The Insider

Senate Armed Services Committee Chairman Carl Levin (D-MI) sent a letter today to Ranking Member James Inhofe (R-OK), responding to one that Inhofe and other Republican senators sent earlier this week insisting on additional financial disclosure information from Defense Secretary nominee Chuck Hagel.

In his letter, Levin outlines the Armed Services Committee's rules and practices for nominees and states the request by Inhofe and other GOP senators "appears to insist upon financial disclosure requirements that far exceed the standard practices of the Armed Services Committee and go far beyond the financial disclosure required of previous Secretaries of Defense."

"Our committee has a well-defined set of financial disclosure and ethics requirements which apply to all nominees for civilian positions in the Department of Defense," Levin wrote, and proceeded to list the requirements nominees are expected to provide, including:

* a copy of the Nominee Public Financial Disclosure Report required by the Ethics in Government Act -- OGE Form 278;

* a response to a standard committee questionnaire, which includes questions on future employment relationships, potential conflicts of interest, personal financial data, and foreign affiliations; and

* a formal ethics agreement, which outlines the steps the nominee will take to avoid any potential conflict of interest, including a commitment by the nominee to divest DOD contractor stocks within 90 days of appointment to office, avoid buying DOD contractor stocks while in office, and resign from non-Federal boards and activities.

"We have applied these disclosure requirements and followed this process for all nominees of both parties throughout the 16 years that I have served as Chairman or Ranking Minority Member of the committee," Levin's letter states. "I understand that the same financial disclosure requirements and processes were followed for at least the previous 10 years, during which Senator Sam Nunn served as Chairman or Ranking Minority Member. During this period, the committee has confirmed eight Secretaries of Defense (Secretaries Carlucci, Cheney, Aspin, Perry, Cohen, Rumsfeld, Gates, and Panetta), as well as hundreds of nominees for other senior civilian positions in the Department."

But what really sticks in Levin's craw is this:

There are two unprecedented elements to the financial disclosure demanded by the February 6, letter:  (1) the disclosure of "all compensation over $5,000 that [Senator Hagel has] received over the past five years"; and (2) the disclosure of any foreign funding of eight private entities from which Senator Hagel has received compensation since leaving the Senate (including the date, source, and specific amount of each foreign contribution).  Each of these demands goes well beyond what the committee has required of any previous nominee.

With regard to the demand that Senator Hagel disclose all compensation over $5,000 that he has received over the past five years, the standard financial disclosure form which the committee requires all nominees to provide calls for the disclosure of all entities from which the nominee has received compensation in excess of $5,000 (including clients for whom the nominee personally provided more than $5,000 in services, even if the payments were made to the nominee’s employer, firm, or affiliated business) during that the previous two years.  The two-year disclosure requirement that has been consistently applied by the committee is established in section 102(b)(1)(A) of the Ethics in Government Act and applies not only to all nominees for Senate-confirmed positions, but also to all candidates for federal elective office.

With regard to the demand that Senator Hagel disclose foreign funding for private entities from which he has received compensation, the February 6 letter asserts that this information is needed because "If it is the case that [Senator Hagel] personally [has] received substantial financial remuneration -- either directly or indirectly -- from foreign governments, sovereign wealth funds, lobbyists, corporations, or individuals, that information is at the very minimum relevant to this Committee's assessment of your nomination."

In fact, the committee questionnaire addresses the issue of foreign affiliations in a manner that is equally applicable to all civilian nominees coming before the committee.  Among other questions, the committee questionnaire asks whether, during the last ten years, the nominee or his spouse has “received any compensation from, or been involved in any financial or business transactions with, a foreign government or an entity controlled by a foreign government.”    Senator Hagel’s answer to this question was “No.”

The demands of the February 6 letter go beyond this standard disclosure regime and would subject Senator Hagel to a different requirement from all previous nominees, under which he alone would be required to somehow ascertain whether certain entities with whom he has been employed may have received foreign contributions.  In particular:

* Senator Hagel serves without compensation as the Chairman of the Board of Directors of the Atlantic Council -- a "think tank" that includes among its other Directors and Honorary Directors seven former Secretaries of States and four former Secretaries of Defense.  The Atlantic Council's public website provides a diverse list of corporate contributors, including both domestic companies (such as Chevron, General Dynamics, Lockheed, Raytheon, Boeing, Citigroup, Duke Energy, and Exxon Mobil) and foreign entities (such as Polish Telecom, Saab, All Nippon Airways, and the Istanbul Stock Exchange).  Over the 16 years that I have served as either Chairman or Ranking Minority Member of the committee, we have considered numerous nominations of individuals who were associated with similar think tanks, universities, and other non-profit entities.  Even in the many cases where a nominee received compensation from such a non-profit entity, we did not require the nominee to disclose the sources of funding provided to the non-profit entity.

