Remarks by Secretary Panetta at Electric Boat in Groton, Conn.

     JOHN CASEY (president, General Dynamics Electric Boat): Good afternoon, everyone. It's great to see all of you out here today to great Secretary of Defense Leon Panetta.

     I would like to mention four of the guests that came this morning to help us welcome the secretary: my boss, Phebe Novakovic, from GD Marine Systems; her boss, Jay Johnson, our chairman of the board at General Dynamics; our congressman, Joe Courtney from Connecticut here; and our lieutenant governor, Nancy Wyman. I want y'all to give them a round of applause -- (inaudible) -- would you please? (Applause.)

     You know, as the nation's defense budget comes under increasing scrutiny, we're fortunate to have such a capable and experienced secretary of defense. Since arriving at Electric Boat this afternoon, Secretary Panetta has toured Mississippi behind me with members of our EB team and the ship's crew. We're working together to deliver this ship about one year ahead of schedule and about $50 million under its target cost.

     Mr. Secretary, on behalf of everyone here, I want to express our sincere appreciation for your interest in all of us at Electric Boat. It's a privilege to have you here at our shipyard, and we're grateful for your offer to take questions, which I'm sure you all have many of -- but for your offer to take question from our employees at the conclusion of your remarks.

     So now it's a great pleasure that I introduce a lifelong public servant, the 23rd secretary of defense, Leon Panetta. (Applause.)

     SECRETARY LEON PANETTA: Thanks. Thanks very much, John.

     I can't tell you what an honor it is for me to have a chance to come up here to Groton and recognize the fact that this is the submarine capital of the world. (Cheers, applause.) It's the home of our submarine force. It's the original home of the Nautilus. And it is, from my point of view, one of -- one of the very important elements of our national defense. What you guys are doing and the work that you're doing is absolutely essential to our ability to keep our country safe.

     And I thank you for that. I thank you for your service, for your work, for your dedication and for your commitment. The -- this kind of work simply could not happen without your skills and your dedication, and I -- and I just can't tell you how much I appreciate that.

     I want to thank Congressman Courtney for being here.

     Lieutenant Governor, good to see you. (Applause.)

     The reality is that, you know, your delegation has put up a good fight. You're talking to somebody who went through the BRAC process. In my district back in California, I had a post called Fort Ord, California. And it represented about 25 percent of my local economy. So we had to go through BRAC, and unfortunately, BRAC shut it down. And I went through the hell of having to figure out what do I do to try to protect the economy of my local community. Fortunately, we were able to do it. We located a campus there, and it's doing fine. But I wouldn't wish going through BRAC on anybody. It's a son of a bitch to try to go through that process.

     The reality is that your delegation, I know, put up a great fight for something that is very important to our national defense, and I commend them for the support that they provide. This is -- this is, as I said -- especially looking at it from my point of view as secretary of defense, this is absolutely essential. And so I really -- I want to thank the delegation for their support and for their willingness to go to bat when it's important to try to protect a facility like this.

     This is a -- you know, this is a challenging time. In many ways, we're at a turning point in terms of our national defense. We've been through 10 years of war, and the reality is that, you know, after 10 years of war, we're beginning to see the results of a lot of sacrifice on the part of our men and women in uniform, but on the part of all of the -- all of the people who are part of our national defense.

     Now, the reality is that, you know, by the end of this year we're going to draw down our forces, all of our combat forces in Iraq. The mission there was to establish an Iraq that could govern and defend and secure itself, and we have accomplished that mission. Now it's up to Iraq to be able to secure and govern itself. We'll give them assistance, we'll continue to work with them, but the reality is that, you know, they're on the right track.

     In Afghanistan, we're hoping that we can move in the same direction. We weakened the Taliban. We've had the lowest violence levels in Afghanistan in five years. We're beginning to secure key areas of that country. We're developing an Afghan army, an Afghan police. We are moving in the right direction. A lot of work to be done, but hopefully by the end of 2014 we'll be able to again have an Afghanistan that can govern and secure itself.

