(Applause.)

SEC. RUMSFELD: Thank you very much. Thank you. Please be seated.

Thank you, Admiral Emerson and Captain Ryder, and a special greeting to all of you. Thank you so much for what you do to the -- for the country. We appreciate it. The country appreciates it and recognizes it.

It's amazing. You fly over a desert and land, and what do you find? You see no water, but you see sailors and the Navy.

The same thing happened to me the other day. I was in Iraq -- I think it was last month -- and I got out of the plane and was walking across something, and I saw a cluster of 10 or 12 folks, and they were all Navy. And it turned out they'd been asked to go out there and help with the IED problem. And they were electronic experts that were going to form part of a task force that General Monty Meigs and the folks in Iraq are working on to try to reduce the number of casualties from IEDs. And they were all Navy.

Admiral Mullen, the chief of Naval Operation, has just been so cooperative and so forthcoming and so helpful in finding people in the Navy who could be supportive of the ground forces in both Iraq and Afghanistan, given the fact that the long war we are in clearly has put a strain on the ground forces. And I am very grateful to the Navy and, I should add, to the Air Force for the fact that they have stepped forward and provided people who can do all the kinds of things that need to be done, whether it's electronics experts or intelligence or Navy Seabees or engineers or drivers, Military Police. And these folks, who have gone over, in some cases, in units; in some cases, as individual augmentees, are doing a superb job in Iraq.

Have any of you folks been involved with that at all? Anyone here served in Iraq or Afghanistan? There's one. Good. Greetings. Thank you.

But it's -- it clearly is -- the temperature in Iraq when I was there was 119. It's not that here. So -- what is this? About 80, 90? Something like that?

Well, in any event, I was pleased to look around in taxiing in and see all these modern aircraft. Of course, from where I stand, everything looks modern. All the planes that I flew in the Navy -- the only place you'll ever see them are in museums. It's -- so it's nice to be out here and have a chance to see the equipment you have.

I came not to go flying, although that would have been a delight if we'd had the time, but to have a chance to talk with you and thank you personally for your service to the country, for volunteering, for stepping forward and saying you wanted to serve our nation.

I must say that ours is a time of challenge to the country, to be sure. It's a time of peril. And I would like to just talk a bit about the long struggle we face against an enemy that is clearly ruthless in its design and deadly in capability, and then respond to some questions or hear thoughts that any of you may have, which I always look forward to.

Earlier this month, the intentions of the enemy clearly were made clear, with their plot to kill Americans and others in flights leaving London enroute to the United States by blowing up 10 or so airliners over the Atlantic. It should be a powerful reminder to everybody, free people, that they're serious, that they're determined, that they're not going to go away, and that we have to recognize the nature of the long struggle we and other free people are going to be in.

And I think it's also a reminder that all of us, every day since September 11th, are going to have to continue to think of today as the way we felt on September 12th. It has to have that sense of concern, that sense of urgency and that purposefulness.

The president correctly determined that to protect the American people, the only real way to do it is not to be in a defensive mode, but to take the offense and take the fight to them. Terrorists have an enormous advantage. They can attack in any place at any time using any technique. Their purpose is not to kill; their purpose is to terrorize. It's to alter behavior. It's to affect how people think. And so it is particularly true that free people are the most vulnerable because we are the people, in our country and around the world in free systems, who want to be able to get up in the morning and go where they wish and say what they wish and do what they wish, send their children off to school and have high confidence they're going to be able to come home safely, and to not be terrorized, because to be terrorized is to alter fundamentally that which we are as a free people.

The work that you do here is, of course, important, training aviators and their crews for combat. It's vital, if you consider that only weeks after the attacks on September 11th, United States soldiers and airmen were, some of them on horseback, calling in strikes from Navy aircraft in operations that very quickly toppled the Taliban and crippled the al Qaeda in Afghanistan and in the process liberated some 28 or 29 million Afghans.

Here we are several years later. They have fashioned a constitution. They have elected a president. They have an elected parliament. And on the plane flying in, President Karzai of Afghanistan called me on the phone and wanted to talk about some of the things that we're doing together, our two countries. And it is an impressive accomplishment.

I'm told that during that operation in Afghanistan, instructors at this post communicated with combat crews from carriers that were deployed in the theater. And because of the advanced communications and technology, within days the tactics that were being learned over the battlefield in Afghanistan and Iraq, later, were being taught here over the desert in Nevada, and it's a remarkable accomplishment.

The skills learned here also helped pilots and crews in Iraq topple what was a cruel and dangerous regime in a most impressive military operation. The close air support and surveillance provided by aviators saved countless lives of our troops. And it was airpower -- specifically, I believe, two 500-pound bombs -- that were precisely directed by our special forces that eliminated al-Zarqawi.

For years, that extremist had murdered Americans and terrorized Iraqis. He kidnapped, he beheaded. He thought he had found a way to destroy the hopes of the Iraqi people and was determined to do just that. But on June 7th, his hopes were destroyed.

