Remarks by Deputy Secretary of Defense Carter at the Aspen Security Forum at Aspen, Colorado

            PRESIDENT, ASPEN INSTITUTE, MR. WALTER ISAACSON:  I'm Walter Isaacson, the president of the Aspen Institute, and it's particularly -- we're particularly proud to be able to host this security forum.  

            Homeland security is a topic unlike even national security or domestic security concerns, where it's very important to balance two contradictory things, the ability to keep secrets and the ability to be transparent and explain what you're doing when necessary.  It's really important to be able to know what has to be held private and to know what you have to share, to know what has to be kept confidential, and to know what the public needs to know and the public needs to have explained to it. 

            That's a very tricky balance, and unfortunately, I think our country is getting it worse and worse.  The only thing that seem to become public are the things that are supposed to be kept secret, and the things that should be explained to us quite well and discussed we seem to have trouble understanding or drilling down on. 

            It was for this reason that Secretary Napolitano, Jane Holl Lute asked Michael Chertoff and Jane Harman and some of us at the Aspen Institute to have a small security group, and then a security forum, to be able to discuss both quietly what we need to know and more publicly how we're going to get the word out about how things are done. 

            I think the person best adroit -- but we'll see -- it will be up to the FBI to tell us -- at balancing this is David Sanger.  David has been somebody who -- a long-time member of the Aspen Strategy Group, which is our military and strategic affairs group.  He knows very much how to balance the needs of the public to know certain things, but also how to get information, assess it, balance it, with a good sense of values and understanding of what makes this country great.  

            He'll be interviewing Ash Carter, another member of the Aspen Strategy Group, who actually met Stephanie here and married her, so I think we have a particularly close connection to Ash.  Ash is somebody who embodies what the Aspen Institute tries to be about, which is leadership based on values.  So it's my pleasure to introduce David Sanger and Ash Carter. 

            NEW YORK TIMES CHIEF WASHINGTON CORRESPONDENT, MR. DAVID SANGER:  Well, thank you very much, Walter.  Thank you, Ash, for joining us.  Walter, thank you for letting us go through the hardship of leaving 97 degree weather in Washington to come out here.  You don't mind, since you have that nice little house, if we just stayed the month or maybe next month, do you? 

            It's wonderful to be here with Ash Carter, deputy secretary of defense, an old friend of many, many years -- I won't say how many -- and somebody who told me that he first came out to the Aspen Institute to study charmed particles and -- what else were you studying at that time? 

            DEPUTY SECRETARY OF DEFENSE ASHTON B. CARTER:  That was the early days of charmed quarks and also the Higgs boson, and the Theoretical Physics Institute was here. 

            MR. SANGER:  So Ash had asked whether, for the first 40 minutes of this, he could just do a small slide presentation on Higgs boson.  (Laughter.) 

            DR. CARTER:  That would be a lot better. 

            MR. SANGER:  And so we asked his security team to actually put a bullet through the -- through the projector.  So -- so let's -- let's dive right in, because we're going to have a fairly broad conversation about where you are in the future of the Pentagon, where you are in the pivot to Asia, where you are on cyber and drones, and so forth. 

            We are ourselves at an incredible pivot point, it seems.  You've ended one war.  You are rapidly exiting a second.  If you believe what we publish in the New York Times, you're thinking about exiting even more rapidly than you've admitted to.  You're facing a period of somewhat enforced blunderbuss cuts through sequester. 

            And so I'd like to know, just at the start, how do you manage that pivot?  What gets lopped off, other than 20 percent of the civilians at headquarters?  What are the opportunities and risks?  And what in the midst of this do you think we need to be investing in? 

            DR. CARTER:  Good.  Well, that is our daily preoccupation.  And you're right, you know, here we're far from Washington, but in Washington, everybody's focused on the budget, and that's very important, because we're undergoing a reduction in the defense budget that is as large and as steep as the post-Vietnam reduction and the post-Cold War reduction.  So it's very large.  It's very consequential.  I can get to that later. 

            But I think you start on the right note, David.  The other huge transition before us is the transition from the first 9/11 decade, which was characterized, as you said, by two wars in two particular places, of one particular kind, namely, counterinsurgency, and also the first post-9/11 decade of wrestling with the counterterrorism problem. 

            Those were the riveting, defining, daily preoccupations of all of us.  And I've been as much a part of that as anybody else.  You can't be any other way when you're in -- have responsibility in the Department of Defense and you have troops at war.  So I spend an enormous amount of my time on Afghanistan still and will, David, for some time to come, simply by dint of the fact that we have people there fighting. 

            At the same time, you know, we all know that that era is coming to an end and that we need to turn our minds now and our eyes from that set of problems to the opportunities and challenges that are going to define our future, and that is the -- a really titanic transition that we're trying to make the Department of Defense undergo right now. 

            So what does that mean?  First of all, we need to get back to some issues that we've taken our eye off a little bit over the last decade.  I think certainly countering weapons of mass destruction is one of those we want to get back to.  We need to get back to, from a military point of view, some areas of warfare where potential opponents have crept up on us over the last 10 years, and we need to reinvest and get back in the game.  More on that later. 

            And we need to do new things in counterterrorism, but we also have some opportunities, too, some huge opportunities.  And the biggest one in front of us you mentioned is to shift the great weight of our institution that has been so focused both intellectually and physically for 10 years on Iraq and Afghanistan to the part of the world that is going to more than any other define the American future, and that's the Asia Pacific theater.  And you'll see that happening now.  You'll see that in terms of troops there.  You'll see it in terms of aircraft there.  You'll see it in terms of ships there, investments made of particular importance to that theater, a new bomber, for example, a new variant of the Virginia-class submarine, new tactical aircraft, new electronic warfare things, and some -- some space and other things that we don't talk about, because we hope they take people by surprise. 