     With regards to Libya, we just came out of the Libya mission, a NATO mission that was very successful in taking down Gadhafi and giving Libya back to the Libyan people.

     And on terrorism, which is the very reason that many of us are here, because we're fighting terrorism since 9/11, the reality is we've decimated al-Qaida's leadership. In my old job at the CIA, working with the military, we were able to go after their leadership and they continue to go after their leadership. The reality is we have taken down key people, including bin Laden and others, and the result of that is that this country is safer by virtue of what we've been able to do. (Applause.)

     We need to keep the pressure on. We need to make sure that we don't give up. These guys are still at it. Whether it's Pakistan, whether it's Yemen, whether it's Somalia, whether it's North Africa, we've got to keep the pressure up and make damn sure that they never again are able to attack this country. And that's what we're doing.

     So when you look at it, the reality is we -- you know, as a result of 10 years of war, we're moving in the right direction because of the sacrifice of a lot of people who've put their lives on the line.

     There are still threats out there. We face threats from Iran; we face threats from North Korea; we face threats from cyber. This is a whole new world in which cyber-warfare is a reality. It's the battlefield of the future. We face the threats from rising powers -- China, India, others -- that we have to always be aware of and try to make sure that we always have sufficient force protection out there in the Pacific to make sure they know we're never going anywhere. In addition to that, we've got a Middle East that remains in turmoil. We're always going to have to respond to the challenges in that part of the world as well. So when you look at the world that we're dealing with, we still have a lot of threats.

     And add to that the challenge of now having to reduce the defense budget. We've got a huge deficit in this country, and I've been given a number of about $450 billion-plus to reduce the defense budget by. And I've always felt an obligation that we have a responsibility to do our share in that effort. And as a result of that, I'm working with the service chiefs, working with the undersecretaries to decide how we do that.

     There are four guidelines for me. Number one, when I go through that process, we are going to maintain the best military in the world. We're the strongest military in the world today. We're going to remain the best military in the world. (Applause.)

     Secondly, I am not going to hollow out this force. I'm not going to hollow out the force. Coming out of World War II, coming out of Korea, coming out of the Vietnam War, coming out of the fall of the Soviet Union, the problem was that cuts were made across the board, and the result was we weakened defense across the board. We hollowed out the force. We are not going to do that. We're going to learn the lessons from the past.

     So it means we have to look at every area within the defense budget, decide what's needed, what's not needed, look at efficiencies, look at where we can be able to achieve savings, and do it in a way that, most importantly -- and this is the key point -- we cannot break faith with people who have served in the military.

     Men and women in the military have put their lives on the line time and time again. They've deployed time and time again. We owe them the benefits that we promised them. And I've said whatever savings we achieve, we're going to grandfather people's benefits so they don't -- they get the benefits that we promised them. (Applause.)

     Now, the most important element that I also have to protect is the industrial base in this country. We cannot have a strong defense for the United States without protecting this industrial base. I need to be able in this country to produce our ships, to produce our submarines, to produce our planes, to produce our fighter planes, to produce our tanks, to produce what we need for the military. I don't need to rely on another country; we've got to rely on the United States to do that. (Cheers, whistles, applause.)

     That means that one of the commitments I've made as we go through this budget process: as I said, we absolutely have to protect our industrial base. And that means, you know, as we work through it -- and you guys have done a great job here -- being able to cut costs, being able to produce submarines on a -- on a more rapid path. And I thank you for that. That's the kind of partnership we need.

     So, you know, our national defense obviously depends on those brave men and women who have put their lives on the line time and time again. But I have to tell you something: You, too, are the patriots that I need to depend on. Your skills, your capabilities, what you're able to do, that is an important resource that we have to protect for the future.

     So that's why I'm here. I'm here to thank you for your service and thank you for your dedication.

