The Insider

February 17, 2009 at 5:00 AM

Two lawmakers last week made it clear they want nothing to do with the oft-cited "hard choices" that dominate defense budget conversations these days.

Republican Sen. James Inhofe (OK) and Rep. Trent Franks (AZ) introduced a joint resolution on Feb. 12 that supports a minimum annual defense budget equivalent to 4 percent of the country's gross domestic product.

The idea is hardly new, but it comes at a time when all signs point to an inevitable advent of declining defense budgets in the face of a deep economic crisis.

Advocates of a 4-percent floor believe such a move would make spending on defense programs more predictable and ensure a big-enough industrial base. Opponents say the requirement would tempt defense leaders into crafting national security strategies to fit a given defense budget -- instead of working the other way around.

In his remarks introducing the joint resolution on the Senate floor, Inhofe sought to cast his proposal as a means to counter the economic crisis.

The measure would "create and maintain jobs across America and sustain our military industrial base," he said. "Investing in our Nation's defense provides thousands of sustainable American jobs and provides for our national security at the same time. Experts estimate that each $1 billion in procurement spending correlates to 6,500 jobs."

Inhofe added: "Major defense procurement programs are all manufactured in the United States with our aerospace industry alone employing 655,000 workers spread across 44 States. The U.S. shipbuilding industry supports more than 400,000 workers in 47 States."

Irrespective of the 4-percent question, Inhofe's remarks foreshadow a drama that could soon unfold on Capitol Hill should defense leaders opt to recommend the axing of some of the big-ticket weapon programs this budget season.

Will lawmakers agree to cut Defense Department programs under the current economic pressure when the same economic pressure demands that they preserve defense-related jobs in their districts?

Talk about hard choices.

-- Sebastian Sprenger

February 13, 2009 at 5:00 AM

Newly appointed Director of National Intelligence Dennis Blair has had a busy 10 days.

Since taking the reins of the U.S. intelligence community, Blair has gotten up to speed on the slate of current security threats and issued the community's annual assessment report to Congress on Feb. 12, as well as tackling issues such as a nuclear Iran, the spread of terrorist influences in Africa and Latin America and the impact of the ongoing economic crisis on national security.

Suffice to say, the former U.S. Pacific Command chief has little time to watch television.

However, the DNI's viewing habits were the subject of debate when Senate Select Committee on Intelligence member Sen. Jay Rockefeller (D-WV) questioned Blair during a Feb. 12 hearing on Capitol Hill. "I'm going to ask you a very different kind of question, but one which I think has enormous consequences both in this country and across the world," Rockefeller said as he began his unusual line of questioning.

Continuing on, the former committee chairman pressed Blair for his thoughts on the Fox Network's fictional spy drama "24," and whether or not the actions of the show's main character, intelligence operative Jack Bauer, glorifies the use of torture as a viable interrogation tool.

In the new season of "24," Bauer has been called to testify before a Senate investigations panel to answer for his use of questionable interrogation tactics to thwart a pending terrorist attack in the United States. During the show's season premiere last month, Bauer threatened to drive a ballpoint pen through an individual's eye, as a means of obtaining the location of a domestic terrorist cell.

Rockefeller noted that West Point Dean Brig. Gen. Patrick Finnegan tried "to convince the producers of this TV show '24' not to glorify torture," claiming the show was having a "toxic effect" on cadets' training and ethics.

Admitting the show is "celebrated in some circles" for its depiction "of the tough choices that have to be made in the war on terrorism," Rockefeller asked Blair whether he thought the show was an accurate portrayal of the ongoing global war on terror.

Blair's response: "I've never seen an episode of that show, senator, so I can't help you."

For hearing excerpts as well as Blair's prepared testimony, click here.

-- Carlo Munoz

February 12, 2009 at 5:00 AM

(UPDATE: Blair's prepared testimony is now available -- see link below.)

Today, Congress will receive its first glimpse into the Obama administration's views on the slate of national security threats facing the United States, and how the White House plans on addressing those threats in the near and long-term.

Newly minted Director of National Intelligence Dennis Blair is set to testify before members of the Senate Select Intelligence committee, less than a month after the Senate confirmed his nomination to become the top U.S. intelligence official in January.

The former U.S. Pacific Command chief replaces former DNI Mike McConnell and is the first brand-new member of President Obama's national security appointees to assume his position under the new administration. Bush appointee Defense Secretary Robert Gates was asked to remain at the Pentagon by the White House.