            And that's just the military dimension of a shift that has a political-military dimension, with our alliances there, renewing and reinvigorating our alliance with Japan, which is -- which is -- everybody knows China is a rising military power.  Well, Japan is a rising military power in East Asia, also.  South Korea, the countries of Southeast Asia, our old friends like Australia and Thailand, on over to India, which is a natural security partner for the United States for a variety of reasons.  So we're trying to turn our attentions to the Asia Pacific theater. 

            So this is the kind of strategic transition that we're trying to manage at the same time we're having this enormous budget reduction.  Now, one of the -- you look at the kind of new capabilities and new problem sets -- I mentioned a number of them -- but one of great importance is cyber, and we are making new investments in cyber, as well.  And that's an important new thrust for us, too. 

            So all in all, this is a moment in the history of your Department of Defense not seen really since the wall fell in 1989, in terms of the need for us to do things differently, and we do understand that.  We understand that people want us to spend less money, but more importantly, they want us to spend it better, smarter, and we understand that, and we also understand that the country needs us to shift our attention away from Iraq and Afghanistan and so forth, and the first 9/11 counterterrorism decade, which is I think one of the themes of this meeting will be that the next decade's going to be different from the first decade, in many ways, I can tell you now. 

            MR. SANGER:  Well, we'll come back to that.  And, Ash, let me just pull on one string of what you describe there on the cyber side of this.  And we'll have General Alexander coming up later.  He's got nothing to explain these days.  But along the way, one of the big new initiatives that you have put in place with him are what he described to Congress recently as 40 new cyber teams working under Cyber Command, which is the military side of his job, as opposed to the NSA side.  He said 27 of them were for defense, 13 of them were for offense.          

            And this comes before we've even had much of a discussion -- at least a general public discussion -- about whether you even want the Department of Defense in the offensive cyber business.  You know, one of the -- just as we ended up going into the drone business before we had that discussion and so forth. 

            So tell us a little bit about what these cyber teams are supposed to do, what their mission is, how much all this costs, whether it's expensive or inexpensive, compared to the other things you're doing, and then how you get that conversation going on offensive cyber? 

            DR. CARTER:  Good question.  It's terribly important.  And I divide the mission of cyber for us in the Department of Defense into three pieces.  The first piece and by far and away the most important piece for us is to defend our own networks, the integrity of our own networks, because -- for any of you who know how we operate -- everything we do depends upon the use of information systems, including ones that are connected to the Internet. 

            So if you go in, even today, which would have been -- you know, 10 years ago, a -- you wouldn't have seen it except at a brigade-level command post.  Now you go to a company command post -- and what does a company command post consist of?  It consists of 8 or 10 screens, and they're all -- they're chatting with other units around them.  They're getting satellite feeds.  They're getting intelligence products.  They're getting information on what units around them are doing, what the enemy's doing.  We depend on all that everywhere in the world. 

            And if we lose that, we think about how -- what we would do in that instance, and we think about what we call operating through the loss of our connectivity, but it's not good if it happens.  So job one is protecting integrity of our networks.  Obviously, therein enters Snowden, and we can get back to that later. 

            The second thing you mentioned, which is to develop and deploy and do the intelligence preparation for our own cyber capabilities to nullify cyber advantage on the part of others.  You're right.  That's something worth talking about.  And I'll tell you what some of the tricky issues are associated with that.  It's a new field of warfare.  And obviously, we want to do things, as we try always to do, in a way that is lawful and in a way that the -- you know, our population can support and that is consistent with our values. 

            And the tricky things that come into cyber are privacy, obviously, although that's not so much of an issue on the offensive side.  It's -- it's things like, are you sure that a particular action you take with an enemy's information system will only have the consequence of disrupting, let us say, an air defense system and not wider consequences?  So you have to understand what the consequences are of your actions. 

            The authorities to do this, obviously, these are the kinds of things that are serious enough that they're reserved for the president, and so you're right.  We have thought these through.  We are thinking them through.  And it's fair game for a wider -- a wider conversation. 

            The third thing -- so there's the third thing we do is play our role in defending the nation's networks.  Now, I say our role in, because we don't have the lead for that.  We are -- we support law enforcement and homeland security.  So Janet Napolitano, Bob Mueller have important roles there, but we try to support them.  Our principal source of support is the National Security Agency, which obviously we manage, but that's a capability that I am responsible for on behalf of all these other agencies of government who use it.  I use the technical capability there.  And -- 

            MR. SANGER:  Is that where the 40 teams fit in? 

            DR. CARTER:  That's where the 40 teams are.  The teams are new.  They're in addition to the NSA's existing cyber workforce, which is mostly oriented towards cyber intelligence collection.  And what we're trying to do is create another set of people, also associated with NSA and CYBERCOM, whose mission is defense, development of capabilities for the U.S. military, second, and, third, playing our role in the defense of the nation. 

            And the last thing I'll close on is, you know, this defense of the nation business, which many of you participate in -- I see some of the names here -- is very important.  And government can help and needs to help, but another thing that has to happen is many of the civil networks are so poorly protected themselves that it is very difficult for us to claim that we can come to their aid. 

