Adding money and creating organizations. There may be a point where you do not see that return. There may be a point you see diminishing return. It links nicely to these others to strategic discussions. It is not a domain or you can say, this is my one threat. You have Nations Building by capacity, most of whom are laced less is capability. That is the debate we are not having in the us. The two things that reports say are spend more in operations and cyber. They do not say what that means. At what point do you grow it to the point that it becomes not greater in capability but to less special . That is part of an interesting debate. It is easy to see these and these reports tuesday that. No one gets to the next step. I would emphasize the part you said at the beginning. It is potentially the most serious area of technological change. All of the agility and efficiency that we are able to brag about in use as a vehicle for getting more efficient depends on our and vulnerabilities and vulnerabilities in cyberspace. It is important. I am not sure we can have a public debate about the question you raise. It is a valid one. Do we need more quantity or quality . Americans have always been quantity. We won the civil war and a few others. So much of the stuff is so highly classified. I do not know how you can have an intelligent discussion in public. It is a crucial question. It is interesting given the Discussion Group that links to longterm questions in the difference in the industrial environment. The nature of our debate of cyber has been the digital pearl harbor. The Greater NationalSecurity Threat is the gradual loss of intellectual property. It is effort by a thousand cuts. Part of the challenge at 35 is not just scaling costs but the leakage through cyber theft, which does not mean someone else can build it but they are gaining knowledge and capacity in a way they would not have been able to. Something that may have given you a tenyear advantage does not give you that kind of advantage at technological capacity. I would like to tie it back to our economy and jobs. President obama said the focus would be to increase jobs. I come back to paul. You said that the success of our [indiscernible]channel some of the budget from the dod to the state department. I take this time to say that Hillary Clinton is coming back to work today. I wish her great recovery. If we have projected our intent is to china and the world. Looking at the way china has been aggressive many ways in the south china sea. [indiscernible]how do we look into that without freedom of navigation . How do we look into that for our market share . Where is the limit before we go to the International Sanctions and global law . The problem is the Us Government does not know what its intentions are. We have not faced that question or decided. There is a lot of complacency with the status quo. That is indefinitely. Things in taiwan have gotten better. On the islands dispute, the initial american reaction was a statement from the state department saying the United States does not take a position on the islands. We say it is covered by the us japan treaty. Maybe that is creative. It is an invitation to miscalculation. That is why i worry. If you asked those americans, what should the United States to in the event of a crisis over these islands or over taiwan, they would not really be sure. What will recent me is the repetition of situations we face in 1950 and 1990. Paul indicated a concern like this. Before june 25, 19th it the, General Macarthur and secretary of defense said south korea was not inside the us defense perimeter. When the invasion took place, and truman focused on it, the reaction was to fight. The same thing happened in the invasion of kuwait. It was an unexpected contingency. If we had made an effort to be clear that deterrence was in advance, neither would have occurred. The reason i am pessimistic about the situation in asia is it seems to me there are potential contingencies of that sort. If they happened, they would not be as crazy as they seem if you asked the average person. Add british ambiguity about if they would oppose an attack on france in 1914. The germans had known in advance, maybe they would have behaved differently. In 1990, the us decision in kuwait was we do not take a position on a territorial dispute between iraq and kuwait. We did not take a position. The border was on define. We should have added to that statement that we would oppose any support of either party. The message would have gotten across. It was ambiguous. I agree. I will sound dovish. I worry about a dynamic over unimportant states. It may not count like belgium or france or south korea or kuwait. They are unappointed. They are not clear that the law of the sea treaty would get importance to development of underwater resources to the owner. There is ambiguity. They are uninhabited. It is the kind of example that you mentioned. It has been to in the news. If there was a dispute over these, i do not believe greatest concern should be if the we have to worry about security dynamics. We need to make it clear to china there would be a strong response but not reconnect ourselves to a military response. If china attacks japan, that would be different. They are not japan and neither are most of the eyelids in the south china sea. Look at ways for developing resolute responses that are nonmilitary that we keep our oteri posture robust. It sure the worst. Worstcase scenarios do not become tempting. It is interesting that we have a panel that followed a speech on with the impact of sequestration and Defense Budgets and theres link to strategy. What percentage of it has reference china . That is my