There's a good deal of discussion these days about Iraq and its relationship to the larger fight against terrorism. Well, the enemy has no illusion about Iraq's importance, and nor should we. Indeed, I would say we have no excuse for having illusions about how Iraq fits into the war on terror. Bin Laden has said, and I quote, "The epicenter of these wars is Baghdad." Al Qaeda's second in command, Ayman al-Zawahiri, has said, and I quote, "The arena of jihad in Iraq is now the most important area of jihad in this age." Is there anything unclear or ambiguous about that? How can so many still be debating this issue? It strikes me that the answer is there for all to see.

We tend to talk about the challenges in Iraq today, and there are tough challenges, let there be no doubt. But we also need to recall what Iraq was before its liberation and consider the Middle East today.

One of the greatest causes for concern today is Iran, now threatening the stability of that region, pursuing a nuclear capability by their own self-profession and aggressively providing aid and weapons to terrorist organizations, including Hezbollah. Iran's president talks of a world without America and without Israel. That is the Iran we see today. Imagine how much more dangerous that part of the world would be today if Iraq and Afghanistan were still ruled by the enemies of freedom, the enemies of the American people and the enemies of the West.

In the coming weeks and months, there will be a vigorous discussion about the struggle we're in and the prospects for success. The important question, I believe, is not whether we can win; of course we can win. We're not going to lose a single battle in Afghanistan or Iraq. The real question is whether we will have the will to persevere, whether we have the grit to carry on in our pursuit of a safer world for our families and for our values.

The arguments we hear today are interesting. There are those who argue that America is really what's wrong with the world. That's not news. They used to call that crowd the "blame America first crowd." But I don't get up every morning and think that America or the United States of America is what's wrong with this world. It simply isn't. We're a nation in history that has liberated rather than conquered. We're the country where every year millions of people line up to come here because they want to live here, and they want to work here, and they want to have the opportunities that exist here.

One day I believe that the men and women of the armed forces today will look back -- I don't know -- five, 10, 20 years from now, and they'll see a world where the terrorist threat has been sharply reduced, a world where many millions more people are benefitting from freedom, and a world where America is a rising force for freedom.

A few days ago, I was in Fairbanks, Alaska, and I met with -- I don't know -- 6(00), 7(00), 800 family members, the loved ones whose loved ones are in Iraq serving in the 172nd Stryker Brigade. You may have read that at some moment several weeks ago General Casey decided that in working with the new Iraqi government that they had three priorities. One was to have a reconciliation process that would bring in all elements of the country; a second was to go after the death squads that were trying to foment sectarian violence; and the third was to reduce the level of violence in Iraq -- correction -- in Baghdad, the biggest city in Iraq, and where a non-trivial fraction of the whole population lives. And it's a mixture of all the ethnic groups and all the religious groups.

And as a result, we decided to extend the tour beyond the normal up to one year or 365 days of this Stryker Brigade and divert them from coming home -- some had already gotten into Kuwait -- and send them into Baghdad. And needless to say, it was a big disappointment for them and their families and their spouses and their children. So I went to meet with the, I guess there must have been 7(00) or 800 of them.

And driving into the base you saw the welcome home signs that had been put up a few weeks before, and of course, they were not home. And we then went in and they had an ice skating rink with no ice at this time of year, but it was filled with children who were -- the parents had brought into the place for day-care, while they were in discussion with me discussing the Stryker Brigade and when they might be coming home. And it was just filled with these youngsters whose parents were over in Iraq. It was a moving sight, and all I can say about it is that it was impressive to listen to their thoughts.

These are people, spouses, male and female, from people who are professional military and career, and some who are not, who were just in for a temporary period of time, expressing their concerns and hopes, and trying to find ways that they can sort through all the inconvenience that occurs as a result of the change in plans of that significance. A lot of them had arranged for vacations, chartered cruises; some were being transferred and they'd moved their furniture and things were en route to another location, a school or a different base. So there were just an enormous number of things that the Army had to work out.

And one of the wives at the meeting gave me a letter written by her son who was, I believe, nine years old. He said he was hoping that his dad would be able to come home, and he wanted to know if I could help. And it was a cute letter. He went on to say something to the effect that I hope you'll help find a way for my dad to come home, and everyone else's too -- which is a nice thought. You got a sense that the letter, which had a picture of the Stryker vehicle, it had a picture of him with his father -- I don't mean a real picture, a drawing -- and then a big American flag, you get a sense that even though he's nine, he had a pretty good sense of what was going on, that what his father was doing was important. But he didn't know precisely what it was that his father was doing, although his father, I believe, was a chaplain.

