General Odierno: Thank you. I look forward to the discussion. Many thanks to Michael Hanlon and everyone here. It is always a real pleasure to come here. It really allows me the opportunity to really think through very difficult issues we have and I get a chance to listen and hear other people's opinions. I look forward today specifically to answering your questions. I want to leave a lot of time for questions, so I can discuss the issues that you think are important and that you want to hear about. There are a few things I want to say first.
I think your invitation to speak her today is a timely one, as we testified twice this week. We had the State of the Union Address as well this week. We also had the presentation of the Medal of Honor for Staff Sergeant Clinton Romesha. I think all of those things come together…when you think about the President talking about how he sees the future…when we are talking about the future of our budgets and what it means to our defense….and then we have the opportunity to see a great American hero, a young Soldier who does what we asks of him every day. It has truly been an emotional and important week for me personally.

As evidenced by the Congressional testimony this week, our nation's leaders continue to grapple with decisions that will shape the trajectory of our national security for the years ahead. The near term budget decisions ahead of us today will deeply affect the direction we are trying to take the Joint Force, and in my case the Army, as we complete combat operations in Afghanistan, reset our equipment, reorient our Force, and be prepared to deal with a broad array of challenges that are define in the Defense Strategy that we rolled out last year. We put a lot of thought and process into thinking about where we want to go as the Defense Department in the future. We need to approach these problems, as tough as they are, with an understanding of the fundamental role the Army plays in providing our nation's security.

This morning, I would like to describe the strategic and physical challenges that the Army faces, the Joint Force faces, and the impact it will have on the future, to include its readiness, size and other things as we move forward. Before I do, I would like to take a moment to reflect on the basic building block of every Army, and that is the American Soldier. On Monday, Staff Sergeant Romesha of the 4th Brigade, 4th Infantry Division was presented the Medal of Honor by President Obama. His heroism exemplifies the caliber of the men and women serving in our Army today. He exemplifies the gravity of the task we ask them to perform on our behalf. It is sometimes hard to describe to the American people just how talented and dedicated these young men and women are. They possess a humility and selflessness that we will respect. They embrace Esprit de Corps and routinely demonstrate dedication to their profession with moral and physical courage that epitomizes the ethos of the American Soldier. 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 12 years. More than a half a million have deployed 2, 3, 4, or 5 times. More than 4,800 have made the ultimate sacrifice to defend this great nation.

Our Soldiers today operate in the most uncertain, unpredictable and dynamic security environment. It is really the most dynamic and unpredictable I have seen in my over 36 years of service. Unlike post conflict drawdowns in the past, in this drawdown, we don't have a termination of conflict due to an armistice, a Peace Treaty, or a political decline of a superpower. Instead today, we still have 81,000 Soldiers deployed, including 58,000 fighting in Afghanistan, and thousands of others in Kuwait, Qatar, Horn of Africa, Kosovo, the Sinai, and Korea. Over 91,000 Soldiers are forward stationed in nearly 160 countries.

The Army has been in a state of continuous war for nearly 12 years, the longest in our nation's history, but today in my opinion, the greatest threat to our national security is the fiscal uncertainty resulting from the lack of predictability in the budget cycle. A series of continuing resolutions, a threat of sequestration hanging over our heads, and our country's inability to put its fiscal house in order compromise the future readiness of the Joint Force, the Army, and ultimately will impact our ability to provide security to our nation.

We have two specific problems as I stand here today. We have an immediate problem in FY13, which has about 8 months left. We have a longer term problem due to potential full sequestration. In FY13, the combination of a continuing resolution, a short fall in overseas contingency operations funds for Afghanistan and the sequester have resulted in a $17-18 billion dollar shortfall to the Army's Operation and Maintenance Accounts, as well as an additional $6 billion dollar cut to all other programs. All of these cuts have to be taken over the last seven months of this year. So what does that mean? That means we are going to have to take some immediate actions. As we prioritize, we will always ensure that our Soldiers in Afghanistan or next to deploy, and our Forces in Korea are fully equipped and trained. Then we will see if we can continue to ensure the readiness of the global response force at Fort Bragg, but we have to take some immediate steps to reduce expenditures and plan for budgetary shortfalls. We will curtail training for 80% of all our Ground Force. We have canceled all but one of our Brigade level training center rotations for non-deploying Forces. Training cancelation will impact our units' basic war-fighting skills. It will induce shortfalls across other critical specialties, including aviation, intelligence, engineering, and our ability to recruit new Soldiers into the Army. We will reduce work at our Depots, which will delay the reset of our equipment coming out of Iraq and Afghanistan. We will furlough up to 251,000 of our hardworking civilians for up to 22 days, terminate nearly 31 temporary and term employees, and 5,000 workers in our Depots. The list goes on and on; I am just touching on a few of the impacts that will cause us to make some of these difficult decisions over the next seven months because of this Bermuda Triangle of uncertainty we have had in the budget, specifically in FY13.

In the longer term, we have a bigger issue. I want to first remind everybody that sequestration is not the first set of cuts that we have taken in the military. In 2010, we took $300 billion in cuts under Secretary Gates' initiatives. That was followed up by the Budget Control Act, which directed another $487 billion dollars of cuts in our Defense spending. We are now just beginning to implement that almost $800 billion dollars of cuts now. So we have not quite seen those yet. We have just begun to see the impacts. Now on top of that, with sequestration, we will take an additional $500 billion dollars worth of cuts in the Department of Defense. So we are now up to $1.2 trillion dollars worth of cuts since 2010. This does not include the reduction in our spending of overseas contingency accounts, and now some of that will have to be woven into our base budget, such as IED detection equipment, some of our EW detection equipment, which will cause another $100 billion dollars of shortfall in the Department of Defense as we migrate these programs, which we know we need for the future. So we are now up to 1.3 trillion dollars worth of cuts, which we will have to find in the Department of Defense. This is significant.