observation. Maybe that is a telling point or not. We have a limited study group here. I went to take what she said and take it to a different direction. We should not look at jobs. It should not be a consideration and our Decision Making it comes to defense. Sent you noted the small percentage that had been spent on job stimulus and the like. There is a broader discussion taking place over sequestration where the strategy around the discussion was do not let sequestration happen because of all of the job impact it will have in the industry and the knock on effect on local communities and states. That was the centerpiece of a lobbying effort. We can argue whether it was successful. I want to ask each of you, is that a valid argument . Do you agree with the proposition that jobs should not be part of the discussion if we are setting this before hand . If not, what part of the discussion should they be . You should not cut programs if you said we will not cut programs if they lose jobs. One should be careful about large or sudden cuts. Cuts in an economy that is where the Employment Situation is bad. It is one thing to cut a full employment economy and another to cut one that is not. Why do you discriminate against several ready jobs in the Defense Industry . If you are going to spend money on things you do not need to create jobs, those are rims should have been funded as well and set of putting 50,000 people out of work. The main concerns i have are those parts of the Defense Industrial base that as we go to smaller budgets and we are building weapons that tend to cost more that we could lose because the court tell curt ain a certain production. The Ground Combat vehicles. A lot of the Technology Behind them is not so unique to the military not so hard to re create that i am concerned about reproducing each one to keep the Industrial Base alive. And some hightech areas, one should you lose the capability you will have a hard time re creating it. That is my greatest concern on the intersection between strategy and economics. I agree. My question dovetails into the jobs question. Every time we hear the discussions in regard to defense dollars, you would hear about compensation whether it is through healthcare dollars or the conversation about maintenance and equipment. You never hear about our reliance on the contractors and how that has become commonplace in the new normal for the defense establishment. I would like your thoughts on that. I am ignorant of the relevant issues. I would like to see what studies there are that get an answer to how much of the trend to contracting out has saved money and how much it has not because it is a mix. The answer is important because the trend has gone far, probably too far. An anecdote in support of that a former colleague of mine who ended up in charge of the Training Command in afghanistan said contractors would not do what is not in the contract. There is no substitute for a volunteer soldier or marine who will do whatever the job takes. Whatever danger or risk is involved. There is some routine civilian type functions that would be better performed by civilians and contractors. We are trying to get contractors in the compaq zone combat zone would suggest we have gone too far. While we typically talk about the pentagon as and its relationship to private industry is going out and buying goods. We have had this discussion here whether it should by Ground Combat vehicles or keep that on base. The reality is that we are moving to where the pentagon spends more on buying Services Rather than buying goods. It is not paying people to go make things. It is making in terms of the hours they are billing. The answer to what extent is it we have not seen the kind of savings that have been promised in the study before 1hand. The savings have been political cost savings where you keep your deployed numbers down even though the overall number of people are roughly the same. What is appropriate for contractors . Navy some roles that are appropriate to turn over to contractors and others are not we have been willynilly about. Once you figure it out, then developing Good Management structure so you get the best price. You have competition. You can say, they have done a terrible job. It comes back to how the contracts have been structured. Let us do two more questions. I find it telling that one that did not come up was nato. Is it relevant . Is it a relic . How can we rejuvenate it . The one risk is your rep. The one risk is europe. It is extraordinary. We complain endlessly that our european allies are not spending enough, which is true. They are fighting with us. We might prefer the aggressive posture. Who would agree that in the mid 1990s when senator lieberman said you are out of air or out of business they would be talking about afghanistan. Europe is one of the worlds great economic powers. It is in our interest to keep it friendly. How much effort it takes to do that, i do not know. You could never create nato if we had to start all over again. It has seen us through good times and bad. A modest effort to stay engaged and keep our allies engaged and to have it there should there be some Serious Problems and Eastern Europe is a good thing. This builds on something i learned from reading. I am inclined to agree. It is out of the mainstream of both political parties. Nato expansion makes me nervous. The steps that have been taking so far would not be worth the consequences of a deteriorating relationship with russia. Paul may not agree with me but i want to come into the Bush Administration for how they handle the russian invasion of georgia. Georgia is not a nato member. The Bush Administration was clear and resolute that