      And I also want to stress that it is very important that Congress, especially the supercommittee, do the work that it's supposed to do, and try to continue deficit reduction, and not let this crazy sequester take place which will result in doubling the number of cuts that I'd have to face on defense. And I've told members of that supercommittee, I said: Let me tell you something, if there are men and women in the military -- and I've got them and I see them every day, whether it's on the battlefield, whether it's at Bethesda, whether it's at posts throughout this country, whether it's here on this submarine -- I have men and women that put their lives on the line every day, that are willing to die for America, that are willing to sacrifice for America. And if they're willing to do that, it's not asking too much for the leaders of this country to sacrifice just a little bit to find the solutions to our problems. (Applause.)

     This is a country that depends on public service. I'm the son of Italian immigrants. My  parents came here, like millions of other immigrants -- no money in their pocket, no language ability. And I used to ask my father: Why would you travel all that distance to come to a strange country? And my father said: The reason we did it is because your mother and I believed we could give our kids a better life.

     That's the American dream. It's what I want for my kids; it's what, hopefully, they want for their kids. And, frankly, what we're all about -- what we're all about, men and women in uniform and all of you workers -- what we are about is giving our kids a better life. That's what this is all about. This is what national defense is all about. This is why people live and die for this country, because they want to make sure that our kids always have a safe and secure and better life.

     So thank you for what you do to make that American dream real for everyone. Thank you very much. (Applause.)

     All right, this -- I guess this is a town hall meeting. (Laughter) If I -- if I don't know the answer, I'm going to throw it to Courtney and the lieutenant governor.

      All right, questions?

     Yeah.

     Q: If the deficit reduction committee does not come to agreement, what do you foresee for the shipbuilding industry?

     SEC. PANETTA: Well, you know, I -- we were asked by Senator McCain and Senator Graham and others to kind of project, you know, what would happen if we had to go through sequester. And we gave them a summary and, look, it decimates defense. You cut 23 percent, in addition to cutting almost, you know, a half a trillion dollars. If I have to cut another 500 (billion dollars) to 600 billion (dollars) out of defense, it decimates defense. I got to cut 23 percent across the board. You know, it means, you know, you cut 23 percent off a submarine -- you can't do that; or off a weapons system -- you can't do that.

     What it's basically going to do, it's going to totally hollow out the force. I'm going to have RIFs (Reduction in Force). I'm going to have men and women that are -- you know, that are going to suddenly be thrown out of the military. I'm going to have weapon systems that we're going to have to cut back on.

     This country is going to face a very serious situation with regards to our national defense, and I made that clear. We can't afford to do that. And that's why, you know, I -- what I've said is, I've urged them: Please confront the challenges you've got to confront.

     Now, just to give you a -- you know, I used to do budget work when I was in the Congress. The federal budget is roughly about $4 trillion. About a trillion of that is in what's called discretionary funds on the domestic side and on the defense side. Three-fourths of the federal budget is wrapped up in entitlement programs.

     And I said, you know, you've cut the hell out of the discretionary side of the budget. You've taken steps; I'm going to implement those cuts. But the time has come, if you're serious about deficit reduction, you got to take on the three-fourths of the budget that has grown incredibly over these last few years, and you got to deal with revenues. You got to do both of those. Every budget deal I've ever cut -- when I was chairman of the Budget Committee, when I worked as OMB director -- we've had to put all of that on the table, and we made the tough decisions to go after it. And I have to tell you, as a result of that, particularly in the Clinton Administration, building on the efforts of Reagan and Bush and others, we balanced the federal budget. We balanced the federal budget. And I thought: Christ, we've balanced the federal budget -- (chuckles) -- you know, things are going to be OK. And suddenly, before we know it, I -- you know, we're back in debt, and we're facing huge deficits. Well, if you want to fix these deficits, you've got to make the same damn decisions.

     So I -- you know, I really urge the leaders in the Congress, I urge this committee: Suck it up, do what's right for the country. You know, I think the country wants these people to govern. That's why we elect people, is to govern, not to just survive in office. We elect them to govern. That involves risks, that involves tough choices, but that's what democracy is all about. (Applause.)

     Other questions? Yeah.

     Q: (Off mic.)