            They need to be protected themselves first, and that gets to a much bigger problem in our society, and that is that cybersecurity is underinvested in.  There's a market failure in the cybersecurity field.  And those of you who have companies who try to market products for cybersecurity, it's a hard slog.  A lot of people don't want to spend a lot of money.  They don't want to acknowledge that they have a problem.  And so a lot of our critical businesses are more vulnerable than they should be, and what should really happen is they should take the steps to harden themselves, and that's more important than us rendering aid, which, of course, we're prepared to do as we defend the rest of the country. 

            MR. SANGER:  Ash, one more detail on this before we move on to the broader -- of these 40 teams, give us a sense of size.  I mean, it sounds to me closest to the model, but maybe it isn't, of special operations.  I mean, you've got a highly trained group to -- we have no idea.  Are we talking thousands of people?  Are we talking millions or billions of people? 

            DR. CARTER:  In total -- no.  In total, they're sort of 4,000-ish. 

            MR. SANGER:  Spread among the 40 teams? 

            DR. CARTER:  Spread among the teams.  And -- 

            MR. SANGER:  And are they up and running? 

            DR. CARTER:  I'm starting that way -- yeah, almost.  I'm starting that way because we're drawing people in from the services that we already have.  This, it -- like special operations people are hard to find and hard to grow.  It's a -- requires a lot of talent, a considerable amount of experience, and then, of course, we -- as we always do when we have high-skill areas, have to worry about whether we're -- once we train them up, how long can we keep them before they go off to your companies -- and so forth? 

            So we're starting this way, because I want to start fast.  And so we're taking the people we have and then slowly growing the new people that we need.  That's the management strategy.  We're starting off in this way with these three teams.  I don't rule out that we -- we'll change our approach.  We're going to sense and adjust here.  I may take a different approach down the road and do things more like the SOCOM model, but we're not starting there yet, simply because we need to get started.  We've got to get going. 

            Now, you mentioned money.  This isn't very expensive.  This is not a -- a money problem for me.  This is a management problem.  It doesn't cost a lot.  And fundamentally, we're spending everything we can think about spending intelligently for, notwithstanding our budget hassles, because this is an area that we are protecting even as other military capabilities will be cut. 

            MR. SANGER:  Great.  Well, we discussed money, and so let's -- let's turn to sequester.  A year ago, you and I were talking about sequester, and you said two things.  First, I don't think it's going to happen and, second, I don't want to plan for it happening, because if you -- if the word gets out that you're planning for it happening, then you're making it easier to have happen.  I think you may have added to that, I can't believe we'd ever do anything quite this dumb. 

            So what's happened a year later? 

            DR. CARTER:  First part is right.  I couldn't believe we'd do something so dumb.  Second part, not quite.  And the difference is between planning and doing.  Of course we planned for sequester.  It turns out to be easier than you -- than you might think to plan for sequester, because sequester by its nature is a -- gives you very little choice.  You have to cut here, here, here, here, here, here by this much. 

            So there's less planning than -- to then -- than there might be if you were just told take that cut and do whatever you want with it, which I would dearly love, but we don't have that kind of flexibility in '13.  And so we were ready. 

            But the second thing is, I did not take action until it became clear that the budget deal collapsed at the end of the year, and that is because the things that we do under sequester are harmful, and I wasn't going to do anything harmful to our defense until it became clear -- and, again, a betting man or woman would not, I think, have thought that we'd actually topple off this cliff, but I didn't want to begin doing harmful things -- and these are harmful things -- until January 1st.  So we were ready, but we didn't begin taking management action until -- until the deal collapsed, because the management actions we're taking are so harmful. 

            Let me tell you why it is also so difficult to deal with now.  You know, mind you, we're doing our very, very best every day to do the best we can by our defense, given these circumstances.  We're trying very hard to get through this and get a sensible result.  But let me tell you why things work out so -- so badly.           

            Our budget has three pieces in it.  It's got people.  It's got an operating budget.  And it has investment, those three pieces.  Let's start with the people.  The people -- I've got -- I've got to take money out of those three pots.  I can't take money out of people just like that, because I cannot -- I can involuntarily especially people in uniform, but it turns out that it costs me almost as much -- in fact, as much -- to put them on the path to involuntarily separation over the course of a year as it costs to just pay them.  So said differently, you don't save any money in the process of separating people. 

            So what a company might do, faced with a budget cut, is dramatically shed people.  That is not something that we're able to do.  Therefore, the bill, the cut falls into these two other parts, the operations pot and the investment pot.  What do we do there?  There you say, now, there I have to -- in the operations pot, I have to take the war off the table, right?  I can't short the people who are at war in Afghanistan.  I can't short nuclear deterrence.  Submarines have to sail.  You can't -- we can't be unready as a nuclear force.  You know, the presidential airplane needs to keep flying and so forth. 

            And so there are a number of things you take off the table.  And, again, the bill gets squeezed into the rest.  So what happens as a result is that the cuts end up in not spread out over our entire defense budget, but bulged into a few areas, and the area that's most -- the two areas that are most painful are training, readiness, and our civilian people, who are getting furloughed, which is a terrible thing to do to them. 

            So let me take the first one first, training and readiness.  Take an airbase.  At an airbase, the airbases are open.  They have guards at the gate.  They have people in the tower.  They have people in the fire truck.  The lights are on, okay?  So all that, you're spending the money for all that.  Where can you stop spending money quickly?  Well, painting the buildings, mow the lawn less often, that kind of thing. 

            But importantly, you stop training.  And when you stop training, you stop readiness.  Now, we're protecting those units that we know are going to Afghanistan.  We're protecting training for those units that would be in what we call "fight tonight" on the Korean peninsula, if God forbid we ever had a war in Korea.  So we're trying to protect training for the units that are most likely to find themselves in combat.  But for other units, we can't afford to train them, and that's risky, because if something does happen, those units won't be fully ready. 