And it was a -- I did not meet the young man, but the questions that got the biggest cheer were when someone asked will they be home before Christmas, and I said I thought so, and I would do everything humanly possible to see that that happened, because that would be the extension of 120 days, I think goes to December 13th. Someone in the back of the room yelled, "How about Thanksgiving?" Someone else yelled, "What about Labor Day?" You know, but they're a terrific group of people.

And needless to say, decisions that have to be made in the Department of Defense are decisions that affect lots of people, and there's always some situation that's distinctive. And broad decisions like that may be right in a macro sense, and in an individual sense they may be enormously inconvenient or difficult. And big institutions have to find ways to work with the people and see that what we do creates an environment that's hospitable to them and that encourages them to be a part of this institution, and someplace that they want to re-enlist and continue their careers in the military.

I mention all this simply because I -- we do think about the individual people in the service. We do think about those folks whose tours were extended. We think about them every day and we pray for them. And I know that all of you think of the folks that are serving over there every day as well.

So I thank all of you for what you do. History is being made. You are helping to make history. You're going to be able to look back in a decade or two and be enormously proud of the fact that you did volunteer, that you are serving the country, and it is a country that we love and we value.

So I thank you for your service. And may God bless all of you.

Thank you very much. (Applause.)

Now, I see some microphones, and I'd be delighted to respond to some questions. I'll answer the ones I know how to answer, and I'll respond gracefully to the ones I don't, or I'll get some of the folks behind me to come up, or the -- where's the chief? He probably knows the answers to all those questions. I don't see where he's sitting. There he is back there. I'll get him or I'll get the admiral or the captain.

Yes, sir?

Q Mr. Secretary, Lieutenant Commander -- (inaudible). It's a pleasure to meet you, sir.

SEC. RUMSFELD: Thank you.

Q Sir, I joined the Navy in 1979. Back in the late '70s and early '80s, when we joined, we joined with VEAP programs -- Veterans Educational Assistance Program, like the modern-day Montgomery GI Bill. It didn't last that long, and back in 2001, well, they switched to the Montgomery GI Bill, but they never brought the VEAP guys with this.

In 2001, right around the same time as 9/11, while serving aboard the Abraham Lincoln, they had a conversion time where these old sailors from the '70s could convert over to the new Montgomery GI Bill. Well, needless to say, once 9/11 hit, everybody was frantically -- we were hard to starboard preparing, getting our force protection all squared away.

So finally I went down to Personnel to do the conversion, and found out it ended the day before. I was able to ask Admiral Kelly (sp) in 2004, who was CNP at the time -- commander naval personnel -- and apparently there's 4,000 sailors that were in the Navy back in 2004 that were affected by this. So I'm sure that Army, the Air Force and the Marine Corps has similar numbers.

So right now I have 27 years in. I wrote the VA, and the VA's response was, "It's up to Congress. Write your congressman."

So my question to you is, when you have audience with Congress, can you get them to add that in there, to open this back up, so I don't retire with 28, 30 years of service with no educational benefits after I get out, sir?

SEC. RUMSFELD: What was the program called that you thought you had? VEAP?

Q VEAP. It was VEAP. Veterans Educational --

SEC. RUMSFELD: How do you --

Q Veterans Educational Assistance Program.

SEC. RUMSFELD: I'll be happy to take a look at it. And --

Q You had the Vietnam era GI bill, sir, VEAP, and the Montgomery GI bill.

SEC. RUMSFELD: Yes.

Q (Inaudible.)

SEC. RUMSFELD: I remember the Montgomery GI bill. It came after. And there's a glitch in the middle, you say, of about 4,000 Navy people, and maybe some in other services.

Q I'm sure there is in other services. Uh-huh.

SEC. RUMSFELD: Fair enough. We'll take a look at it. Thank you.

Q Thank you very much, sir.

SEC. RUMSFELD: Appreciate your raising it.

Question? Yes, sir? You can just go out and stand behind the mike, and we'll get to you. Yes, sir?

Q Mr. Secretary, I was curious to know if the Department of Defense will be allocating more sailors to fight in Iraq.

SEC. RUMSFELD: I don't know. Admiral Mullen has been just terrific, and what he has done is to recognize the need that our country has for people who can perform the functions that the ground forces need performed during this period.

Right now -- our goal in the Army, for example -- in the Navy, it's generally six months out and then back, and in the Marines, it's seven-month tours in Iraq and then back. And they tend to get two seven-month tours out of the Marines. Air Force does it differently and so too the other services.

But what we're trying to do is to get the Army so that they can have one-year active duty -- the regular service people -- one year out and three -- and two years back, in a three-year period. And if they have to deploy again, they'd have a couple years back.

Right now it's down to less than -- one year out and less than two back. And it's -- I don't know if it's 1.3 or (1.)4 or (1.)5 years back, and then they go again.