People often say after war we have a reduction. That is normal in the Army. Since 2008, if we implement the 2014 budget without sequestration, it will be a 45% reduction in the Army budget. If we implement sequestration, it will be over 50%. That is a significant cut. These are not insignificant numbers that we are talking about. It will have an impact on our capabilities as we move forward. So for FY14 and beyond, sequestration will result in the loss of a minimum of an additional 100,000 Soldiers in our Active, National Guard, and U.S. Army Reserve. This is already on top of an 88,000 cut we are taking right now. That totals about 190,000. My guess in the end it will be over 200,000 Soldiers that we will have to take out of the Active Component, the National Guard, and the U.S. Army Reserve. We will take an almost 40% reduction in our Brigade Combat Teams once we are finished. Sequestration will result in delays to every one of our ten major modernization programs and stretch them out longer and longer and longer. We will have an inability to reset our equipment in a timely fashion if we are asked to deploy. It will impact our ability to train individually and in units. These reductions will impact every Army base and installation across the entire country. Such a rapid decline in our ability to train and maintain the Force will result in extremely low levels of readiness inside the next six months, which will cascade into FY14 and FY15.

No matter how this all turns out, which is still an unknown, fiscal constraints are here to stay. We understand that we have to play a role. The status of our economy and our fiscal capacity is a key piece of the strength of our nation. We understand that. But our domestic fiscal constraints do not diminish budding threats overseas. Many of the challenges we face are in the headlines every day, whether it be the aggressiveness of North Korea and Iran; the proliferation of weapons of mass destruction, continued turmoil across the Middle East and North Africa, or the growing threat of cyber attacks. As a Joint Force and Army, we must make decisions based on the context of the security environment and the historical experience, not false assumptions about the future.

Last year, the Department of Defense developed a collaborative process to publish a 2012 Defense Strategy. The Strategy calls on the Department to invest in the capabilities critical to future success, resist the temptation to sacrifice readiness in order to retain Force Structure, and rebuild readiness in areas that by necessity we de-emphasized over the past decade. With a fundamental role in 10 of the 11 identified missions in the new Defense Strategy, the Army designated its Force Structure and capability requirements in support of this Guidance. My priorities for building the Army of the future have not changed because they have been developed consistent with our new Defense Strategy and how we see the future. Of course if sequestration occurs, we will probably have to do a complete review of our Defense Strategy and develop a new strategy based on the fiscal realities.

As we move forward to posture our Army for the future, we still must have the foundational capabilities to win our nation's wars. But more importantly, we must provide capabilities to our geographic Combatant Commanders that assist in their efforts to shape their environment through joint, interagency, and multinational activities, what we call Phase 0 Operations. We will have to harness the unique strengths and capabilities of the Army, both Active and Reserve, across a variety of capabilities to ensure that Combatant Commanders get what they need to shape their environment. We will deliver scalable, tailorable packages for a variety of missions such as: building partner capacity, humanitarian and disaster relief, multilateral exercises, and rotational forces for operational contingency missions. We will execute this by implementing a process of what we call Regionally Aligned Forces. We will align the Army to each Combatant Commander to meet their needs. Some additional actions we are taking to reshape the Force include making modifications to our Brigade Combat Team structure to incorporate the lessons learned over the nearly 12 years of war. We must revitalize our professional military education system to ensure we are growing leaders with a broad understanding of historical experiences, but more importantly to prepare them for the future, to prepare them for what we expect to see as we move forward.

It is more important than ever that we seek a balance of capabilities and readiness across the total Army. We need the capabilities of the Active Army; we need the capabilities of the Army National Guard and the U.S. Army Reserve. We must balance our Force Structure to reflect the different readiness levels of each of our Components and make sure they fit into the strategy that we will execute into the future. We must make affordable and cost effective decisions to provide the most versatile and tailorable capabilities to our Joint Commanders. We must capitalize on our current strengths: a combat seasoned, disciplined, well led Force. Our modernization efforts must remain centered on the Soldier and the Squad as the building block of our Army. The extent to which we provide our Soldiers the right equipment, vehicles, and networks to succeed on future battlefields will be determined by our decisions today.

We must learn from our 12 years of combat to build and sustain the resiliency and readiness of our Soldiers, civilians and families. We will launch a Ready and Resilient Campaign to develop the comprehensive fitness and strength of our Force. We will place a high priority on programs that help our Veterans and families transition back to civilian life. Caring for our Wounded Warriors and keeping faith with our Veterans and families is essential to honoring their service and preserving America's confidence in our military institutions. We are at a strategic point in the future of the U.S. Army and the U.S. military. There is no doubt in my mind that we need a globally engaged, regionally responsive Army with enough capacity and capability to deter and prevent conflict. We also need an Army that takes advantage of unique capabilities and unique structures that our Army has today in order to shape the environment and prevent conflict in all of our Geographic Combatant Commands.

This is about our nation's security. It is about developing the right balance of capabilities within the Joint Force. Our history tells us that if we get out of balance our enemies will seek to take advantage. That leads to miscalculations and conflict. The one thing history is clear about is that we will be asked to deploy Soldiers again. It is my responsibility that when they are asked, they have the capacity and readiness to be decisive and accomplish the mission. I look forward to continued debate and feedback on the Joint Force and the Army's plans to posture for the future. I am interested in your views of the second or third order effects of budgetary cuts and sequestration and its impacts on our Army and Joint Force readiness and our national security. I want to thank you again, everyone, for coming here this morning. I am very proud to continue to wear this uniform because of the great young men and women who serve in it every day.

Thank you very much.