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October 21, 2015

Inhofe Questions Former Defense Sec. Gates on Pentagon Budget

WASHINGTON – U.S. Sen. Jim Inhofe, senior member of Senate Armed Services Committee (SASC), today participated in a SASC full committee hearing on the future of defense reform with former Defense Sec. Robert Gates as a witness. Inhofe questioned Gates about how the Pentagon can best absorb budget cuts in a way that effectively and responsibly streamlines operations and continues to meet our current national security needs. 

In his question, Inhofe highlighted how bureaucracies often fail to achieve balance and preserve critical operation competencies when adjusting to budget cuts. Highlighting an example of his own efforts to reform the Federal Aviation Administration’s (FAA) budget, Inhofe said bureaucracies often target spending cuts towards programs that would scare the public from demanding further fiscal restraint.

Inhofe said, Bureaucracies don't want to get smaller, they want to grow… So every time it seems that there is a bureaucracy that is asked to reduce its overhead – and that’s what we’re talking about today, headquarters, its overhead – they will pick out, cherry-pick something that they do that the public is so concerned about.”

In responding to Inhofe’s question of how to prevent this practice within the Pentagon, Gates said it requires incentivizing leaders to make smart budgeting decisions and also holding leaders accountable to the outcomes of those decisions.

Gates closed with, “In effect, you have to regularly grade your homework. You can't tell somebody -- you can't tell a service secretary, 'I want you to cut $25 billion in overhead over the next five years,' and then a year later, ask him how he's doing… You can make these bureaucracies work. But it's, how do you do that? Because it clearly is not done very often. And one of the things that I did, for which this committee expressed a great deal of appreciation at the time, was actually holding people accountable."

SASC Hearing 10.2015

Click here to watch the Q & A

The following is an unofficial transcript of Inhofe and Gates discussion in the hearing:

INHOFE:

Thank you Mr. Chairman. And Dr. Gates, I agree with the statement that was made by our Chairman that there's no one better to sit in for the reform that we're looking at and we're hoping for and we're anticipating than you. And I also want to say that in the various incarnations you've had I've always enjoyed personally working with you.

You've gone out of your way to have dinners with individuals and really tried to work with us, more than anyone else has. So I thank you for that. You know, you observe in 1961, it was 51 percent of the budget and it's now 15 percent. And that's a problem. This is – it’s the lowest percentage since World War II I guess.

But that isn't the problem we're addressing today. That is a problem, but what we're talking about is the tooth and the tail. Now both you and Secretary Hagel sought to shrink the inflated headquarters and major combat command tasks during the -- your respective times as Secretary of Defense. Secretary Carter initiated a target in 20 percent reduction in the staff during his deputy time as deputy secretary.

And in August of this year, Deputy Defense Secretary Robert Work sent all services a memo entitled, Cost Reduction Targets for Major Headquarters, ordering preparation for a 25 percent cut in appropriations from 2017 to 2020. I think that's great and we're supporting it.

INHOFE:

In fact, our defense authorization bill has a lot of language in there that says this is what we're going to -- we need to do and it's a major problem.

Let me just ask you to think about something that hasn't been brought up yet. It's an observation that I've made a long time ago, and that is the problem you had with bureaucracies in general. Bureaucracies don't want to get smaller, they want to grow. It was Reagan who said, "There's nothing closer to life, eternal in the face of this earth, than the government agency once formed." And we both remember that.

And so every time it seems that there is a bureaucracy that is asked to reduce its overhead -- and that's what we're talking about today, headquarters, its overhead -- they will pick out, cherry-pick something that they do that the public is so concerned about. Let me give you an example. I've introduced legislation, in fact, I've passed legislation that addresses the FAA and their treatment of general aviation. I have a second bill called the “Bill of Rights 2.”

I had problems with reams and reams of bureaucrats from that department out lobbying, knowing they had a lot of people out there on their staff. If you look at the FAA, in 1990, the total number of pilots that they regulated -- was primarily what they were doing in the year 2000 -- was [625,581] pilots. Today, it's [593,499] pilots.