            And then we get to the civilian personnel part, which is the fact that a week ago furloughs began for many of our civilians.  And I know many of you don't track that -- we're far from Washington now -- but, in fact, our civilians live all over the country.  We have 800,000 civilians in the Department of Defense.  They're not people who work in desks in Washington, mostly.  They're mostly people who fix airplanes and fix ships and do other essential things. 

            And these folks have had their pay frozen for three years.  And they've had a hiring freeze.  And now we're taking a fifth of their paycheck in the last quarter of the year, which is causing many of them to have to change their family plans and not do things that they had hoped to do for their kids and so forth.  It's a miserable way to treat people. 

            And I talk to audiences of our civilians, and I always say, I don't know why you put up with us, except I do know.  They're there for the mission.  They care about defending the country.  Otherwise, they'd tell us to go to Hell and leave.  But they care, and they're dedicated.  They don't deserve this kind of treatment. 

            So these are the things that happen as a result of cuts that are very steep and very fast.  Now, if we had more time to take cuts, like the cuts we've already taken, we approach that strategically and we say, what things don't we need anymore that we can phase out?  What bases don't we need anymore?  What kind of capabilities don't we need anymore?  And we get rid of the old and start buying the new, like cyber.  That's the sensible way to do things, but this sequester thing, at least in the short term, really frustrates us. 

            MR. SANGER:  Ash, if you -- you said a year ago or even six months ago, the bet was -- you know, a betting person wouldn't think this would happen.  If you were putting money on the table now, excluding that fifth of your salary that will be left off the table, you'd probably have to bet that sequester's got at least another year to it, that it will get extended out. 

            DR. CARTER:  I'm afraid you're right.  I'm afraid you're right. 

            MR. SANGER:  So -- 

            DR. CARTER:  And we are -- 

            MR. SANGER:  So does this become the new normal for you?  And how does that change the nature of the plan? 

            DR. CARTER:  Well, right now, we -- you're absolutely right.  We are taking very seriously the prospect that this craziness is going to continue into the next year, because that's the path of least resistance for the political system.  If a big deal can't be put together by the Congress that can be approved by both houses of Congress, which obviously requires the assent of both parties, that the president can sign, then we will drift into next year with some continuation of what we've had this year. 

            You know, our responsibility is to be prepared for that eventuality, as we try to be prepared for other eventualities.  And looking forward, you ask, could this go on?  We started about four months ago an effort to be prepared for exactly that.  The president's budget has further cuts for us in it, to meet the objective of deficit reduction, but they -- they phase in gradually, which, as I said, from a management point of view, is the sensible way to do things, because I can do sensible things over time.  I can shed people over time.  I just can't do it in one year.  So that we can handle.  So that is one scenario, is the president's budget.  But I don't know that the president's budget's going to be approved, you know? 

            So it's -- it's July.  You don't see a whole lot of forward motion.  And right -- and we're looking at a number of scenarios -- right up to the possibility that this does become the new normal and that our budget is simply cut and stays low for a period of time.  And we're, again, preparing for that, and we're going to do our level best to make this strategic transition, which is the paramount thing, get rid of old things we don't need as fast as we can, get new things, treat our people as decently as we can, recognizing that we're going to have to shed people. 

            MR. SANGER:  I didn't make it in until a little bit late last night, but I hear that, in some of the discussion, the senior official from the Air Force yesterday, the presentation, there was a suggestion that one reason you might not do a no-fly zone around Syria is we simply couldn't afford it under these kind of circumstances. 

            DR. CARTER:  Well, I think -- 

            MR. SANGER:  True? 

            DR. CARTER:  Yeah, we would need supplemental -- we would certainly -- supplemental funding, which is normal in a new -- for a new contingency.  And so this is a concept where you add money to the Defense Department when you have some new need, which is a sensible thing to do, because we -- there's no reason for us to have that money, if we aren't going to be using the units that are concerned or something. 

            The example I give people is -- is hurricanes.  You know, we have a bad hurricane about once every three years and we're needed for a hurricane about once every three years.  Well, you could give us the money to be ready for hurricanes every year, but then we'd waste it two years out of three.  So that's not sensible.  So what's sensible is that you don't give us that money all the time and that you -- you give us extra money when something extra needs to be done. 

            That's the concept that we've applied to the wars in Iraq and Afghanistan, to readiness in the Persian Gulf, to our operations in the Horn of Africa, and so forth.  It makes perfect sense when you have new, temporary things that cost money. 

            MR. SANGER:  Ash, let me ask you to briefly put on your political science hat, as if you were back in your last job at Harvard.  Something's changed in the political culture.  In the post-9/11 years, the hawks in Congress always outvoted the budget-cutters in Congress.  And when I was White House correspondent for the Times, you'd frequently hear President Bush say, I'm going to do whatever my generals -- give my generals whatever they say they need, which one might argue was not necessarily a position that the commander-in-chief should take, but you heard the line very often. 

            Now, even within President Bush's own party, especially within his party, but even to some degree within your party, what you're hearing is budget-cutting first here and defense second.  Is this just a function of how many years have gone since 9/11?  Is there something else fundamentally at work here?  What is it that has changed in this debate? 

            DR. CARTER:  Well, there are a couple of things.  First of all, it is very noticeable.  There was always a solid center of opinion that supported defense that you could count on, and much less so now.  And there are a few -- 

            MR. SANGER:  In both parties. 

