Good morning. I am surprised to see so many people here. Usually when it snows in Washington, people hibernate, so it is great to see so many people. I am very happy to see General Gordon Sullivan, especially since I know you are mourning about your Patriots this weekend.There are so many great people here: the Honorable Les Brownlee, the Former Secretary of the Army; General Reimer, the Former Chief of Staff; General Kroesen. I had the opportunity to talk to some Soldiers from the 82nd. General Kroesen spent some time with them this weekend. I know they really appreciated the opportunity to meet with you and General Warner. They really appreciate it. So thank you so much. Also here is General Wagner, the Honorable Tom Lamont, and the Honorable Mary Matiella. Thank you so much for being here. My battle buddy Sergeant Major Ray Chandler, Sergeant Major of the Army, and SMA (Retired) Jack Tilley. Everyone else here, thank you so much for being here today. We really appreciate your support.
Before I jump into the meat of what I am going to say about the fiscal environment, and its effect on Army readiness, I do want to start out by talking a little bit about our Army and where we are at. As I have been the Chief for 18 months now, I realized when you are in the Pentagon, you tend to often focus on the negative. What you deal with every day are the tough issues, whether it be the budget, whether it be other variety of issues that come up on a quite regular basis when you are in charge of an Army of 1.1 million people, 270,000 Civilians, and 1.4 million family members. So it is always good to really get out and see how great our Army is.I had the opportunity last week to go to Hawaii and then on to Korea, where I spent a couple of days with the 2nd Infantry Division, forward deployed in Korea. They are just doing great, great work. I had the opportunity to go and see several Soldiers. I get to do that quite often. While in Korea, they brought me to a unit called CBRNE, which is a chemical-biological-radiological-explosives response unit, that is there to respond to any attacks that we could have. They walked me through what they do. The real thing that made me feel so good about our Army is as I did this 45 minute walk through, of every briefer, the highest ranking briefer was a Private First Class. As I went through all of this, their technical expertise, their tactical expertise on their systems was amazing to me. They would explain to me what a piece of equipment did; they explained to me how they used it. They explained to me how they trained on it. They explained how they integrated it into the Army. I asked how long they had been doing this. They said for a couple of months since they had been in the Army for eight months. You just look and say 'gosh, we are so fortunate to have these great men and women and what they are able to do, and how they are able to do their job, and how excited they are about their job.'Then I went to another unit and there was a specialist and they had just fielded a new counterfire radar. He took me to the old one and to the new one and explained to me the difference. He told me what their mission was, how they did it, how they were able to distribute information, how they were connected for the counter-fire fight in Korea. I asked how long he had been doing that. He had been doing it five months and had been in the Army eight months. I just said to myself how thankful I am. I see that everywhere I go.When I was in Hawaii I had the chance to meet with a lot of great Soldiers of the 25th Infantry Division and learn what they are doing to reinvigorate our presence in the Pacific. They are charging forward; they are conducting exercises throughout the Pacific. It is just exciting to see these young men and women and how excited they are about being in the Army. It is important for us to remember that is why we are here in Washington -- to make sure those young men and women have what they need to do the job that we ask them to do. We don't know when that will be. We don't know where that will be, but we know we will have to ask them. So it is our responsibility to make sure that they are ready, because they certainly are motivated. It really is important for us to understand that.As we stand here today, we have over 88,000 Soldiers deployed, including over 56,000 in Afghanistan, thousands of others in Kuwait, Qatar, the Horn of Africa, Kosovo, and the Sinai. Over 91,000 are forward stationed in nearly 160 countries. Since 9/11, we have grown a generation of experienced, combat-tested leaders and Soldiers from the young men and women who have volunteered to serve our country. 1.5 million Soldiers have deployed during the past twelve years. More than half a million of those Soldiers have deployed multiple times….2,3,4,5 times. We have a dedicated Force. For the first time, we know that we are going to sustain these combat veterans. I tell everyone no matter where we are headed, we are starting from a position of strength because of the experience of the leaders we have in our Non-Commissioned Officer Corps, our Officer Corps across all three of our components. In my mind, we have never been in a position like this before. That is because of the All-Volunteer Force. That is because of what they have been able to do. So in my mind, we have incredible strength as we go forward. We have had over 15,000 Awards of Valor, including six, and in about two weeks it will be seven, Medals of Honor in the Army, 25 Distinguished Service Crosses, and 689 Silver Stars.