So we need more people who can do those functions. And we have found that there has been a very can-do willingness on the part of -- both the Air Force and the Navy to step forward and to serve in Iraq and in Afghanistan. And the extent to which it would be needed prospectively is open to question, because we don't know how long before we're going to be able to continue to transfer more responsibility to the Iraqi and the Afghan forces, and reduce the number of forces we have there. We expect that that will be the case as we go through this year and next year. And therefore the demand would go down.

On the other hand, it's -- everyone I have met from the Navy and the Air Force was delighted that they had that opportunity to serve over there. They were proud of what they've done, and they recognize that they made a real solid contribution. And God bless them for it. But only time will tell the extent to which that need will continue, and we're now up to 267(000) Iraqi security forces -- (2)67,000 Iraqi security forces. And we'll pass -- we've passed over one of the 18 provinces; another one's being passed over, I believe, this week. We continue to pass more and more responsibility to the Iraqi security forces. And our hope and expectation is that the demand for ground forces over there on the part of the coalition countries will go down as the capabilities of the Iraqi security forces continues to go up, both their numbers and their capability.

Q Thank you, Mr. Secretary.

SEC. RUMSFELD: Thank you.

Yes, sir.

Q Mr. Secretary, it's an absolute honor to meet you. My name's Lieutenant J.P. Marcade (sp). My question is, I understand that it probably must be really frustrating to have the criticism that you say is on Capitol Hill, maybe those on the far left, does it all hamper -- does it at all hamper your ability to do your job, sir?

SEC. RUMSFELD: That's an interesting question. I don't sense that it has. One would think that at a certain level it could reduce one's effectiveness because of questions that get raised in people's minds. I think that from my standpoint it doesn't. I don't feel it myself because I've read so much history and am aware that in every conflict we've ever been in there have been heated criticisms of those individuals who were involved. George Washington came close to being fired during the Revolutionary War, and goodness knows the leadership during the Civil War was wrongly criticized. And in World War II you think of the loss after loss after loss of the Pacific and the -- I don't know -- 70,000 Americans killed in North Africa in less than a year -- or casualties, killed or wounded. And there have always been criticisms in every conflict and I expect that, I understand that.

But at least thus far -- you know, on the one hand, you have a free country, and that means people are free to say what they what they want, think what they want and they do. And so that's a great system. People also have the privilege of listening to what people say and judging them for what they say, and that's also a good fact. The thing that bothers me most is not that. The thing that bothers me the most is how clever the enemy is. They are actively manipulating the media in this country. They plan their attacks to get maximum notoriety and publicity. They hide among civilians, and when they're attacked by people and killed, and some civilians may be killed, they then claim that there were innocent civilians being killed by us when we're not doing it.

They can lie with impunity. They seem to be held -- we're held to the laws of war, as we should be, and we are held to a standard of perfection, near perfection, and people who go outside that line are punished. There's no accountability for the enemies we face, and they seem to be able to say what they wish and get away with it -- with lies with impunity. And that's what worries -- that does worry me, particularly in an era of this new media era of the 21st century where you've got 24-hour news and bloggers and Internet and digital cameras and Sony-cams. I mean, just last month we had instances where doctored pictures were being put out and carried on all the legitimate media -- not all of them, but some of those legitimate media in our country. And the world all saw these doctored pictures, and it wasn't until sometime later that people discovered they were doctored, and thank goodness they did. But it is -- that problem, it seems to me, is that the enemy is so much better at communicating and is held to no account for what they say.

You know, in a town where you grow up, some guy tells lies every day, pretty soon everyone looks around the corner and says, "Here comes Joe, the liar." And everyone gets to know he's a liar, so no one believes him.

But these folks, they have media committees. They plan how they're going to lie. They arrange themselves to do it, how they're going to manipulate the media, how they're going to get -- how they're going to weaken our will. And it is that the thing that keeps me up at night and worries me and makes me wish we were better able to counter that, because the constant drum beat of the things they say -- often which are not true -- is harmful over time; it's cumulative, and it does weaken people's will and lessen their determination and raise questions in their minds as to whether the cost is worth it. And that's worrisome.

Thank you.

Questions?

Yes, sir?

Q Mr. Secretary, thank you for coming.

SEC. RUMSFELD: Thank you.

Q My name is Lieutenant Javier. And my question, is, sir, given so much attention in Iran, do we have any plan militarily on them, sir?

SEC. RUMSFELD: Any plan militarily on what?

Q On Iran, sir.

SEC. RUMSFELD: On Iran.

Q Yes, sir.

SEC. RUMSFELD: The president has made a decision that it is -- would not be a good thing for Iran to develop nuclear weapons. Iran is a sponsor of terrorist organizations -- Hezbollah, for example. Many of the some 4,000 missiles and rockets that were fired into civilian population in northern Israel by Hezbollah had been manufactured or sold or given to Hezbollah by Iran down through Syria.

The president's decided that he is going to work with European countries, with Russia and with China, who ought to have a common interest in Iran -- state that sponsors terrorism -- not having a nuclear capability.