            DR. CARTER:  -- few reasons for that, yes.  There are a few reasons for that.  One is the one you mentioned, which is that we have a competing priority, which is fiscal discipline for the country.  And unfortunately, the part of government spending that has been most politically easy to get to has been discretionary spending. 

            Now, of course, there's revenues and there's entitlements, also.  Those are the three parts of the federal budget.  But much harder from a political point of view to get to the second two.  And so a lot of the cutting has fallen on the discretionary expenditures that pay for defense, homeland security, and all the other agencies of the federal government.  So that's one thing. 

            The other thing is, you know, time has passed since 9/11.  People are tired of the two wars.  They're tired of Afghanistan.  They're tired of Iraq.  I mean, I pay a lot of attention to them, but you don't see Afghanistan in the headlines all the time as it used to be.  They're tired of it. 

            MR. SANGER:  And when you do, it's usually -- 

            DR. CARTER:  And that's very understandable -- 

            MR. SANGER:  -- about the pace at which we're leaving. 

            DR. CARTER:  Exactly.  And people are tired of it.  And then there's a last thing, David, which is particularly true for the counterterrorism effort, and that is this.  In a funny way, the better we are, the less people will notice what we're doing.  I always -- every time I get dispirited by the fact that people don't seem to pay enough attention and care enough about national defense and international security, I console myself at least with the following thought, that if we're doing our job well, then, you know, people get up in the morning, they get to go to work and take their kids to school and live their lives and dream their dreams without having to worry about their physical security.  What a gift that is. 

            I mean, look around the world.  There are a lot of people who don't have that, don't have that.  And -- and security's like oxygen, as I often say.  If you -- if you have it, you don't think about it.  And if you don't have it, it's all you can think about.  And we'd like to be in a circumstance -- the former circumstance.  

            And that's kind of a paradox.  It's a paradox that's very important in the counterterrorism effort, for example, of which we are a part, obviously, the theme of this meeting, and an important mission of the Defense Department, but that kind of balance of getting enough public support to do what needs to be done, but not scaring people. 

            The president said something really riveting to me in the speech he gave on counterterrorism a few months ago, and he said that we now, at this point, after a decade of fighting this fight and learning what we've learned, can proceed not on the basis of fear, but hard-earned wisdom.  And we do.  We have hard-earned wisdom.  We've learned a lot over the last 10 years.  We've gotten a lot better.  And that's the foundation upon which we build now. 

            MR. SANGER:  You briefly mentioned Mr. Snowden before.  You know, after WikiLeaks happened, and I was involved in some of the Times coverage on it, so I recall this pretty distinctly, we were asking a lot of people the question, how could you download 250,000 documents from the State Department and no alarms going off?  And my recollection is that your old boss, Bob Gates, asked that question both publicly and privately pretty vividly. 

            DR. CARTER:  He did.

            MR. SANGER:  Then Mr. Snowden comes along.  It wasn't 250,000 documents, but was certainly documents of a higher level of sensitivity than what was in WikiLeaks.  So tell us, first, as you've look at it, what you think happened, why that was able to happen.  And, secondly, since you mentioned before the importance of defending your own networks, how you're changing your practices or plan to change your practices going forward.  And maybe make an assessment of how much damage, if any, was done. 

            DR. CARTER:  Well, we are assessing the damage.  I can just tell you right now, the damage is very substantial.  And I don't want to get into Snowden himself, because that's -- there's a criminal investigation involved and so I can't talk about that. 

            But to the issue, it gets back to what I said.  Job one for us has to be defending our own networks.  And this is a failure to defend our own networks.  It's not -- and it's not an outsider hacking in.  It was an insider.  And, you know, everybody who has networks knows that the insider threat is an enormous one. 

            This failure originated from two practices that we need to reverse.  The first is that there -- in an effort for those in the intelligence community to be able to share information with one another, there was an enormous amount of information concentrated in one place.  That's a mistake.  

            So we normally compartmentalize information for the very -- loading everything onto a server by people each cleared in their component, but loading onto a server creates a security risk of de-compartmentalization.  That's thing one. 

            MR. SANGER:  That wasn't a surprise to anybody. 

            DR. CARTER:  And thing two -- 

            MR. SANGER:  I mean, people said that as they were doing it. 

            DR. CARTER:  I don't know who it was a surprise to.  It's not a surprise to me.  But it's something we can't do, because it creates a -- too much information in one place. 

            The second thing is you had an individual who was given very substantial authority to access that information and move that information.  That oughtn't to be the case, either.

            So we're acting to reverse both of those things.  It's quite clear that those are the two root causes of this.  Now, what do you have to do about that?  You do have to compartmentalize more rigidly.  And you have to have a system, which I would liken to our longstanding system for handling nuclear weapons.  You know, we have no-alone zones.  We have two-man rule.  You go out to, you know, Barksdale and walk around the Apron, and you'll see a red line.  And it says you cross that red line, you can get shot, because there are areas where you're simply not to be, because proximity to nuclear weapons is too sensitive and momentous a thing to be allowed for individuals.  Because, you know, there's always some aberrant individual somewhere, and you've got to recognize that fact. 

            So when it comes to nuclear weapons, we give special -- we watch people's behavior in a special way.  We don't let people all by themselves do anything.  Nobody ever touches a nuclear weapon by him or herself.  There are always two people rated in the same specialty.  So everybody can see and understand exactly what is being done to that weapon.  It's been that way for decades.

            Now, here we had a case where a single person at one installation in the intelligence community could have access to and, moreover, move that much information.  So both of those pieces are a mistake and have to be corrected. 