While details are scant regarding the current threat assessment Blair plans to present to lawmakers today, issues regarding the nuclear ambitions of Iran and North Korea, the continuing spread of influence across the globe by violent extremist organizations like al Qaeda and the continuing hunt for Osama Bin Laden are likely to top the list.

However, Blair's testimony does coincide with a number of significant changes to intelligence and national security policy taken on by the new administration in recent weeks.

This week, Obama launched a new soup-to-nuts review on U.S. policy in Afghanistan and Pakistan, which is expected to dramatically increase the number of American troops in that country.

Last month, the White House issued a slew of executive orders which set a timetable for the closure of the U.S. detention facility at Guantanamo Bay, Cuba and set new standards for interrogation tactics used against suspected terrorists.

For some background, click here to view the testimony from Blair's confirmation hearing.

Click here for Blair's prepared testimony on the intel community's latest worldwide threat assessment.

-- Carlo Munoz

February 12, 2009 at 5:00 AM

Given the state of the economy, voting for the economic stimulus package will essentially be equivalent to voting to reduce defense spending, Rep. J. Randy Forbes (R-VA) said today.

After listening to defense experts explain what needs to be done in Afghanistan, House lawmakers questioned whether or not there would be sufficient resources to meet the military's operational objectives.

Can victory still be achieved in Afghanistan and Iraq with dramatic cuts to defense spending, Forbes asked at today's House Armed Services Committee hearing.

As it stands, Congress plans to vote on the economic stimulus package of about $789 billion tomorrow so that it can reach President Obama's desk by Monday.

The hearing panel included CSIS' Anthony Cordesman, Council on Foreign Relation's Stephen Biddle, retired Army Gen. Jack Keane, and Janet St. Laurent from the Government Accountability Office.

Keane said that when troops' lives are on the line, the resources they need will be met; however the Defense Department has to make budget choices based on the money made available to them.

"I don't believe operations and maintenance dollars will be cut," said Keane.

Where Defense Secretary Robert Gates does have discretion is in his investment and capital accounts, Keane told lawmakers.

"That's where he'll go to make cuts to live within the budget given to him," said Keane.

-- Kate Brannen

February 12, 2009 at 5:00 AM

The Senate tonight unanimously confirmed Leon Panetta as director of the Central Intelligence Agency, Sen. Diane Feinstein's office just announced.

-- Jason Sherman

February 11, 2009 at 5:00 AM

It may have taken a little longer than some expected, but the Senate today voted 93-4 to confirm the nomination of William Lynn for the No. 2 spot at the Pentagon.

Click here and here for our coverage of his nomination saga.

-- John Liang

February 11, 2009 at 5:00 AM

Milan Vodicka, a Czech journalist, is using the platform of The Wall Street Journal's op-ed page today to warn the United States against turning its back against his country on missile defense, after so much political capital was spent getting the agreement to base an X-band radar there.

If the United States builds a radar system in the Czech Republic as part of the missile defense program developed by the Bush administration, it's likely that the Russians will target the Czech Republic with their tactical nuclear missiles. But many Czechs are fearful of an even greater danger than Russia: The possibility that the U.S. may decide not to deploy the defense system. Unfortunately, Vice President Joseph Biden suggested this prospect last week in Munich when he said, "We will wait for what the experts say and then we will see."

Czech politicians and their Polish counterparts have invested a lot of political capital in the missile defense project. If the Obama administration doesn't follow through, supporters of the missile shield would feel abandoned by the U.S.

What's worse, Czech and Polish leaders would lose credibility among their opponents and, most importantly, Russia. Moscow would see the failure to build the radar system as proof of its influence over Central Europe, and as recognition of its veto power over European security policy.Mr. Biden doesn't seem to appreciate that the missile defense project isn't just about American interests. It's about the Czechs and the Poles, too.

But the juiciest line comes later:

It's beginning to look as though the Americans were taking us for a ride. Now that there's a new driver in the White House, they think they can just drop us off at the curb.

Last week, we reported on a presentation by Stanford academic Dean Wilkening, who argues that Bush-era plans to station ballistic missile defense assets in Poland and the Czech Republic offer European nations less protection from Iranian missiles than defense officials have claimed publicly. Inside Missile Defense was able to interview Wilkening yesterday, and today's issue features an updated version of the story.

