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CNN Live Event/Special

Defense Secretary Rumsfeld Testifies on Capitol Hill About the Budget

Aired February 05, 2002 - 10:08   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Donald Rumsfeld now, on Capitol Hill.

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DONALD RUMSFELD, SECY. OF DEFENSE: ... effective that is year after year, and if that's really the way we feel, it's best to conduct our business.

After counting the costs of keeping the department moving on a straight line, the cost of the war and the savings generated, we are left with about $9.8 billion so called "free money" to invest in transformational activities. It's a lot of money. But it requires us to make a lot of difficult trade-offs.

And just to get it up on the table before we start, we were not able to meet our objective of lowering the average age of tactical aircraft. We are investing in unmanned aircraft, the F-22 and the joint strike fighter, which requires significant up-front investments that will be coming on the line in future years.

But in the current year, the average age of aircraft will not be declining as we had hoped.

Second, while the budget funds faster growth in science and technology, we were not able to meet our goal of 3 percent of the overall budget, though we are slightly higher than the president's request from 2002.

And third, and most importantly, we clearly were not able to fund ship building at replacement rates in 2003. We must do that in the future.

As with every department, the department of Navy had to make choices. I know they will be up here next week to discuss the choices they made where that decided to place more money in O&M and other accounts than in ship building. The fiscal '03 ship building budget is 8.6 billion. It procures five ships. This is for several reasons. First, there are a number of problems, including contractor problems, but also past ship building cost estimate were off and they needed to be funded. So this year's ship building budget funded some of the cost increases that were not budgeted from prior years.

Second, the Navy made a calculation that in the short term, we can maintain the desired Navy force level at the proposed procurement rate because of the relatively young age of the fleet. A lot of the ships were purchased during the 1980s, and average age of Navy I'm told is at or slightly better than the average age that's expected and targeted.

It is more -- they felt it was more important now to deal with significant needs underfunded in recent years such as short falls in the munitions, spare parts and steaming hours, which are fully funded in this budget.

Further, we are investigating sums in SSGN conversions, which do not count in ship numbers, because while they give us new capabilities, they don't buy new ships as such. The Navy's four year defense plan budgets five ships in 2004, seven in 2005, seven in 2006 and 10 in 2007.

Finally, the $379 billion that we are talking about here is a great deal of money. But if you consider that New York City's comptrollers office estimated that the local economic cost of the September 11th attack in New York City will add up to about $100 billion, estimates of the costs to the national economy range about $170 billion last year, and estimates range as high as almost $250 billion a year in lost productivity, sales, jobs, airlines, revenues, advertising and the like. And that's not to mention the lost of human lives, and the pain and suffering of so many thousands of Americans who lost husbands and wives, and fathers and mothers, and sons and daughters, mothers and sons, and sisters and brothers on that day.

The president's proposed defense budget amounts to about 3.3 percent of our gross domestic product.

When I came to Washington in 1957 in the '60s in the Eisenhower and Kennedy era, we were spending about 10 percent of our gross national product on defense. Today it is about 3.3 percent in this budget proposal. In those days, were spending over 50 percent of the federal budget on defense. Today, this budget proposes we spend, I believe, 16.9 percent of our federal budget on defense.

I point that out because there's been a mistake repeated throughout history that free nations tend to recognize the need to invest in their armed forces only after a crisis has already arrived. In 1950, it's interesting, just five years after the Allied victory in World War II, General Omar Bradley urged President Truman to spend about $18 billion in defense. The chiefs gave an even a higher estimate. They said about $23 billion. And the services estimate were still higher. Their original request at $30 billion. The president concluded the country couldn't afford anything more than $15 billion.

The fact was that six months after we were at war in Korea. And just as suddenly, we found we could in fact afford not just $18 billion but $48 billion was just fine, a 300 percent increase, because the war was on. We need to work together to see that our country makes the investments necessary to deter war, not just to win wars, and let's do so with our experience on September 11th in mind and with a renewed commitment to insure that once the fires burn out, and the war ends and nation rebuilds, that we won't forget the lessons learned at the cost of so many innocent lives, and we won't go back to the old ways of dog things.

Thank you, Mr. Chairman.

UNIDENTIFIED MALE: Thank you Secretary Rumsfeld.

General Myers.

HEMMER: As Richard Myers begins his own testimony, we will go to the Pentagon quickly and pick things up with Barbara Starr, who has gone through these numbers quite extensively, and they are big numbers. Nonetheless, the argument is being made right now, and Barbara, as we look at this budget and talk about $48 billion, an increase of about 14.5 percent in the budget proposals, what is critical in breaking down these numbers?

BARBARA STARR, CNN CORRESPONDENT: Well, this is -- what you are seeing this morning on Capitol Hill, Bill, is a combination of typical Washington Capitol Hill politics and a nation at war. On the political side, Rumsfeld is trying to justify this $48 billion increase, but there is lots of traditional spending in there that's very much Republican -- the Republican's agenda -- $8 billion for national missile, several billion for new fighter aircraft, other money for new ships, new weapons, that sort of thing.

But then there's some money for very innovative, high-tech weapons. They're asking for over a billion in unmanned aerial vehicles, these drones we have seen working over Afghanistan. So it's a combination of both. If he is looking for money for, and he's also looking for more money to pay for the war itself. The war is already costing the pentagon about $2 billion month. Sources here tell us they have already spent over $7 billion on the war. It will go for some time. They need more money for that.

But back on the traditional side, even as the Pentagon is asking for the $48 billion, the joint chiefs of staff are privately telling Congress they need about another $100 billion, $120 billion over the next five years. For more weapons, for more operations, for more maintenance.

So a lot of this is an opportunity to seek more money, a lot of it is to pay for the ongoing war, and Congress is going to find it very politically difficult to say no to the White House. With the war on, nobody wants to be seen as saying no to with what the administration is saying is vital military spending.

HEMMER: All right, Barbara, thanks. Barbara Starr live at the Pentagon. We will be in touch later in the morning here.

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