            MR. SANGER:  Since you mentioned nuclear weapons, your old specialty before you had to head into the world of budget-cutting here, in the Berlin speech, President Obama announced about a month ago, the next big step that he envisioned, which was bringing the American arsenal down to somewhere just above 1,000 nuclear weapons.  But he added to that, that it would only have to be done -- it could only be done in concert with the Russians and getting similar cuts -- and, of course, there are all kinds of issues around that.  Almost the next day, you heard President Putin pretty well reject this approach.  

            So from your long study of this, back to the Preventative Defense Project and what you've learned in office, what would be the risk of doing this unilaterally?  Why -- if you're not going to get Russian agreement to this, would the United States be significantly less safe with merely 1,000 weapons against the current Russian arsenal?  And how do you deal with the Russian concern about our non-nuclear weapons of increasing precision, you know, the one-hour global strike weapons?

            DR. CARTER:  Good question.  Several things in there.  First of all, you're right.  The president did say that we are prepared to make further reductions below the New START level in our nuclear arsenal, but he had the intention of seeking them in parallel or in tandem with Russia.  And you're right, Putin said what he said, namely that the Russians have some concerns that would need to be addressed in the course of that negotiation.  I'll get back to what they are -- 

            MR. SANGER:  And there's no discussion of having that negotiation. 

            DR. CARTER:  -- and does it matter.  But I think the fundamental point here is that, you know, David, we're not going to attack ourselves with our own nuclear weapons.  So the value of reducing them -- what we're after is protection, right?  And so if there's value in reductions -- the goal is to get Russian reduction, the goal more widely Iran, North Korea, stop proliferation, get people to control fissile materials more closely.  That's what we want, because those weapons and those materials might actually be used against us.

            So if our own reductions and being prepared for our own reductions can be a catalyst for nuclear security more broadly, that's a good thing, and that's what the president wants.  And you miss that opportunity if you just do it yourself, because as I said, we're not going to attack ourselves. 

            MR. SANGER:  As a cost basis, would it save you considerably to decommission another third of the nuclear force? 

            DR. CARTER:  You may all be surprised to know that nuclear weapons don't actually cost that much.  Our -- our annual spending for nuclear delivery systems is about $12 billion a year.  This is out of around $525 billion, our budget, coming down.  And another $4 billion-ish for the command-and-control system that goes with the nuclear weapons, the radar upper, warning, the special communications to make sure that we could -- the president could retaliate under any circumstances, especially if we're attacked first, and all that, another $4 billion.  So that takes you up to about $16 billion.

            And so it is not a big swinger of the budget.  You don't save a lot of money by having arms control and so forth.  But the reason you do it is because these things -- though they don't cost that much -- are the most awesome and terrible inventions of humankind.  And, you know, I'm a physicist, as you mentioned, and we in the -- physicists always felt that there was some responsibility that went with having created this technology.  And so they are things always to remember are -- are part of our arsenal that deserves our most careful thought and treatment and responsibility.  But they're not the answer to our budget problem.  They're just not that expensive. 

            MR. SANGER:  One last question, and then we're going to go out to the audience here, Ash.  You -- at the beginning, we talked about Afghanistan, and you said you have to stay focused on it, because we're still there.  We know that there is an increasing debate within the administration about what some call the zero option, the question that at the end of 2014, could you pull out everyone?  There are downsides to this.  One reason for keeping forces there is not only to be a tripwire for the -- in Afghanistan, but to have forces in place in case Pakistan went bad. 

            Tell us where this debate stands.  Is the zero option, to your mind, a real option?  Is it more of a negotiating position, which some have argued?  Could you imagine a situation -- we did it in Iraq.  Could you imagine a situation where we do it in Afghanistan? 

            DR. CARTER:  Good question.  So let me answer your question by backing up for a moment, sort of where are we in this whole thing of Afghanistan, which many people have kind of forgotten about now, not being critical. 

            But the plan laid out in Chicago -- whatever it was, a year-and-a-half or so ago -- was that we were going to wind down our presence in Afghanistan and -- that is, the coalition would -- as the Afghan forces got stronger and stronger, the idea being that, as we went down, they would come up, in such a way that the sum of our power and Afghan power would be greater than the enemy's power, the insurgency.  

            And that's the plan -- that's the path we're on.  We're winding down at the same time the Afghan forces are winding up.  And the Afghan forces -- for those of you who track this -- are upwards of 300,000 now.  These are not just vanilla infantrymen anymore.  They're beginning to get more and more capability over time.  All -- essentially all of the missions in Afghanistan are now led by Afghans.  And so that's the -- that's the whole objective, is that we wind down and Afghanistan eventually becomes capable all by itself of defending itself. 

            Now, that can't happen for some time, which is the reason to do it gradually.  And the question you're raising is a good one, which -- and the president hasn't made a decision yet about exactly how to wind down and where to.  And part of the reason is that that depends upon what Afghanistan does. 

            And it needs to build up its forces so that it compensate, number one.  And, number two, if we are going to have forces there, we have to have an agreement that covers them, the so-called bilateral security agreement, which has not been concluded yet and which we have to have in order to stay.  So there are a lot of different variables to the thing. 

            My own view, David, is -- and I've been at this now for four-and-a-half years -- and, I mean, every little detail of what we do there -- is to say that from the purely military point of view, in terms of having the capability to maintain the Afghan state and level of peace and stability in the Afghan state, I think that is within reach.  That's a hard-earned thing.  Many Americans died, wounded having it.  