-- John Liang

February 11, 2009 at 5:00 AM

This just in from the Senate Select Intelligence Committee:

WASHINGTON, DC -- Today Senators Dianne Feinstein (D-Calif.), chairman of the Senate Intelligence Committee, and Christopher (Kit) Bond (R-Mo.), vice chairman of the committee, announced that the committee has approved the nomination of Leon Panetta to be the next Director of the Central Intelligence Agency.

“Leon Panetta will mark a new beginning for the CIA as its next Director. He has the integrity, the drive and the judgment to ensure that the CIA fulfills its mission of producing information critical to our national security, without sacrificing our national values,” Senator Feinstein said.

“He has promised the Senate Intelligence Committee that he will not allow coercive interrogation practices, secret prisons, or the transfer of terrorist suspects to countries that may use torture. And he has pledged to surround himself with career professionals, to keep Congress fully and currently informed, and to give the President unvarnished, independent advice. I am confident that the President and the nation will be well-served by Mr. Panetta as our next CIA Director.”

“I have supported Mr. Panetta after receiving his assurances that he will lean forward in the fight against terrorism to keep our nation safe,” Senator Bond said. “He has committed to using all appropriate and lawful means to do so, including the use of contract employees when the agency does not have a qualified government employee to perform the job, exploring the use of enhanced interrogation techniques on high-value detainees that may warrant going beyond the Army Field Manual in certain situations, and the lawful rendition of detainees to countries who have assured our State Department that they will not engage in torture.”

Panetta’s confirmation in the full Senate is expected to take place "as soon as possible," according to Feinstein's and Bond's joint statement.

-- John Liang

February 10, 2009 at 5:00 AM

Textron's sales of the V-22 Osprey and other products to the Defense Department may be one of the few things keeping the company's debt rating from truly tanking, according to a report issued yesterday by debt-rating agency Fitch Ratings:

Fitch Ratings has downgraded the Issuer Default Ratings (IDR) and long-term debt ratings for Textron Inc. (TXT) and Textron Financial Corporation (TFC) to ‘BBB-’ from ‘BBB’. In addition, the short-term IDRs and commercial paper ratings have been downgraded to ‘F3’ from ‘F2’. The Rating Outlook is Negative.

At the same time, Fitch has downgraded and simultaneously withdrawn its ratings for TXT’s preferred securities due to the small amount outstanding. Debt and preferred securities totaled nearly $11 billion at Jan. 3, 2009, including $2.5 billion at TXT and $8.3 billion at TFC. . . .

The downgrade of TXT’s and TFC’s ratings recognizes execution risks related to TFC’s plans to exit its non-captive finance business, as well as difficult economic conditions that could pressure TFC’s asset quality and financial performance at TXT’s manufacturing businesses. These factors could lead to liquidity pressures in 2010 in the absence of asset sales or capital market transactions. Other developments considered in the ratings include the full drawdown of the company’s committed bank facilities and the recently announced management changes, which emphasize the broad challenges facing the company.

Here's what Fitch had to say about Textron's manufacturing business, of which the V-22 is a big part (through its Bell Helicopter subdivision):

At TXT, the ratings incorporate Fitch’s view that TXT’s manufacturing businesses will generate positive free cash flow, albeit at lower levels than in the past due to weaker demand at Cessna and for the Industrial segment. In late January 2009, TXT lowered its estimate for deliveries in 2009 to 375 aircraft, a nearly 20% reduction from the 467 jets that were delivered in 2008. In Fitch’s view, the reduction understates the decline in demand because the mix of low-end Mustangs has been increasing. As a result of higher deferrals and sharply lower orders, deliveries could potentially remain at lower levels for a sustained period. However, the impact is partly offset by Cessna’s large backlog that totaled $14.5 billion at the end of 2008 after peaking at $15.6 billion in September 2008. The outlook for TXT’s Bell and Defense & Intelligence segments is more stable, helping to mitigate concerns about declining demand for business jets and difficult conditions in TXT’s Industrial segment.

While Textron's overall defense business looks safe, implementing the Pentagon's earned-value management rules has been a challenge, as Inside the Pentagon reported late last month:

When contractors fail to follow the rules, they risk losing their certification. That happened to Bell Helicopter Textron in March 2006; the company has struggled ever since to earn it back. Bell again failed to reach this goal during ((the Defense Contract Management Agency's)) most recent review of the company last November. The next such review is slated for March.