* Senator Hagel has also served as an Advisory Board Member, Senior Advisor, Director, Special Advisor, or Board Member to seven domestic for-profit entities identified in the February 6 letter since he left the Senate in January 2009.  His financial disclosure report and committee questionnaire indicate that he left four of these entities (Wolfensohn & Company, National Interest Security Company, Elite Training & Security, and Kaseman, LLC) in 2010 and has received no compensation from them during the two-year reporting period covered by the Ethics in Government Act.  Nonetheless, the February 6 letter demands that Senator Hagel provide ten years of corporate financial data on foreign investments or funding received by these entities.  The forms and committee questionnaire indicate that Senator Hagel continues to serve as an Advisory Board Member for Corsair Capital, a Senior Advisor to McCarthy Capital, and a Special Advisor to the Chairman of M.I.C. Industries and that he has received compensation for his service to these three entities.  I am doubtful that, as mere advisor to these companies, Senator Hagel has either access to the corporate financial information that is sought in the February 6 letter or the authority to release such information if he were able to get access to it.  In any case, over the 16 years that I have served as either Chairman or Ranking Minority Member of the committee, we have considered numerous nominations of individuals who were employed by for-profit entities of every variety.  We have considered board members, officers, directors, and employees of companies doing business across the full range of our economy.  In this time, we have never required the nominee to attempt to ascertain and disclose the names of investors in such an entity.

"The committee cannot have two different sets of financial disclosure standards for nominees, one for Senator Hagel and one for other nominees," Levin writes.

The Senate Intelligence Committee is scheduled to hold a hearing this afternoon on the president's nomination of John Brennan to become the next CIA director. Brennan submitted prepared answers to questions posed by the committee prior to the hearing.

One of those questions involves the use of unmanned aircraft systems to carry out strikes against suspected terrorists -- about whether Brennan would "support legislation to authorize the use of force outside of 'hot' battlefields and codify the standards for the conduct of targeted strikes, including the use of remotely piloted aircraft." His answer:

As you know, the United States has publicly acknowledged that it sometimes uses remotely piloted aircraft to conduct targeted strikes against specific al-Qa'ida terrorists in order to prevent terrorist attacks on the United States and to save American lives. These strikes are conducted in full compliance with the law. In fact, extraordinary care is taken to ensure that they conform to the law of war principles of (1) necessity -- the requirement that the target have definite military value; (2) distinction -- the idea that only military objectives may be intentionally targeted and that civilians are protected from being intentionally targeted; (3) proportionality -- the notion that the anticipated collateral damage of an action cannot be excessive in relation to the anticipated concrete and direct military advantage; and (4) humanity -- a principle that requires us to use weapons that will not inflict unnecessary suffering.

As I have noted publicly, using remotely piloted aircraft for targeted strikes can be a calibrated choice because of their ability to fly hundreds of miles over the most treacherous terrain, strike their targets with astonishing precision, and then return to base. Moreover, they dramatically reduce the danger to U.S. personnel and to innocent civilians, especially considered against massive ordnance that can cause injury and death far beyond the intended target.

We must, however, use these technologies carefully and responsibly. The President has, in fact, demanded that we hold ourselves to the highest possible standards and that, at every step, we be as thorough and deliberate as possible. Consequently we apply rigorous standards and a rigorous process of review, which I provided a general sense of in the April 2012 speech cited in your question. As I noted there, we are working to refine, clarify, and strengthen this process and our standards.

Finally, on your question about whether I would support legislation to authorize the use of force outside of "hot" battlefields, I believe we currently have the authority to take action in such circumstances against al-Qa'ida and associated forces. As Jeh Johnson, the former General Counsel of the Department of Defense, indicated in a lecture at Yale Law School in February of last year, the 2001 Authorization for the Use of Military Force does not contain a geographical limitation. Consequently I do not believe additional legislation along these lines is necessary.

View the rest of Brennan's prepared responses.

The Congressional Budget Office posted a blog entry this morning on a report it released yesterday, called "The Budget and Economic Outlook: Fiscal Years 2013 to 2023."

The report predicts that "the federal deficit will drop to $845 billion in 2013 -- its smallest size since 2008. Even so, under current law annual deficits and federal debt will stay at historically high levels relative to the economy through 2023, and lawmakers face key budgetary decisions this year that could have a substantial effect on that budget outlook," the blog post states, adding that on defense:

By CBO's estimate, budgetary resources for defense (other than spending for military personnel) will be cut by around 8 percent across the board, and nondefense funding that is subject to the automatic reductions will be cut by between 5 percent and 6 percent. According to that estimate, discretionary outlays will drop by $35 billion and mandatory spending will be reduced by $9 billion this year as a direct result of those procedures; additional reductions in outlays attributable to the cuts in 2013 funding will occur in later years. The deficit for 2013 will depend in part on whether those cuts are allowed to take place, are canceled (in whole or in part), or are replaced with other measures designed to reduce the deficit.