From counterterrorism and counter-WMD operations worldwide, to deterring conflict in the Middle East and on the Korean peninsula, to counterinsurgency in Afghanistan and disaster response - our Soldiers are ready. They are prepared, and they are prepared to do what our Country needs them to do. However, we do have some concerns, such as whether the Army will be ready for tomorrow's contingencies. That's what we face today.Today, the greatest threat to our national security is fiscal uncertainty. On January 14th, the members of the Joint Chiefs of Staff penned a letter to House and Senate leaders voicing our concerns about the future readiness of our Armed Forces. Three budget conditions are creating a perfect storm. First, there is a possibility that the continuing resolution for fiscal year 2013 will be extended throughout the year. For the Army, the continuing resolution has resulted in a shortfall of more than $6 billion in our operations and maintenance accounts. It is because we are not able to move money around under the continuing resolution. We are overprescribed in one budget and undersubscribed in another budget. So we have a $6 billion dollar shortfall in
our operations and maintenance. Second, the threat of across-the-board cuts due to sequestration or additional DOD cuts remains. Again, we believe this is probably another $6 billion plus in O&M reductions in FY13. So now we have $12 billion dollars reductions in FY13 that we are facing in our operations and maintenance accounts. Also, there is also uncertainty with regards to the amount of Overseas Contingency Operations (OCO) funding going forward. We believe we have a potential $5-7 billion dollar shortfall in operations and maintenance in our OCO accounts for FY13. So the Army is facing about $17-19 billion dollars worth of shortfalls that we are going to have to figure out how to deal with if they do not come to some conclusion by the first of March.These budget conditions, coupled with current legislation, may restrict our decision making with regards to personnel and equipment while underfunding force readiness. So we are going to be forced to prioritize. Obviously we will ensure that all Soldiers in Afghanistan or going to Afghanistan are properly prepared and ready. We will ensure that the Forces in Korea are properly equipped and ready. Then we will see if we can continue to fund and ensure that we have readiness in our Division-Ready Brigade at Fort Bragg. What I do know is we will have significant training and maintenance shortfalls in the rest of the Army.My guess is that we will very quickly go to extremely low levels of readiness in the next six months throughout the Army. We will probably cancel some CTC rotations. We will have to reduce work in the depots, which will delay the reset of our equipment coming out of Iraq and Afghanistan. We will have to delay maintenance on our current fleets. The sad part about this is once you start these delays, it will take longer and longer and longer to catch up. So this will not be just a FY13 readiness issue, it will be a readiness issue that goes into FY14 and FY15. So these are incredibly important decisions that have to be made here. For us, it is important that we make the right decisions.Last week, the Secretary of the Army and I issued guidance to mitigate risk in our environment of fiscal uncertainty. First, we are implementing an immediate freeze on all civilian hires. We are considering the termination of temporary employees and furlough of our civilian workforce. Second, we will have to seek a 30% reduction in installation operation costs, which affects directly 30% of our family programs. We will curtail temporary duties and professional training that are not mission critical. Army Material Command has to plan for cancellation and reset of orders for the rest of FY13 of units that have not deployed or are soon to deploy. There are a host of additional implications for ongoing contracts and studies, facilities management, community services, and research and development programs. We have directed our major subordinate commands to come back with details, and we expect to have those details in the next week, which will define the actions that we will have to take.The situation is serious. If we do not have a legislative solution that provides our leaders with the time and the flexibility to shape our Forces for the future, we will create a hollow Force. For years, we talked about no more Task Force Smiths. We are headed to the largest Task Force Smith I have ever been associated with. For those of you who do not know what that is, it is the unit that first deployed to Korea when they were not ready. The Army has dedicated itself to ensure we never go there again. We are headed down that road. We must consider the impact of fiscal uncertainty on implementing Department of Defense Strategic Guidance, organizing and training our Forces for the evolving mission in Afghanistan, reducing our force structure and end strength, and developing the future Force.Furthermore, there is also great uncertainty in the global security environment. This is a time that I would say is not a time of peace and stability around world. In the past when we have taken reductions, it has been at a time of relative peace and stability. In my mind as I look at the world today, there is instability in every continent around the world. There is incredible uncertainty in what the future may hold. We must have the capability to protect our country. You can watch it everyday. Whether it is in Algeria, whether it is in Libya, whether it is in Syria, whether it is Iran, whether it is North Korea, there is incredible uncertainty in the Middle East. The Arab Spring has not sprung yet.There is much going on politically. We have more concern now in the Sinai than we have had in 30 years in terms of stability. We have more concern about many of the different relationships that are centered around the Middle East. We have a young North Korean leader that we are not sure what he will do next and what his intentions are. He just launched a continental ballistic missile. So there is uncertainty all around us as we continue to have an unpredictable fiscal environment.If nothing else, the predictability of understanding what we will have for the next five years would help us. Right now, we have no idea what our budget will look like for the next five years, so it is impossible to put a proper plan together. As you all know, we are in the process of reducing the Active Duty end strength to 490,000. We just released the environmental assessment for taking force structure out of the Army. Within the initial Budget Control Act, DOD has almost $500 billion dollars worth of cuts. We have announced taking force structure and Soldiers out of 21 installations in the United States. This is before sequestration. This is just in response to the Budget Control Act. It is necessary for us to do this in order to balance our force structure with our end strength.We will continue to prioritize modernization so that our current and future force is prepared for a wide range of military operations. We have had to slow down our modernization efforts. At the same time, our ability to modernize the Force will be balanced with issues of readiness and end strength. That is our biggest challenge is getting that right balance. We can't do that until we have predictability in our budget process. If we don't have predictability, it is impossible for us to build a balanced Force of end strength, modernization, and readiness.
