Agreement (SMA) as well as issues concerning various bases in Japan. In your opinion, what impact will the U.S.S. Greeneville's sinking of the Ehime Maru have on those negotiations and our security relationship? Based on your experience as a naval officer, what is your opinion about the calls to raise the Ehime Maru?

Admiral BLAIR. The new 5-year SMA was ratified by the Japanese Diet in November 2000 and went into effect on 1 April 2001, before the U.S.S. Greeneville's collision with the Ehime Maru. I believe the U.S. and Japan have a strong bilateral relationship whose enduring strength has benefited both sides for close to half a century. I believe we will be able to move forward from this tragedy in the interests of both nations and our peoples. I fully support ongoing efforts to raise the Ehime Maru. Recovery operations at this depth, though technically feasible, will be challenging. We are committed to using the best capabilities in the world. When salvage operations begin later this summer, the U.S. Navy and the Japan Maritime Self Defense Force will do everything possible to recover the remains of the missing crewmembers.

[Whereupon, at 12:00 p.m., the committee was recessed, to reconvene in closed session.]

DEPARMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 2002

THURSDAY, JUNE 28, 2001

COMMITTEE ON ARMED SERVICES,

U.S. SENATE,

Washington, DC.

MILITARY POSTURE/BUDGET AMENDMENT

The committee met, pursuant to notice, at 2:31 p.m. in room SD106, Dirksen Senate Office Building, Senator Carl Levin (chairman) presiding.

Committee members present: Senators Levin, Lieberman, Cleland, Landrieu, Reed, Akaka, Bill Nelson, E. Benjamin Nelson, Carnahan, Dayton, Warner, McCain, Inhofe, Santorum, Roberts, Allard, Hutchinson, Sessions, and Collins.

Committee staff members present: David S. Lyles, staff director; Anita R. Raiford, deputy chief clerk; Madelyn R. Creedon, counsel; Richard D. DeBobes, counsel; Gerald J. Leeling, counsel; and Peter K. Levine, general counsel.

Professional staff members present: Daniel J. Cox, Jr., Evelyn N. Farkas, Richard W. Fieldhouse, Creighton Greene, Michael J. McCord, and Terence P. Szuplat.

Minority staff members present: Romie L. Brownlee, Republican staff director; L. David Cherington, minority counsel; Ann M. Mittermeyer, minority counsel; Suzanne K.L. Ross, research assistant; Scott W. Stucky, minority counsel; and Richard F. Walsh, minority counsel.

Professional staff members present: Charles W. Alsup, Edward H. Edens IV, Brian R. Green, William C. Greenwalt, Gary M. Hall, Mary Alice A. Hayward, Ambrose R. Hock, George W. Lauffer, Patricia L. Lewis, Thomas L. MacKenzie, Joseph T. Sixeas, and Cord A. Sterling.

Staff assistants present: Gabriella Eisen, Thomas C. Moore, and Jennifer L. Naccari.

Committee members' assistants present: Menda S. Fife, assistant to Senator Kennedy; Christina Evans, Barry Gene (B.G.) Wright, and Erik Raven, assistants to Senator Byrd; Frederick M. Downey, assistant to Senator Lieberman; Andrew Vanlandinghama, assistant to Senator Cleland; Elizabeth King, assistant to Senator Reed; Davelyn Noelani Kalipi, assistant to Senator Akaka; William K. Sutey, assistant to Senator Bill Nelson; Eric Pierce, assistant to Senator Ben Nelson; Neal Orringer, assistant to Senator Carnahan;

Brady King, assistant to Senator Dayton; Christopher J. Paul, assistant to Senator McCain; Margaret Hemenway, assistant to Senator Smith; John A. Bonsell, assistant to Senator Inhofe; George M. Bernier III, assistant to Senator Santorum; Robert Allen McCurry and James Beauchamp, assistants to Senator Roberts; Douglas Flanders, assistant to Senator Allard; James P. Dohoney, Jr., assistant to Senator Hutchinson; Arch Galloway II, assistant to Senator Sessions; and Kristine Fauser, assistant to Senator Collins.

OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN Chairman LEVIN. The committee will come to order. The committee meets this afternoon to receive testimony from Donald Rumsfeld, Secretary of Defense; General Hugh Shelton, Chairman of the Joint Chiefs of Staff; and Dr. Dov Zakheim, Under Secretary of Defense (Comptroller). We welcome them. They will be testifying this afternoon on the fiscal year 2002 budget amendment. We welcome you all back.

This may be the final time that General Shelton will be appearing before this committee to present his views on a defense budget before his term ends this fall. General Shelton, you have always put one cause above all others, and that is the well-being of America's Armed Forces and their families. History will record you as an outstanding Chairman of the Joint Chiefs of Staff who left the U.S. military more capable than you found it. On behalf of all of us, I want to take this opportunity to express our gratitude for the tremendous service that you have given to this Nation.

Mr. Secretary, we all know there are many reasons why the administration is late in submitting the amended budget request, but as I mentioned in our hearing last week, the administration's delay is forcing Congress to attempt in an 8-week session what typically takes 5 months. It will be an incredibly difficult task.

The men and women of our Armed Forces have a lot at stake in the Fiscal Year 2002 National Defense Authorization Bill, and every member of this committee is committed to working hard to complete action on this bill before the start of the new fiscal year. To do that, the committee needs an actual budget proposal from the Department of Defense. So far, we have received only a budget outline. We need details on specific budget line items, and we need the justification books explaining these line items.

This morning, we received some of the legislative proposals that the Secretary is asking this committee to consider. Mr. Secretary, given the extremely compressed schedule that I mentioned, we have to ask again for all of that information that I have outlined, the specific line items, the justification books, and legislative proposals by next week.

While we have had only 24 hours to review your budget request, certain aspects are beginning to emerge. The fog is still heavy, but it is beginning to lift. There are some positive aspects to the request, such as efforts to build on the improvements in quality of life over the last few years by giving pay raises, reducing service members' out-of-pocket housing costs, and increasing funds for military health care and family housing. However, there are some puzzling aspects of your request as well.

For instance, despite a proposed $33 billion increase in defense spending over the current fiscal year, spending on procurement would actually decrease next year by $0.5 billion; despite this $33 billion increase, funding for basic science and technology also would decrease next year; and despite a $7.8 billion increase in spending for operations and maintenance, Army flying hours and tank training miles also would decrease.

At the same time, funding for missile defense would increase by $3 billion, from $5.3 billion to $8.3 billion, a 57 percent jump over this year's level. Every line item in the budget involves real choices. It is clear that this budget places a huge increase in missile defense ahead of important programs in modernization, basic research, and training time for Army units.

Earlier this year, many of us in the Senate expressed our concern that the large tax cut sought by the administration would leave little, if any, room for some essential investments, including defense. In fact, during the debate on the budget resolution, Senators Landrieu, Carnahan, and others introduced an amendment to redirect $100 billion of the tax cut over 10 years to defense, only to have that amendment defeated.

Our Ranking Member, Senator Warner, offered an amendment, which was adopted in the Senate but then later dropped in conference, which also would have added funds for defense.

Under the terms of the budget resolution, the Chairmen of the Budget Committees in the House and Senate will decide if the current level of funding for national defense in the budget resolution should be increased to accommodate your proposed budget amendment. As the Chairman of the Senate Budget Committee mentioned in a letter to the President earlier this week, with the new economic estimate from the Congressional Budget Office due in about a month, it would appear that the $18.4 billion increase that the administration is requesting for the Defense Department in fiscal year 2002 could lead to dipping into the medicare surplus.

Moreover, the request before us is limited to fiscal year 2002. The Secretary will testify today that an additional $18 billion increase, totaling $347 billion, will be required in fiscal year 2003 just to sustain the proposed 2002 budget level on a straight line basis. This could take as much as $30 billion of medicare funds next year alone without paying for any improvements or providing funding for the transformation of the military to meet new threats, which the Secretary will be proposing in the fiscal year 2003 budget, following the completion of his defense strategy review and the quadrennial defense review.