If lawmakers chose to prevent those automatic cuts each year without making other changes that reduced spending by offsetting amounts, the deficit would total nearly $900 billion in 2013, more than $40 billion higher than under current law. Over the 2014-2023 period, total deficits would exceed $8 trillion -- over $1 trillion more than is projected in CBO's current baseline.

Top Republicans from the House and Senate Armed Services committees plan to unveil their thoughts today on how to avert "the automatic defense cuts known as sequestration," according to press releases sent out by a few of them.

The press briefing is slated for 1:45 today at the Senate Radio/TV Gallery in the Capitol.

Participants include:

House Armed Services Committee Chairman Howard “Buck” McKeon (R-CA)

Senate Armed Services Committee Ranking Member Jim Inhofe (R-OK)

Senator Kelly Ayotte (R-NH)

Senator John McCain (R-AZ)

Senator Lindsey Graham (R-SC)

Congressman Mac Thornberry (R-TX)

Congressman Mike Turner (R-OH)

Changing the Navy's official name to include the Marine Corps would not have much adverse budgetary effect, according to a brief Congressional Budget Office report released last week.

Reps. Walter Jones (R-NC) and Paul Broun (R-GA) introduced a bill on Jan. 3 that would redesignate the Department of the Navy the Department of the Navy and Marine Corps. CBO's Jan. 31 analysis states:

CBO anticipates that the bill would have very little effect on most U.S. Naval or Marine Corps installations since signage, service flags, and other items bearing the emblems or names of the Navy or Marine Corps generally do not reference the Department of the Navy and would not need to be replaced. In addition, since the commanding officers of U.S. military installations and other senior-level positions within the department change on a relatively frequent and routine basis, the budgetary impact of the bill would be small if purchasing of materials, such as stationery, were coordinated with those changes of command and appointments. CBO anticipates that the cost of implementing this bill would be less than $500,000 a year, over the next several years, from appropriated funds.

Enacting the bill would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.

Marine Corps Commandant Gen. James Amos, during his Senate confirmation hearing in September 2010, reluctantly suggested that a name change might be warranted, as Inside the Navy reported at the time:

Sen. Jim Webb (D-VA) a former Marine, Naval Academy graduate and Navy Secretary, pushed the subject when he questioned Amos during his Sept. 21 nomination hearing before the Senate Armed Services Committee. Webb argued that the change would overturn more than 200 years of tradition.

Amos noted that general officers have historically avoided being drawn into the debate, which he called a "political effort."

"It's probably not appropriate for the commandant of the Marine Corps as a service chief to weigh in," he said.

However, he added, "Do I need to dig into this a little bit more here and reveal myself?"

Webb prodded him, asking if there might be budgetary benefits for the Marine Corps in such a change.

Amos responded with a gloss of the Corps' history, noting that at one time the Marine Corps commandant was not even considered a member of the Joint Chiefs of Staff.

"This whole process has been evolutionary since the beginning of the Department of the Navy," he said. "I think if you talk to the Marines out there … where we are in 2010 today, because of where we have evolved, we are a pretty formidable force for our nation. And I think just viscerally … the average fleet Marine would look at the secretary [of the Navy] and say, 'Yeah, I'd like him to be called the secretary of the Navy and the secretary of the Marine Corps.'"

While he acknowledged Webb's concerns about breaking tradition, he added, "We paid a pretty healthy price in the last nine to 10 years of combat and we feel pretty relevant right now."

View the full story.

Sen. John McCain (R-AZ) today criticized the Defense Department's “culture of inefficiency” and questioned whether the White House's nominee to be defense secretary, former Sen. Chuck Hagel (R-NE), has the chops to grapple with problems in the Pentagon's process for buying major weapons.

The Weapon Systems Acquisition Reform Act (WSARA) of 2009 has led to improvements, but there is more work to be done, according to McCain. "Whether Senator Hagel would serve as the right leader at the Department of Defense to foster needed cultural change in the Department’s procurement practices is unclear," McCain said in a floor statement. "What we do know," he added, "is that the right person must embrace the following principles."

DOD must set realistic requirements early and manage changes to those requirements aggressively; improve the department's ability to price risk; improve its workforce for cost estimating, technical- and systems-engineering and developmental testing; use appropriate contract types; better incentivize productivity and innovation; and take other steps, McCain said. His full statement is online.