And so he's -- in working with them made some proposals to Iran. Iran has been considering them and responding, and that diplomatic process is going forward. It's my understanding that the -- the -- I believe it's six countries that are working together to get Iran to agree to a diplomatic course of action, have discussed the possibility of taking it into the United Nations and asking for sanctions at some point if Iran's response is unresponsive and unacceptable. I don't know quite how that'll play out.

Let me set that aside for a minute and say something about a general subject of Iran or North Korea or other problems that could crop up in the world.

I get asked from time to time, "If your forces are in Iraq and Afghanistan, is the U.S. military sufficiently stressed or strained that it really couldn't deal or cope with a problem in another part of the world?" And the answer is, no, that's not correct. We are capable of dealing with other problems, were they to occur. And I say that with a great deal of confidence because General Pete Pace, the chairman of the Joint Chiefs, and the members of the Joint Chiefs meet with the combatant commanders for each of our combatant commands around the world on a regular basis. And they review the contingency plans that we in the Pentagon -- our job is to plan and be prepared to think about what might be done in various contingencies -- and they look at these contingency plans and they look at our capabilities, and they come to me at least every four or five or six months and tell me that, yes, we are capable of fulfilling and meeting the contingency plans that we feel are appropriate for our country to have on the shelf in the event they're needed.

So I think it would not be -- it would be unfortunate if other countries thought, because we have -- I guess we have about 136,000 troops in Iraq today -- that therefore, we're not capable of defending our country or doing anything that we might need to do.

If you think about it, we end up with 70,000 folks down at Katrina a year ago last week, and they ended up there, I believe, in less than a week and a half -- there were 70,000 folks.

In the tsunami in Indonesia, we sent a large force.

We moved 15,000 people out of Lebanon a month or two ago -- a city of 15,000 people in a matter of seven or eight days. The United States military did that.

We helped with the Pakistan relief in the earthquakes with a large capability.

We have -- you know, we have a large active force. We have a large Reserve force -- we have -- that's ready to serve, that drills -- the Selected Reserve -- and we have a large number of Individual Ready Reservists who have an obligation that runs, depending on their circumstance, for the remainder of their six-year period.

And we have allies. I mean, we've got 42 countries helping us in Afghanistan. All of NATO, 26 NATO countries. We've got 34 countries helping us in Iraq.

Now, you can't do everything and you can't do everything at once, but some of the capabilities that we need, the place that we're using most of our capabilities right now are the ground forces in Iraq. Our naval forces are certainly not stressed. Our Air Forces are certainly not stressed. And those capabilities are available and exist.

So I feel comfortable that the chiefs are attentive to those questions and that our country is able to fulfill the responsibilities that the American people expect of us and that the president has charged us with.

Q Thank you, sir.

SEC. RUMSFELD: Yes, sir?

Q Good morning, Mr. Secretary. My name's Frank Byrne (sp), and I'm a retired sailor as well as a contract employee here aboard the base. My question has to do with some of the TRICARE initiatives. When I joined the Navy back in 1983, there were healthcare benefits and dental benefits and what-not for family members of retired servicemen, these same people that you're thanking here today for their time that they do in the battlefields and what-not supporting the nation. Continuously I've seen, since I retired, the benefits -- it seems like our lawmakers continue to chisel and chip away at them -- or excuse me, continue to chisel and chip away at those benefits.

I'd just like to ask, any chance you get at the time when you're speaking to those people in the Pentagon, in Washington, where have you, that you remember those guys that did those time in the trenches and that stood the duties and stood the watches and stuff out there. And a lot of the civilians out there are saying, you know, we're not paying as much as they do for their healthcare benefits. And you're right, we may not, but we're also the people that went and stood in harm's way for them to be sitting here reaping those benefits that they're using today.

SEC. RUMSFELD: Well, I'm glad you raised the question. And let me -- I am not an expert. This is a very complicated set of issues, and the rules and regulations passed by Congress and implemented by the department affect different categories of people different ways. But I know a few facts. Admittedly, they're macro, they're not micro.

The taxpayers of America this year are spending $84 billion for health care for the military. That is the money that goes for the retired military, for the Veterans Administration, it goes in an annuity fund in the Treasury for future benefits and the current military healthcare system. Eighty-four billion dollars out of our budget. It is enormous. It has not been chiseled and chipped away at. It has increased every year, and it's going up -- someone correct me if I'm wrong, but I think the last number I saw was 11 or 12 percent a year in costs.

The healthcare programs for the military are considered to be among the best in the United States.

In fact, they're so good that we have a very serious problem. Corporations, state governments and other entities are telling their employees that "we will not give you any health care unless you first use any government -- Defense Department health care, Veterans Administration health care that you can get." So they are skimping and having the taxpayer pay that first. And we know state governments that literally have made that with their employees, and if you worked in the military at any time in your life, and you have any benefits, you have to use those first before you get anything from us.