Together with Congress, we must make affordable and cost-effective decisions to provide the most versatile and tailored capabilities to our Joint Commanders. The extent to which we provide our Soldiers with the next generation of equipment, vehicles, and networks to ensure tactical overmatch will be determined by the conditions in the fiscal environment. I will continue to place a high priority on Soldier, Civilian, and Family resiliency and on programs that help our Veterans and their Families transition back to civilian life. Our Ready and Resilient Campaign aligns all programs aimed at ensuring the comprehensive fitness and strength of our Force and is directly linked to Army readiness. We will protect all funding related to the care of our Wounded Warriors. Keeping faith with our Veterans and their Families is essential to honoring their service and preserving America's confidence in our military institutions.Although I've just outlined for you that the present fiscal environment presents challenges, I also believe with predictability it presents us with opportunity: the opportunity to shape the Army's force of the future in order to meet this uncertain world that we face; to develop an Army that remains on the leading edge; that is able to contribute to the support of Combatant Commanders in shaping their theatres; to ensure that we don't have to go to war; to ensure that we prevent conflict and shape the environment that we are operating in. We have an opportunity to make an Army that is versatile; that is agile; that is innovative; that can be tailorable and scalable to meet whatever needs are necessary for us to move forward while sustaining our ability if needed to win our Nation's wars. We have an opportunity to retain the most capable and combat experienced Army Soldiers in our Nation's history. We will maintain the best. We will sustain a high quality of individual Soldiers that helps us to build the Army.So although we hope that the current fiscal uncertainty will be resolved in a manner that avoids significant reductions, we must take action now to slow spending. We are going to need everybody's support: the support of our defense leaders, the support of Congress, and the support of our partners in industry in the days and months ahead.For the Army and military leaders in the audience, help us to inform our Soldiers and leaders at every level of about our fiscal challenges. Lean forward in your efforts to implement new DOD and Army guidance so that we might mitigate the risks, the long-term risks, to our Army readiness. We must be prudent. Over the last 10 years, we have had a significant amount of funding because of being at war. We now have to be good stewards of the money that we are given. We have to get the most out of every dollar that we are given. We have to make sure that the systems that we have in place and the programs that we develop are efficient and effective. We cannot afford inefficient or ineffective programs. Yes, we will continue to take some risks in S&T and R&D, but it must be prudent risk as we go forward.To our partners in Congress, it is more important than ever that we work closely together to generate a legislative solution that ensures the Joint Force and the Army are able to sustain its readiness. We need the flexibility and we need the predictability to right size our military and civilian workforce and to reduce overhead costs.
For our partners in industry, thank you for your patience and steadfast support in the face of fiscal uncertainty. As we face some tough decisions together, help us to build creative solutions to reset the Force, to fulfill our modernization strategy, and to find efficiencies in ongoing programs. Together, we can solve this problem. Today, we have the best Army in the world. No matter what happens as we work our way through this, I guarantee you we will continue to have the best Army in the world. We are dedicated to ensure that happens. It will take all of us in this room to ensure that we sustain that.The strength of our Nation is our Army. The strength of our Army is our Soldiers. The strength of our Soldiers is our Families. That is what makes us Army Strong.