            I think it is within reach, but it depends on some other things.  It depends on Afghanistan.  It depends, by the way, on Pakistan.  So there are other variables here.  But from the purely military point of view, I think it is within reach, and I don't say that lightly, because, believe me, I've spent a lot of time there and working on the problems and issues associated over there.  You have to, because your heart has to be in it, because our people are there. 

            MR. SANGER:  So do we read that as a possibility -- do you think we could -- if you couldn't get that bilateral agreement, you might be able to live with the zero option?

            DR. CARTER:  Well, I mean, that's for sure.  We have said that we need the bilateral security agreement.  Does not having a bilateral security agreement and, therefore, not having a joint plan between the Afghan government and the coalition after the end of 2014, is that a good thing?  No, it's not a good thing, because it will disrupt this ability to achieve this result.  I said it was -- it was in reach, but, you know, that's not entirely within the president's purview.  We need Afghanistan as a partner.  We need our coalition partners.  And so -- and then there's the whole issue of Pakistan that we haven't talked about. 

            MR. SANGER:  So let's go out to the audience here and ask you to ask your questions crisply and tell us who you are and all that.  And we'll start with Jane.  I think -- are there -- there's a microphone coming to you, Jane. 

            Q:  Ash, thank you for sharing your enormous talent with our country.  First, a correction to you, David.  Mark Welsh, who's Chief of Staff of the Air Force, did not say last night that we couldn't do the mission if -- if asked, the no-fly zone over Syria.  He said, with less resources, he'd have to figure out how to get it done with less, but he'd get it done.  That was what he said. 

            Ash, my question to you is, Congress is incapable of doing big things these days.  I don't think anyone's missed that.  But it can do small things.  And why isn't it at least reasonably easy to ask Congress to give you the authority to apportion the cuts where you need to apportion them?  And if sequester continues forever, which it may, if you had that authority -- Mark Welsh said it, and I think you just said it -- you could live with that and you could build a smaller DOD, but you could build it intelligently. 

            And so if you agree with that, why isn't a huge effort being made by the administration to build a coalition in Congress to change the sequester, just in that way? 

            DR. CARTER:  It's a good question.  And, by the way, it's nice to see you here.  I mean, this is somebody who knows all about all this stuff I'm talking about.  Great to see you, Jane. 

            With respect to the question of flexibility, the -- the -- what we really need is time.  That's what we really need.  And I'll give you an example of why.  The -- remember, I talked about people.  Over time, we can reduce the force, but we can't do it quickly.  It's, first of all, not feasible for us to do it.  

            So that is, it is -- if you take a servicemember and involuntarily separate him or her, you -- they go through a process.  It takes time and takes money, and they're entitled to things in the course of that, and so forth.  So you can't just snap your fingers and reduce the size of the force.  It takes time.  Now, we can do it, and we're prepared to do it, but the reality is, it takes time. 

            And so that's what we really need, is the time to do this strategically and intelligently.  The -- having yet another year next year like this year, where you suddenly have to take a large amount of money out, leads to the kind of -- twisted results that you see associated with sequester in the first year. 

            So what we really need is time.  And so if there were a budget deal of the kind -- you know, there are other possibilities out there, but of the kind that the president has laid out, which is cuts, but they're -- they phase in over time -- now, I realize nobody's -- you know, has agreed to the president's plan.  I'm just saying, something like that, which comes in over time, that's the kind of flexibility that we really need in order to do this strategically and intelligently.

            If we're hit again in '14, I can tell you we're getting ready for it.  And we will be prepared.  But it's not what you ought to -- it's not what you ought to expect.  It's not a good way to spend the taxpayers' money to do it this way.  It's too many perverse consequences of doing things this way. 

            MR. SANGER:  Saw a hand right there. 

            Q:  Thank you very much -- 

            DR. CARTER:  Oh, I'm sorry.  Can I add one other thing to what Jane said?  Which is that, because of -- what -- what we have to do, Jane, in a year of execution to get money out, when it's an unplanned cut, is you have to go where the money is.  So I have to go where the money is.  And -- and in that sense, flexibility to move money doesn't help me that much, because I have to go where the money is. 

            So, you know, I can't go to the war in Afghanistan, because I can't have people over there and stop sending them fuel and food.  As I said, I can't cut the nuclear deterrent.  I can't cut the president's airplane.  There are a lot of things I can't -- so I have to go where the money is.  That's what's perverse about it.  It's not as strategic where you have to go where the money is.  And that's true no matter whether I get to move things around or not, so what we really need is the time to do things strategically. 

            Q:  Thank you, Mr. Secretary.  Steve Shapiro from New York representing BENS, Business Executives for National Security.  You've worked with us in the past.  Thank you.  If one moves one's strategic forces to a theater or increases capital production with respect to those forces, typically one's adversaries or potential adversaries are aware of that.  What, then, is the advantage to publicly announcing a shift or pivot to the Asian theater, when so far the only visible results have been jitters in Europe and the Mideast and bellicose response in Asia?  Why not just do it and keep quiet about it? 

            DR. CARTER:  Okay.  Well, you've got two parts of that.  One is that we're talking and not doing, which is incorrect, and the other is that there's no value in talking, so let me take on both of those points. 

            We are doing.  We are moving equipment.  We're moving forces.  We're making -- we're moving money around in our investment -- in our investments to -- as I mentioned earlier -- to invest in things that are especially useful for that theater.  There will be more U.S. forces in the Asia Pacific theater in years to come than there have been in years.  Why?  Because they've been in Iraq and Afghanistan.  So there is more happening there.  