Now, that means that the Defense budget is toting a large fraction of the health care costs of all of the people who have ever served in the military, even though they've -- a large number of the retired people have another health care program at the companies they're working for.

Now, I don't know what the answer is. I do know that if it keeps going up at 12 percent a year, it's going to be a serious problem, because it will be -- our procurement budget hasn't gone any -- up anywhere near as 12 -- near 12 percent a year.

And the other aspect of our budget is, it's just the health care piece that's been so expensive.

I don't know. I was very pleased that the chiefs went up to Congress this year and unanimously agreed that -- I -- again, my recollection -- don't hold me to this, but it's close enough for government work -- the percentage of health care cost that is being paid by people who are retired or served in the military and are out had been pegged at a lower number sometime during the 1990s and not adjusted up, as happens with everyone else. So the percentage goes down. The number has stayed -- the cost -- dollar cost has stayed the same because Congress never adjusted it up as every corporation adjusts up for their employees -- they maintain a certain percentage of the total cost the employee pays and a certain percentage the company pays. But in the case of the military, they said the employee only -- retired employee only pays this amount, and the rest of it is paid by the taxpayer.

So they went out and said they thought there ought to be some way to adjust that so that we were on a more normal basis. The Congress rejected it.

So I can't imagine -- you must know a certain situation that I'm just not familiar with, where you think someone's been chipping away at the health care benefit, because the total cost and, in my understanding, the benefits have gone up at a very rapid clip.

I think -- I don't know how many countries in the world have defense budgets that even begin to approximate $84 billion, and we're spending that much just for health care.

Does any of that make sense to you?

Q Yes, sir, I do understand that. But I'm looking at that, where you're saying the costs are increasing and stuff, and they've got to do that -- this is the same benefit that, when I joined the Navy in 1983, was a free benefit that -- they told you, "You do 20 years for your country, you're going to be entitled to these." And all I'm asking, sir --

SEC. RUMSFELD: At a certain age.

Q -- is that they continue to keep in mind those benefits that you yourself have that fortitude to go in there to our lawmakers and say, "Hey, let's not roll over on these people that have been out there and done their time in the trenches." That's all we're asking, sir.

SEC. RUMSFELD: (Fair enough ?). Thank you.

Q Thank you.

SEC. RUMSFELD: Yes, sir.

Q Michael Coston (sp), Naval (Health Branch ?) Clinic here at Fallon.

SEC. RUMSFELD: Say it again.

Q Naval Health Clinic here, sir.

SEC. RUMSFELD: You know the answers! (Laughter.)

Q I'm -- (inaudible) -- sir.

SEC. RUMSFELD: Why did you sit here and let me try to answer that -- (laughter) -- when you are one of the world's leading experts?

Q (Laughs.) First, thank you for what you do, sir. We appreciate you taking the time to come see us.

SEC. RUMSFELD: Thank you.

Q On the subject of the national personnel system conversion, many of us are really excited about it. We understand we're entering Spiral 2, I believe it's October this year, moving in transition through February timeframe. Any idea when Spiral 3, which will actually affect us here at Fallon, will be enacted, sir?

SEC. RUMSFELD: I don't. Gordon England's been doing a lot of work on this, my deputy, and we have such a litigious society. Every time you turn around there's another lawsuit stopping you from doing something, and the Congress looked at our national security personnel system and said, "Yes, the idea of paying for performance is a good idea." A number of the experiments and tests that were done over the last decade -- the two decades had demonstrated that the civilian population felt that the experiments they ran were good ones and that some of those things should be implemented more broadly. And sure enough the Congress passes it, and then the -- somebody goes into the courts and gets a lawsuit and it gets stopped.

So I have no idea what the timing would be. Every time we turn around we're delayed, and life is made more complicated and more expensive by these lawsuits.

Q Thank you, sir.

SEC. RUMSFELD: But you're quite right. I think it offers some real promise to the civilian population.

You know what's happened, my experience has been that when someone in the military or someone in the civilian Department of Defense needs something done, you would think they would look at the task and say, "Is that an appropriate task for a military person or is that an appropriate task for a contractor or is it an appropriate task for a civilian employee with the department?" A rational person in the private sector would do it that way. Not in the military, not in the Department of Defense.

What we do today is we say, "Well, here's the task to be done, and I don't know how long it'll last. And I'm going to find a military person because I can bring him in fast, I can give him direction and he'll do it -- he or she -- and then, when that task ends, we can send them to go do something else." (Or I would go to a contractor ?). You hire a contractor, and the contractor says that this is the arrangement for this period of time until something changes and then they do something else. Not with the civilian employees. We don't have the flexibility to bring them in fast. We don't have the flexibility to move them to something else. In some cases in the Department of Defense, managers are managing civilian population, have to manage two or three or four different personnel systems for the same body of employees. There's a tendency not to pay for performance, but to pay for just seniority, I guess, and time.