the us russia relationship could not be the same if russia overthrew the government of georgia. The Bush Administration stopped short of threatening an American Military response. For the range of countries that could be candidates for nato expansion in the future, i would rather not just go slow but probably not go at all. The usrussia relationship is too important. We are living with consequences of expansion in the 1990s and earlier part of the last decade. Thank you. L priest price i am leon. I would like to ask members of the panel their thoughts on higher expenditure on the use of intelligence may be able to lower expenditures on operation for structures for equipment. It may have showed how hollow out the russian economy was. Was it possible that hiring a small degree of higher expenditures on intelligence would have a big effect on lowering expenditures elsewhere . We have to differentiate between the functions of intelligence of collecting basic estimation and reporting things. Rmation and hithin gs. Both things have to be done. You will get more reliable payoff and more agreed payoff from the recording function than from the analytical one that you brought up. I am a great fan of investing in intelligence. Maybe because i am a professional analyst. The intelligent budget is high. I am not against it. I agree with the spirit of what you said. As a policy option. I would not support spending more on intelligence and expecting better results. It is parallel to the issue on cyber. It is crossing into intelligence. Is it a field where throwing more money at it gives you the kind of results you want . Organization, priorities being set by policy makers to the Intelligence Community have more impact that i got one extra dollar or 1 million. We are getting to the closing. I want to pose or a pointed question. In the discourse over National Security, we have seen an evolution and we talk about the most important threat to america. At one point, it was easy. The most important was these soviet nukes. There we get to the postcold war. Nakes. All of the small stake we get to 9 11. It is terrorism. Then it is the fear of a loose nuke. We have to say the most important National Security threat was our debt. That was something the chairman of the joint chiefs said. There has been a change in that discourse. Some people have put out the idea that the most important National Security threat is our dysfunctional political system. What do you think is the most important National Security threats . We will go in order. And the last 12 hours, it is Mike Shanahans decisionmaking. It is a great way you have framed it. There are two categories. There is the rod holding the International System stable. I am a supporter of what we are doing. There is managing the specific crises. They tend to be things you talked about. We may go to war with iran. I will not predict that that will be where we fight or that should be same as the top third. Holding together our system of alliances and presence in the western pacific has to write just as high. That will preclude combat. If we do that right, that should reduce the odds of war. It is an apples and oranges comparison. The tendency to defined National Security broadly is unhelpful. A better way to differentiate these Political Security from other threats to our National Welfare or well being. Debt and the dysfunctional political system i will put in the latter category. There may be more important problems. Since the end of the cold war, we have been blessed with a decline in the severity of external Security Threats. I would distinguish them. We will not be able to deal with National Security effectively if we do not solve the other problems. They are linked. The shortterm and ability of american democracy to face the real choices is going to create bigger problems that are not results. I am in the same place. It depends on the time frame. If we are talking near term, and if it is the case that where ever it gets mentioned [indiscernible]if one looks overt 30 years, if one looks over 13 years, absence of American Leadership. There is no one to step in behind us the way we stepped in behind the british. It would be a very dangerous world for every body. We cannot maintain that leadership if we do not get our economic house in order. One is not more important than the other. Clarks i want to thank our analyst and all of you for joining us. Please, join me in a round of applause. [captioning performed bynational captioning institute][captions copyright nationalcable satellite corp. 2013] we will focus on the renin and hegel nominations live at seven 00 a. M. Eastern. Several live events on cspan. The urban institute analyzes the recent debate on the fiscal cliff and what is next on the debate on government spending. At two 00, new york jersey Governors State of the state address. I enjoy the capitol hill coverage. I started there many decades ago. Also, the Certain Committee hearings. They are informative to see what happens in congress. I like the way cspan covers the fact that it pretends present itself on what is really happening. Bill watches cspan on comcast. Cspan, created by americas Cable Companies in 1979. Rock to you as a Public Service by your television provider. President obama nominates former senator chuck hagel to the security advisor and john brennan as head of the cia. The president of the United States, leon panetta, chuck hagel, and mr. Le john brennan. As president and commander in chief, my most solemn obligation is the security of the American People. We have met that responsibility. By ending the war in iraq, a transition to afghanistan, and decimating the al qaeda core, and taking out osama bin l