Fitch put out the rating in the wake of Textron's reshuffling of the folks in charge of its soon-to-be-defunct financing business earlier this morning. In December, the company announced it was getting out of the financing business altogether.

At the very least, yesterday’s news should make the company's presentation today at an industry conference in Miami Beach, FL, rather interesting.

-- John Liang

February 10, 2009 at 5:00 AM

President Obama has asked Bruce Riedel from the Brookings Institute to chair an interagency review of U.S. policy toward Afghanistan and Pakistan, White House spokesman Robert Gibbs said today.

Riedel is working at the White House for 60 days while on temporary leave as a senior fellow at Brookings' Saban Center for Middle East Policy. The study is to be completed before the NATO summit in April, according to the White House transcript of Gibbs' remarks on board Air Force One.

Amb. Richard Holbrooke and newly minted Under Secretary of Defense for Policy Michèle Flournoy have been appointed as co-chairs of the review, according to Gibbs. Riedel will report directly to the president and National Security Adviser James Jones, Gibbs added.

The proposed study is separate from the military review slated for completion this month. U.S. Central Command chief Gen. David Petraeus is overseeing that one.

Given that the economy has been pretty much dominating today's news as well as this morning's press gaggle, here's the only question that was asked at the White House (or should we say Air Force One) briefing about Riedel's Afghanistan-Pakistan study:

Q: Robert, just a quick question on the Afghanistan panel. How broad is that mission going to be? Is it going to look at troop increases and things like that? Or is it more going to look at --

MR. GIBBS: Well, obviously, there's a review that overlaps also with what General Petraeus is doing. I think everyone has mentioned that in order for us to change the direction that we see in Afghanistan, we can't simply focus on just the military aspects, that we have to focus on the diplomatic, the civil society, the reconstruction.

So I think with what Bruce is doing, and what other military planners are doing, is looking at the Afghanistan and Pakistan policies in a -- not just in how many troops, but in a broad sense of what is possible and what needs to happen in order to change the direction.

-- John Liang

February 10, 2009 at 5:00 AM

Here's hoping the new under secretary of defense for policy, Michèle Flournoy, does something about her organization's Web site.

The home page features an "Announcements" box right in the middle, highlighting "News, Speeches, Items of Interest."

The most recent news: March 27, 2007.

Latest "Public Statements": Sept. 28, 2006.

And the latest "Special Report": The Quadrennial Defense Review. From 2006.

At least the site does reflect that Flournoy is, finally, the under secretary following her confirmation this week -- though it spells her name without that tricky accent. Just one more update to be made.

-- Dan Dupont

February 10, 2009 at 5:00 AM

While Iran's satellite launch last Monday has defense leaders worried, the move is not necessarily a sign that Tehran already has the know-how to build a long-range missile capable of reaching the United States, according to Gen. James Cartwright, the vice chairman of the joint chiefs of staff.

The leap from satellite program to missile program is "not an automatic," Cartwright told reporters today. "It doesn't happen in a day or two."

"((T))he work that they have done thus far is, at best, rudimentary -- very low orbit, very minimal energy to get up there," Cartwright said. "This is not a long- range missile, but it is the path toward that, so we have to worry about that."

-- Sebastian Sprenger

February 9, 2009 at 5:00 AM

Facing tighter budgets and a greater emphasis on fuel efficiency, the military vehicle industry has a challenging year ahead, according to industry panelists at last week's tactical wheeled vehicles conference in Monterey, CA.

“We're going to be all together facing an uncertain future with unpredictability as the main theme,” Pat MacArevey, Navistar's director of government business and government affairs, said during the Feb. 2 panel. “I think the challenge is for our industry to behave like our customer and be on our toes in an era of persistent conflict.”

In particular, the panelists -- including retired Gen. Paul Kern, president and chief operating officer of AM General; John Stoddart, executive vice president and president for defense at Oshkosh; Dennis Dellinger, president for mobility and protection systems at BAE Systems; and MacArevey -- said the industry needs to look toward lightweight materials that provide vehicle protection and increased fuel efficiency.

Additionally, Kern touched on the need to constantly improve vehicles -- in his company's case, the humvee -- to meet threats in theater, while Dellinger looked toward the need to repair damaged vehicles. He favored recap, which allows new technology insertions, instead of reset, which simply returns vehicles to their original configurations.

Stoddart suggested the companies may consider future collaborations.