And we've got a terrific civilian population in this department, and we need to use them in the best way and have them feel that they're the most productive. And that's why this new personnel system offers such promise. And frankly, it's also terribly important to the military because you won't have a bunch of military people doing jobs that they didn't come into the Department of Defense to do.

Someone did a study back in the 1990s, and they estimated that there might be as many as 200,000 or 300,000 military people doing things that civilians could be doing, as opposed to the things that military people probably signed up, raised their hands, volunteered to come and do -- a military assignment.

Now, there are some things where it's true a military person need not do it, but it's a useful thing for the military to have people who have done some of those things for a period. But it tends to be permanent.

And so we're now in the process of taking a number of those activities that don't need to be uniformed military personnel and replacing them with civilian population so that we can free up our military people to do the -- increase the operational Army, the operational Navy and Air Force, and reduce the institutional Army, Navy and Air Force. And I think we're making good progress on it.

Questions?

You know, I was just thinking, that comment I made about that nine-year-old boy. When I was, I guess 10 or 11, World War II was on -- I was born in '32, so in 1942 I was 10, so I was probably 11. And my father was out in an aircraft carrier in the Pacific; gone for a long time. And the war came to an end fast -- atomic bomb, signing ceremony on the Missouri. And everyone was kind of programmed to go in and occupy Japan -- these ships and the Marines and the people out in the Pacific. And we all kind of expected that they were going to do that. But for whatever reason -- oh, I know what it was -- the USS Indianapolis was sunk, and people had been at sea for -- unnoticed. There was a glitch and it wasn't really realized that it had been sunk. They didn't know where the people were. There were large numbers of the crew that were in lifeboats. And at some point they were discovered, and they diverted the aircraft carrier that my dad was on and had them bring back the survivors. And they came into San Pedro Port, California. And I can remember going up there and being there, and there were big signs, "Welcome Home, Indianapolis." So I had just the opposite experience from this young nine-year-old. Instead of having my father extended, as his was, my father got home early because he brought back survivors. And it was really just the back side of it. Instead of having to go into Japan and become part of the occupying force. But I sure hope his dad gets home soon.

Yes, sir?

Q Mr. Secretary, good afternoon. My name's Commander Rogans (sp). It's an honor to be with you today.

I just wanted to let you know that sometimes I catch some of your press conferences and enjoy listening to what you have to say, especially the repartee that you have with the press corps there.

Just -- any thoughts on memoirs and what you really think of the people that you've dealt with in Washington and when you're done with this?

SEC. RUMSFELD: (Laughs.) No, I really haven't.

I'll say this. I -- the Pentagon press corps is -- I have a lot of fun with them, and some -- (laughter) -- sometimes I tease them. But if you went around Washington, D.C., and started looking for a press corps, I think most people would say the Pentagon's got probably the best group of journalists and media people of any of the departments in Washington, D.C., and an awful lot of them have a lot of experience and a lot of knowledge. But I still like to have fun with them.

No, I really haven't thought about writing a book. I know Harold read my book. I've always been doing things here, in the private sector or the public sector. I like life. I like working hard. And -- but I -- people keep saying I'd better do it, better write something someday.

But I did -- I have "Rumsfeld's Rules," which I pulled together a long time ago when I was chief of staff of the White House for President Ford. And he had -- the only president who'd never been elected, never run for president or vice president, didn't have a campaign, didn't have a campaign theme, didn't have a platform, and suddenly he was president. And it was -- I pulled together a lot of these things so people would get a sense of how he and I thought it would be best for the White House to function. And it was helpful, it was useful, but I've not done much beyond that. So -- but it's a thought.

Thank you very much.

Yes, sir.

STAFF: (Off mike.)

SEC. RUMSFELD: Okay. I'm told this is the last question, so make it a pistol.

Q Roger that, sir. (Laughter.)

Commander Jim Romando (sp), I'm here for a couple -- about a month of training up here at Fallon. Kind of a follow-up to that. You came in with a lot of proposals to reform the Department of Defense and to do things to make our lives a little bit easier. Can you give us your thoughts on how you feel that's going?

And probably it doesn't always feel -- (inaudible). I've done a couple of tours at the Pentagon myself, so I know how frustrating it is or how frustrated you get with those efforts -- (inaudible).

SEC. RUMSFELD: Well, thank you.

The president spoke at The Citadel during his campaign -- or before his campaign, really, and talked about the importance of transforming the military, our armed forces to meet the challenges of the 21st century.

So when he asked me to be secretary of Defense, we talked about it a good deal as to the kinds of things he had in mind. And we immediately began that process of recognizing that the world had changed, that we were at the end of the Cold War, we were at that juncture between the Cold War and this new 21st-century set of realities and challenges, and that the department was big, it was bureaucratic, it was resistant to change. People don't like change; it's a natural with all of us, I suppose.