Our men and women in uniform depend on defense budgets that are sustainable, yet it is increasingly apparent that the funding for any future transformation of our Armed Forces cannot be initiated or sustained without cutting existing defense programs, using the medicare surplus, returning to budget deficits, or cutting important programs such as education, health care, and law enforcement, none of which are acceptable alternatives.

The bottom line is this: the administration's strategy of first laying out a banquet of tax cuts unnecessarily leaves other programs, including our national security programs, in an extremely precarious position. In order to avoid dangerous instability in the defense

budget in the future, the administration needs to address this situation and provide a clear plan for meeting and sustaining our defense needs.

Senator Warner.

STATEMENT OF SENATOR JOHN WARNER

Senator WARNER. Thank you, Mr. Chairman. I join you in welcoming our witnesses.

Mr. Chairman, the Republicans are going to caucus today at 3:00, so I am going to forego my opening statement and place it in the record and give my colleagues who will be attending that conference the opportunity, hopefully, to have some questions before they depart. I certainly join you in the recognition of our distinguished chairman of the Joint Chiefs and his lifetime contribution to freedom and service to this country.

I thank you and your family.

[The prepared statement of Senator Warner follows:]

PREPARED STATEMENT BY SENATOR JOHN WARNER

Thank you, Mr. Chairman, for your leadership in arranging to conduct this most important hearing at the earliest possible date. We both recognize the herculean task we now face in thoroughly reviewing this defense budget request, crafting an authorization bill, and gaining the consent of the full Congress prior to the beginning of fiscal year 2002.

I join Senator Levin in welcoming Secretary Rumsfeld to his first posture hearing since the 1970s. It was a very different world when you last appeared before Congress to discuss the budget request 25 years ago, but the importance of the work we begin today is unchanged.

I want to thank you for the service that you have once again undertaken for your country and for the work you have already begun. I also want to commend you and President Bush for submitting a budget amendment that begins to address the commitment you both made to our service men and women, past and present, to their families, and to all American citizens. As President Bush stated at the Citadel last Fall, we must, renew the bond of trust between the American people and the American military; defend the American people against missiles and terror; and, begin creating the military of the next century.

I also extend a welcome to Gen. Hugh Shelton, Chairman of the Joint Chiefs of Staff, to what will be your last posture hearing-I won't say last appearance before this committee-because as a warrior you know none of us can predict with any certainty what the future may bring.

I do want to extend to you the heartfelt thanks of a grateful Nation for your extraordinary service, which now spans five decades-from 1963 to the present-and includes combat service during two tours of duty in Vietnam and during Operation Desert Storm. As Chairman of the Joint Chiefs, you have been repeatedly called upon to provide sound military advice to our President and to execute military operations across the spectrum of conflict that have been the epitome of precision and military professionalism. We are indebted to you, General Shelton, and salute your service.

We are clearly at a critical juncture in our military history, and in the history of our Nation. We all accept that the United States has assumed a unique leadership role in the world today, especially in the realm of international security. It is easy to feel secure in our sole, superpower status, but as our own Director of Central Intelligence, George Tenet, and many other studies and commissions have repeatedly reminded us, we, as a Nation, are more vulnerable today than ever before in this increasingly interdependent and complex world. Mr. Tenet reaffirmed before this committee in March of this year that threats to our national security continue to increase, as was so tragically demonstrated in the vicious terrorist attack on the U.S.S. Cole. The pace of both social and technological change, continues to accelerate, increasing the concerns and the uncertainty we must accept.

Ironically, we find ourselves in a fractious, complex world in the aftermath of communism. The proliferation of weapons of mass destruction and the means to deliver them, as well as the pervasive spread of information technologies, have combined to empower the disaffected of this new world order to increasingly threaten our