“We know that collectively we can do what our national strategy calls for us to do, and don't be surprised if you see the four of us working more closely together in the future,” he said.

For more coverage of the Monterey conference, check out this week's Inside the Army.

-- Marjorie Censer

February 9, 2009 at 5:00 AM

Accelerating equipment reset is one way that military spending can help play a role in the country's economic recovery, states a new memo from the Center for American Progress, a progressive Washington-based think tank. The authors recommend adding $50 billion to equipment reset in fiscal year 2010 as part of the economic recovery package.

After years of use in Iraq and Afghanistan, the services' equipment -- its tanks, trucks and helicopters -- have undergone significant combat damage and require either replacement or repair.

"There is no reason that this reset cannot be done much more rapidly," reads the memo.

Defense spending for equipment reset, which could cost up to $100 billion, should be prioritized, according to the report, because it could spur medium- to long-term economic growth.

Reset is a major issue for the services, especially the Army. Inside the Army reported this week that reset is a "non-negotiable" priority for the service, despite serious funding challenges that lie ahead.

The first step to effective reset is determining what kinds of equipment are essential for the military to successfully defeat current and future threats, states to the memo.

"The vehicles most in need of reset are those seeing service in Iraq and Afghanistan. These include M1 Abrams tanks, M113 Armored Personnel Carriers, Stryker combat vehicles, military Humvees, and various support vehicles," write the authors.

Accelerating reset can bring employment for mechanics and machinists in states such as Texas, California, Oregon, Utah, Ohio, Michigan, Pennsylvania and Alabama, states the memo.

CAP also calls for accelerating the spending of funds already authorized for military construction, as well as an extra $25 billion for fiscal year 2010 for projects in the next five years.

And to combat unemployment, CAP recommends increasing the ground forces to projected levels as quickly as possible.

"In 2010, the Army and Marines should attempt to add all 48,000 troops to their roles without lowering standards. This will increase military personnel expenditures by an estimated $5 billion in 2010 alone," reads the report.

-- Kate Brannen

February 9, 2009 at 5:00 AM

President Obama's national security adviser, James Jones, yesterday delivered his most detailed public remarks to date on his plans for leading the National Security Council. Speaking in Munich to the annual conference on security policy, Jones said the NSC is paying increased attention to the United States' capability to counter weapons of mass destruction as well as “placing a far higher priority on cyber security.”

From the transcript:

The President has made clear that to succeed against 21st century challenges, the United States must use, balance, and integrate all elements of national influence:  our military and our diplomacy, our economy and our intelligence, and law enforcement capacity, our cultural outreach, and as was mentioned yesterday, the power of our moral example, in short, our values.  Given this role, the NSC is by definition at the nexus of that effort.  It integrates on a strategic sense all elements of our national security community towards the development of effective policy development and interagency cooperation.  But to better carry out the president’s priorities, the National Security Council must respond to the world the way it is and not as we wish it were.  And it must consider the fusion of our national priorities within the broader international context and interest.  The NSC’s mission is relatively simple.  It should perform the functions that it alone can perform and serve as a strategic center – and the word strategic is operative here – for the President’s priorities.  

Jones, retired Marine four-star general, also said the NSC must adapt to evolving challenges.

There are traditional priorities that we will manage.  But we must also update our outlook and sometimes our organization to keep pace with the changing world.  To give you just a few examples, the NSC today works very closely with President Obama’s National Economic Council, which is led by Mr. Larry Summers, so that our response to the economic crisis is coordinated with our global partners and our national security needs.  The NSC has worked closely with the White House Counsel’s office as we implement the President’s orders to ban torture and close the detention center at Guantanamo Bay.  The National Security Council is undertaking a review to determine how best to unify our efforts to combat terrorism around the world while protecting our homeland.  And this effort will be led by Mr. John Brennan.

The National Security Council will be at the table as our government forges a new approach to energy security and climate change that demand broad cooperation across the U.S. Government and more persistent American leadership around the world.  And the NSC is evaluating how to update our capacity to combat the proliferation of weapons of mass destruction while also placing a far higher priority on cyber security. There is no fixed model that can capture the world in all of its complexity.  What’s right today will have to be different four years from now or eight years from now.  And that’s precisely the point.  The NSC’s comparatively small size gives it a unique capacity to reinvent itself as required and to pivot on the key priorities of our time. 

-- Jason Sherman