            Why say so?  Why are we there in the first place?  In the big picture, what are we doing in the Asia Pacific theater?  The Asia Pacific theater is one in which -- that has enjoyed peace and stability for -- for -- basically, for decades now.  And it's done that even though the world's -- wounds of World War II never healed.  There's no NATO in Asia.  There's no security structure there. 

            And the critical factor that has kept peace and stability in East Asia for decades has been the American military presence there.  That is what allowed, first, Japan to rise and prosper, and then South Korea to rise and prosper, then Southeast Asia to rise and prosper, and today China and India to rise and prosper.  And that's fine. 

            And -- and that's -- that has been welcomed by the United States.  It's economically welcome, obviously, by the United States.  But it -- a critical ingredient in that peace and stability has been our pivotal military presence in the region and our alliances, which anchor that.  That's a good thing, and we want to keep it going.  And it's about that role that we play in East Asia, a place where the animosities run deep, where people argue over rocks in the ocean, where, as I said, the wounds of World War II and the earlier part of the last century have never healed, and we would like to continue to play our stabilizing role there.  

            That is not aimed at anyone.  It's not picking a fight with anyone.  It's not a concept of deterrence or anything like that.  It's to continue to play that stabilizing role.  And we have not been able to play that to the extent we had in previous decades over the last decade because we have been so involved in Iraq and Afghanistan.  So we want to get back to the role that America has played in that region for a long time. 

            Now, it's important that people know that, to get to your point, because it's important for people to understand what we're doing and why we're doing it, to understand, first of all, that we're -- our alliances are strong and that we stand behind our alliances, second, that we're not picking a fight with anyone, we're not trying to militarize any situation there.  We would like what has been happening in decades past to keep going.  Democracy has been spreading.  Prosperity has been spreading.  The huge amount of economic and political development in the part of the world, without any conflict at all.  And it might very well have been accompanied by conflict if it weren't for the American role.   

            So that's the sight picture that we have on the -- on the pivot, and that's why we're doing it, and that's why we're saying what we're doing, so nobody gets the wrong idea, but they do get the right idea of why we're doing it. 

            MR. SANGER:  We only have a couple of minutes left, and we can't go over our time, because the penalty they invoke here is that they put us on a plane and actually send us back to the 97 degree heat.  (Laughter.)  So we're going to take two questions in quick row, Kimberly and then over here.  And we'll just take the two questions, and then you can pick which one you're answering. 

            Q:  Kim Dozier, AP.  You mentioned that these cyber offense and defense teams are almost ready to go.  Weeks or months before they're operational?  Could you give us more details?  And, secondly, you mentioned two things that you wanted to see changed to keep more Snowden leaks from happening in future.  How fast can you bring that about? 

            MR. SANGER:  And then there was one question over there, just hand the mic there. 

            Q:  Yeah, Maurice Sonnenberg.  First of all, Ash, let me thank you for leaving the wars of academia and coming back to the government.  My question goes to the sequester.  I'd like you to talk a little bit about adversaries, meaning China, the others, in terms of their expenditures and what it means in terms of the advantages they will accrue in the future, for example.  And one little point there.  You mentioned nuclear.  Our arsenal is -- well, they say -- 50 percent maybe, maybe obsolete.  Talk about that. 

            MR. SANGER:  Two good questions. 

            DR. CARTER:  Okay, good.  Let's see.  First of all, soon and now.  So soon for the cyber force.  I mean, the germs of these have existed, as I said, in the services anyway.  And we're trying to reach out and get people who already have that skill set and bring them together, and that's happening right now. 

            MR. SANGER:  And they'll report straight up to General Alexander? 

            DR. CARTER:  Correct. 

            MR. SANGER:  Okay. 

            DR. CARTER:  And then the second part is, when are we taking countermeasures to prevent another Snowden?  The answer's now.  Maurice, who knows a lot about this, by the way, and does a lot of work for -- on behalf of intelligence for the United States, which we much appreciate it, Maurice, you're right.  The international perception of sequester and our budget drama, I worry about a great deal. 

            This is something that makes us look like we are senselessly enfeebling ourselves and, therefore, disheartens our partners and friends and allies.  And it's something that could potentially embolden, you know, those who might commit aggression.  So it is -- it is -- 

            MR. SANGER:  Who do you have in mind in that regard? 

            DR. CARTER:  -- risky.  Well, the usual suspects.  (Laughter.)  And so it is important that we put it in context.  And, you know, this is an unfortunate things that we're doing to ourselves.  On the other hand, we are trying to do our best to manage through it.  And if we had a little time -- or after we've had a little time to adjust, we'll be fine.  This is not a cataclysm for American defense.  This is not a wholesale retreat from our alliances and our military capabilities.  And nobody should get that impression. 

            It's not a good way to run things.  It's not a good way to spend the taxpayers' money, but we will get through this.  And we'll keep our eye on what our priorities are and we'll eventually make that -- this strategic transition, which, as I said, we have to make.  It'll be slower.  It'll be less graceful.  But we'll do it anyway, and nobody should have any doubt about that. 

            But so both things are true.  It's a bad thing to be doing to ourselves, and they do look at us -- and I have foreign counterparts who tell me, "What the hell is going on?"  And, you know, believe me, it's hard to explain.  And -- but at the same time, they need to understand that, you know, we're going to remain very strong, indeed, and as we turn the investments that we have been making in Iraq and Afghanistan to other things, they'll see them showing up.  They'll see them showing up in the cyber area, the electronic warfare area and many other areas that they'll see and won't see and it's important that that message gets across.