want Service Members to a accomplish the mission and come home home alive. It is important to save the goal of this commission is not to save money. It is to strengthen the all volunteer force. It is to modernize a retirement system that is 70 years old. And importantly, it is to ensure that Service Members and their families enjoy a qualityoflife and service that will enable the services to recruit and retain the best men and women needed to meet National Defense objectives. Under the current budget situation, i fear we had quickly are quickly pricing ourselves out of having a military sufficiently sized and adequately trained to meet the myriad threats we face. As we heard last week, the budget caps currently do not allow services need National Defense objectives. These recommendations are enacted and do provide savings. Such savings should be used to address structure and we invest reinvest in modernization. Finally, i would like to highlight one inequity of the current system. Only 17 of all Service Members will leave with any retirement benefit under the current system. Officers are more than twice as likely to leave with these benefits. Even while enlisted personnel have always, including the most recent conflicts, are the vast majority of casualties. Under these recommendations, as many as 75 of all Service Members will leave the services with some Retirement Benefits even if they do not serve the full 20 years on active duty as most Service Members do not. I would like to thank all the members of the panel. They took their valuable time and effort to bring what i think is an excellent comprehensive report to which, i hope, will serve as guidance for us as we move forward with muchneeded reforms. I think all of you again. Mr. Chairman, we are ready to listen to your statement. Thank you again for your chairmanship. Thank you mr. Chairman. Distinguished members of the committee. My fellow commissioners and i are honored to be here today and we thank you for the opportunity to testify. We also thank you for your support of the commission in the last 18 months and leadership in protecting Service Members compensation and benefits. As chairman, i would like to request that our report be entered into the record. Without objection. Their unwavering commitment to excellence in the service of our nation and never been has never been more clear then the last 13 years of war. As commissioners, we recognize our obligation to craft a valiant compensation system that is relevant to contemporary members and able to operate in a modern and efficient member. Manner. We are unanimous in our recommendation. To strengthen the bond the foundation of the force and ensure national security, and truly honor those who served and their families to support them. Now and into the future. Our report is informed by our own experiences with military service and public policy, and as public servants, however our recommendations are most informed by the insides of insights of Service Members, veterans, retirees and families. The commission and staff visited 55 military installations worldwide. They listen to the views and preferences of hundreds along the way. More than 150,000 current and retired servicemembers provided thoughtful responses to the commissions survey. We developed a working relationship with more than 30 military and veteran service organizations. Additionally, the commission received input for more than 20 federal agencies, several department of defense working groups, research institutions, private firms and notforprofit organizations. The result of this process include 18 months of comprehensive independent research and analysis, 15 unanimous recommendations that will improve access, quality and value within the compensation system. I will work to represent the most comprehensive review of military commendation and benefits since the inception of the volunteer force. Consistent with the mandate, we reviewed each program to determine if and how modernization might ensure longterm viability of the all volunteer force and enabled the qualityoflife for Service Members and their families and achieve a greater fiscal sustainability for compensation and Retirement Systems. Our recommendations do this and more. Improving choice, access quality, and value within the compensation system. Our retirement recommendations propose a blended plan that extends Retirement Benefits from 17 to 75 of the force, as Ranking Member reed has already stated. It leverages the retention power of traditional military to maintain the current profile protect assets of servicemembers who retire after 20 years, and reduces annual federal outlays by 4. 7 billion. Our Health Benefits recommendations improve access choice, and value of health care for active duty, reserve, and retirees. While reducing outlays by 3. 2 billion. Our recommendations on commissaries maintain grocery discounts while also reducing the cost of delivering benefit s by more than 500 million annually. While these are significant, the commission does not engage in cost cutting drills. In fact, our recommendations to improve joint Readiness Service , members Financial Literacy support families, and transition assistance, require additional funding to ensure program efficacy. In summary, our recommendations represent a holistic package of reforms that modernize the structure of compensation programs to adjust the level of rather than adjust the level of benefits delivered to servicemembers. They sustain the all volunteer force by maintaining or increasing the overall value of compensation and benefits for servicemembers and families. They provide additional options for Service Personnel managers to design and manage. This approach creates an effective and efficient compensation of benefits system that after full implementation saves taxpayers more than 12 billion annually. While sustaining the overall value of Compensation Benefits of those who serve, and have served, and families to support who support them. My fellow commissioners, i thank you again for the opportunity, and were honored to present unanimous recommendations. We stand ready to answer questions. Thank you very much. Ill have a couple of brief questions because i was briefed by you already. If any of the members of the committee wish to respond to any questions, just signifying we signify and you will be recognized. 2 brief questions. How do you know your recommendations will provide the structure on the issue of the proposed compensation system . Right now, there is an incentive to remain for 20 years. In this present plan there will be retirement compensation literally throughout. How does that do we have incentive for people to remain in for a career or not disincentive . We do indeed mr. Chairman. In our recommendations, we do a blended plan that we already have defined benefits. We added a defined contribution to make sure that we can do the retention or provide for the retention if they wanted us to. Im going to have commissioner higgins to talk to the specifics of that. Thank you mr. Chairman. And chairman mccain. The system we have devised includes the incentives, flexibility, and choice that people want in the force. We feel at its essence, it is going to be a very powerful retention tool. When we look forward at how this system will operate over time, our belief is supported by our analysis. In this case it was a model which was the dynamic retention model used. We believe this will our proposal will exactly model the current force profiles and we will have the tools within it, including a continuation page, thrift savings plan, which is currently not offered today. It will include the tools that will draw people through the 20 year career, much like the defined benefit as today, and into a large extent because defined benefits is retained under our proposals. About 80 of that. These new tools and flexibility along with defined benefits, we believe we will operate very effectively and the modeling we have done will support that. On the issue of health care how does this incentivize beneficiaries to seek most costeffective means of Getting Health Care . Mr. Chairman, thank you for the question. It was very important to us as we took a look at the programs that are providing benefits to our servicemembers. As we travel across the country and talked to servicemembers and families, listening very carefully to the conversations in terms of what people said they wanted, they preferred access and value with the things were the things that kept coming time and time again. And im going to ask commissioner boyer to speak specifically to that question. Thank you chairman