     SEC. PANETTA: Well, I have to tell you that, you know, we're going through this work right now and I -- you know, I think it's fair to say that the service chiefs, I, feel, you know, we're going -- we got to make some tough choices, but we feel very good about the kind of defense we're going to be able to protect. We got to do this over 20 -- or a 10-year period, in terms of what we have to save. There are places we can go for efficiencies; there are places we can go to find savings.

     But when it comes to technology, when it comes to the future, when it comes to the kind of weapons we need, I have to tell you, we're going to continue to invest in those, because that is essential to give us the edge we need in order to be able to protect our national defense.

     What I basically said to people is: Look, I know I'm going from three to two cops in a very rough neighborhood; that's what I've been asked to do. But if I can give those two cops the best technology in the world, the best weaponry in the world, the best submarines in the world, then we can protect that neighborhood. (Applause.)

     Q: (Off mic) -- security when you look out 10, 20 years from now?

     SEC. PANETTA: Well, I think it's an important part of our -- of our nuclear deterrent. You know, we've got a triad. We've got a -- the threat from weapons of mass destruction isn't going anywhere. You know, we have countries out there that have weapons of mass destruction, and we've got to be able to defend ourselves if, you know -- we pray to God that we never have to face that situation. But I want to make very sure that if we ever have a threat like that, we're able to respond. And frankly, the only way you can do it is with our bombers, with missiles and with submarines. It's a very important ingredient to our deterrent.

     And that's -- that's why these things are important. And they're not only important to that, they're important to our ability -- you know, I just came back from the Pacific. The president is in the Pacific now. I said one of the important things is that we're a Pacific nation; we've got to have a presence in the Pacific. We've got to have force projection. If we're going to remain strong, you got to have force projection. You know, yes you do that with carriers, yes you do that with -- you know, with other ships in the Navy, but you do it with submarines. And that all has to be part of our ability to project force in today's world.

     Q: Can I have a question?

     SEC. PANETTA: Yeah.

     Q: Number one, you look a lot taller when you're on television. (Laughter.)

     SEC. PANETTA: I'm just a short Italian. (Laughter.)

     Q: But I wanted to take this time to thank our congressman, Joe Courtney, for all the wonderful work he's done for us here in Groton, Connecticut, and for Electric Boat. (Applause.)

     Mr. Secretary, we've been going through some tough times here, and our skill sets -- and I'm standing with some of the world's best shipbuilders in the world. And we've been going through some tough times. And we're very concerned that if this committee doesn't do what they're supposed to do, that we're going to atrophy all these skill sets. And, you know, by these two subs a year, it level loads our workloads that we're not going through the constant pain of lay-offs, which we have been for the many years.

     SEC. PANETTA: You know, listen, I share that concern. I mean, you guys have -- all of your workforce, all of the people that work here have very unique skills. You can't replicate this stuff. You can't just, you know, do away with it and hope that you can come back and be able to get those skills. You just can't. You got to retain them. You got to keep it up. You got to get young guys coming up who are willing to learn those skills. That's important.

     I mean, I have to worry about this. I mean, as I -- you know, as we come down to a more agile and deployable, flexible kind of force -- and that's what I'm looking at -- I also have to have the ability to mobilize if we have to do it. If we face a major crisis, I got to mobilize. I can't mobilize without an industrial base. And I don't have an industrial base unless I got workers who have the skills to make the things that we need. So all of that is part of our national defense.

     Now, you know, frankly, in World War II, with Pearl Harbor, there was a major mobilization, but we were the only country making ships. We were making most of the ships at that time. We had shipyards. So, suddenly we could produce those things and we had skills to be able to mobilize. It's a little tougher now.

     I need to protect that base. I need to protect those skills. If I'm going to mobilize, if I'm going to be able to defend this country, I got to be able to do it with people that know what the hell they're doing. So one of my efforts is going to be to make sure we protect that (industrial) base. And that means protecting your workers. (Applause.)

     OK. Other questions? If not, I'm freezing my ass off. (Laughter.) So it's time to go. Thank you very much.