So the workload is actually reduced. And yet, in -- in the year 2000, their budget was $9.9 billion. And in -- and then today, it's 16 -- let's see, it grew from -- yes, it grew from $9.9 billion to $16.6 billion. So that's an increase of $6.7 billion.

Now what do they do every time there's some kind of an effort by me, on the radio, or something else, talking about how it is an inflated bureaucracy that doesn't have the workload they had five years ago, that their budget is 67 percent more Every time that they do that they would say, “All right, we'll go ahead and start reducing.”

What did they reduce? They reduced things that scare people. They reduce things -- the controllers, the number of controllers that are out there. And I could give you a lot of examples, but I don't have to, because I know that you know this. So is this -- how is a way to handle this? I think that should be considered in this whole discussion.

And even though I had to leave to another committee hearing, I suspect that part wasn't brought up. What are your thoughts?

GATES:

It just so happens, Senator, that in January, I have a new book coming out that specifically addresses -- the subtitle is, “Lessons on Change and Reform from Fifty Years of Public Service.”

And it's how you lead and change big bureaucracies, and how you bring about change. And one of the -- one of the elements in that book, for example, is how to use a period of budget stringency to change the way an organization does its business. It creates an opportunity for a leader who's determined to change things and make them better, because you don't have enough money to do all the things that you've been doing, and therefore, you have to think about how you do it differently.

I had -- we had a lot of programs, as we referred to earlier. In a four-month period, we came up with $180 billion in overhead cuts in the Defense Department over a multi-year period in 2010. Now, some of those cuts created a strong reaction, including here on the Hill.

Senator Kaine will recall the reaction when I shuttered Joint Forces Command in Norfolk. And I had the entire Virginia delegation on my doorstep; actually, in my office. And...

KAINE:

And the then-governor.

GATES:

And the then-governor.

MCCAIN:

Who was the worst.

GATES:

But the point I'm trying to make is, first of all, to cut $80 billion out of the Defense Department generally. But what I assigned the services to do was to find $100 billion in cuts on their own, just in the services. But what I did, with the approval of the president, was to tell them, “If you find $100 billion, if you find the cut, if you meet the target that I've given you, and then you show me new military capabilities, or expanded military capabilities, that are actually tooth, I'll give you the money back to invest in those.”

So they were incentivized. It wasn't a zero-sum game for them, where anything they identified, they were going to lose. But it forced them to address this tail-and-tooth issue, and created both penalties if they didn't achieve the goals, but an incentive for them to find and be successful in the effort.

One of those things -- and it goes to one of the questions that the committee is addressing -- the number of general officers. As part of that exercise, we took an initial swipe at senior leadership in the department. And our objective -- and this is one of those things you start, you never know whether it came out -- but we proposed cutting 50 four-star positions, or 50 general-officer positions, and I think twice that number of senior civilian positions.

You can do this. But the thing that it requires, whether it's the FAA or the Defense Department, or anyplace else, it requires the person in charge to monitor it almost daily, and to make sure that people are doing what they said, what they signed up to do, or the assignment that they were given. In effect, you have to regularly grade your homework. You can't tell somebody -- you can't tell a service secretary, “I want you to cut $25 billion in overhead over the next five years,” and then a year later, ask him how he's doing.

What you need is to ask him in two weeks, “What's your plan?” And in a week after that, or two weeks after that, “How are you doing on implementation?”

So you can do these things, senators. You can make these bureaucracies work. And that's kind of the thesis of the book. But it's, how do you do that? Because it clearly is not done very often. And one of the things that I did, for which this committee expressed a great deal of appreciation at the time, was actually holding people accountable.

You know, people get fired in Washington all the time for scandals, and doing things wrong, and that kind of stuff. Hardly anybody ever gets fired in this city for just not doing their job well enough. I mean, that's what was rare, was somebody getting fired because they didn't do their job well enough. You need a little bit more of that in this city.

INHOFE:

My time is expired. But that's a great answer to that question. I appreciate it. By the way, I'll swap you books. I have a chapter in mine on this too. Thank you, Mr. Chairman.

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