And then I gave a talk on transforming the department on September 10th, if I'm not mistaken, as fate would have it, in 2001, and the next day was September 11th. And the immediate reaction was that "there goes transformation," you're not gong to be able to do it, you can't fight wars and do that at the same time.

Just the opposite has been true: The reality of the challenges we face, the difficulties, the understanding that the department was basically organized, trained and equipped to fight big armies, big navies and big air forces; and that because of our capabilities, we're less likely to be challenged by big armies, navies and air forces and we're much more likely to be challenged in the period immediately ahead by asymmetric threats and by irregular warfare, by terrorists, by cyberattacks, the kinds of things that you don't have to have that enormous investment in armies, navies and air forces to contend with the United States; and the sense of urgency that 9/11 gave the department has enabled us to move considerably down the road.

You sound a little like the president. About two months he came and said, "Give me a sense of where we are in transforming the department." So this month, earlier this month he came over to the Pentagon and -- (pausing during the loud sound of airplanes flying overhead).

What are we doing down here?! We should be up there! Goodness gracious!

He said come on -- "I'm going to come over to the Pentagon and I want you to walk through it."

So we prepared -- we've got an unclassified briefing that my office can give you if you'd like to look at it. And what it does is it talks about transformation not as a thing where you start untransformed and then become transformed, but a process, a continuum, where it's more of a shift of emphasis, a shift of weight from this towards that.

And we talked about the things that have been accomplished, the initiatives that are currently under way. We talked about the priorities we have for the current period. And then we talked about the ways that conceivably the things that are in process can be institutionalized so that it can't be rolled back, which is the natural tendency of bureaucracies, to stop what is.

I feel very good about it. I looked at the -- I'll just give you one example. Five years ago the forces of the United States of America were located in the world roughly where they were at the end of World War II. Downsized, but there. Still basically in a somewhat static mode, defensive mode, totally European oriented. And today we've either accomplished it or we have negotiated and are in the process of accomplishing an enormous shift of weight from Europe back to the United States so we have much greater flexibility, from Western Europe into other parts of Europe, from north of the Han River in Korea to south of the Han River and south of Seoul, and reducing the number of land forces in Korea.

Now the fact that, you know, Korea 50 years ago was a devastated little country, today it's the 10th or 12th largest economy on the face of the Earth. And North Korea is a weak country. There is starvation. They have a dictatorship and a command economy. South Korea has a free political system, a free -- I keep a picture on my desk of the South Korean peninsula -- correction, the Korean peninsula. And the Demilitarized Zone, if you look at it from a satellite at night, in the South it's lights and electricity and energy and activity. In the North there's just one pinprick of light in the entire country of North Korea, and it's in the capital of Pyongyang. They are taking people in the military that are under 4 feet, 10 inches tall because of malnutrition. They're taking people in the military that are under a hundred pounds in North Korea. Same people in the North as the South, same resources in the North and the South. The only difference is one has a free political system and a free economic system, and the other has a dictatorship and a command economy.

So we are shifting our weight there. We're shifting our weight with Japan. We are putting ourselves in a situation so we have more expeditionary forces.

Take the Navy. I'm going to be close; my recollection is that Admiral Clark said, when he came in as Chief of Naval Operations, the Navy typically was aircraft carriers. He had 12 carrier battle groups. Typically we had three deployed, with an ability to surge two, and the rest were in various stages of the -- I think of it as a bath tub. They come in, and everyone takes leave, and they all go to schools, and they start refixing things and refurbishing. Today, with 11 carrier battle groups -- not 12 -- we're able to have five deployed and surge one, instead of three deployed and surge two. How did that happen? Well, it's because the Navy used their heads. They figured out ways to do Sea Swaps. They figured out ways to maintain a higher level of maintenance and spare parts so that they didn't have to have long periods of refurbishing the ships and the aircraft.

And the Navy is -- the taxpayers are getting their money out of the Navy. To have that big investment in carrier battle groups and to have that few deployed at any given time, compared to what we can do today, that is an -- a significant accomplishment.

And the same thing's been true in the Air Force. It's been true in the Marine Corps. It's been true in the Army. The Army's going through a change, modernization. They've gone from a division structure, where they -- when they wanted to deploy, they had to deploy division headquarters, because that's where capabilities were. Today it's down at the brigade level, and they can deploy modularized brigade combat teams that have much greater capability than previously, and they can do it in any number of different ways.

So we have become much more expeditionary in the armed forces of the United States. And I think the department's doing a darn good job in -- of moving towards the 21st century in ways that will give the taxpayer much more for their money and give us a much better ability to deal with the kinds of unusual challenges -- asymmetric challenges, irregular tasks -- that we're going to be facing, with absolute certainty, in the five and 10 years ahead.

Folks, I appreciate what you do for the country. Thank you. I appreciate having the time to visit with you. Thank you. (Applause.)