John McCain

Mr. McCAIN

Mr. McCAIN. Madam President, how much time remains on either side?

Mr. McCAIN. I yield myself 10 minutes.

Mr. McCAIN. For all the years that I have known Senator Hagel, I have known him to be an honorable man and a patriot in this Chamber and elsewhere--overseas, in the field of battle. Senator Hagel has served this country faithfully and with distinction. We have our differences. Senator Hagel was and remains my friend. There was a time when Senator Hagel and I saw the world and America's role in it in much the same way. When the Balkans were torn apart with mass atrocities and genocide, Senator Hagel and I stood together with Senators Bob Dole and Joe Lieberman to lend bipartisan support to President Clinton in taking more forceful action to end the slaughter. In May 1999, Senator Hagel said on this very floor why the United States should intervene militarily in Kosovo: But we also understand there are things worth going to war for, there are things worth dying for. . . . When people are being slaughtered at a rather considerable rate, and genocide is occurring, and ethnic cleansing is occurring, and people are being driven from their homes. On and on. What do we do now? The geopolitical consequences, the humanitarian consequences involved in this are great. He went on to say: History has surely taught us that when you defer the tough decisions, when you let the butchers continue and the tyrants and dictators continue, it gets worse. And it has gotten worse with Milosevic. For 10 years we've dealt with him. Four wars he's started. Et cetera. I agreed with his statement at the time, and I still do. I think it applies with greater or equal force to Syria today. I am not sure that Senator Hagel believes that anymore. When America was attacked on September 11, 2001, Senator Hagel and I urged a strong American response to vanquish the enemies who attacked us, beginning in Afghanistan. Two years later, President Bush decided the United States may have to use force against Saddam Hussein in Iraq, and then Senator Hagel and I voted to authorize the use of force in Iraq. Senator Hagel and I were often together in our criticism of the Bush administration's conduct of the war in Iraq. We both were disturbed by the apparent arrogance of then-Secretary of Defense Donald Rumsfeld and his abject failure to respond to the clear fact that we were losing the war in Iraq on the ground. In August 2003 I urged President Bush to send more troops. The Senator from South Carolina and I called for the resignation of the Secretary of Defense, and we wanted to change our strategy, to replace military and civilian leaders who were failing in their responsibilities. Senator Hagel, on the other hand, believed we should cut our losses and withdraw from Iraq. Since that time, Senator Hagel has taken policy positions that I believe call into question the quality of his professional judgment on issues critical to national defense. I am also concerned that Senator Hagel is ill-suited to lead the 2.5 million uniformed members of the Armed Services and to ensure the sound management of an agency that has an annual budget equal to the 17th largest economy in the world. Of all the responsibilities of government, none is more fundamental than providing for the Nation's defense. We must have the most qualified and able person for the position, and having carefully reviewed Senator Hagel's long public record, I find his nomination wanting. Senator Hagel's appearance before the Senate Armed Services Committee failed to allay my concerns about his nomination. During the hearing he repeatedly refused to give an assessment of his previous statements on issues such as the troop surge in Iraq, the identification and engagement of terrorist organizations, and his past rhetoric about our allies. In response to these questions, he either assigned history the task of judging the merit of his past statements and positions or simply said: If I had an opportunity to edit that, like many things I've said, I would--I would like to go back and change the words and the meaning. History isn't likely to affirm Senator Hagel's declaration that the decision to increase forces in order to wage a counterinsurgency in Iraq, a decision that helped prevent our losing that war, he said was the most dangerous foreign policy blunder since Vietnam. It is quite obvious now that statement was histrionic, woefully uninformed, and absurd. But I didn't raise it at Senator Hagel's hearing for the satisfaction of an ``I told you so'' moment, but to determine if Senator Hagel recognizes he was in error and, more importantly, if that recognition informs his judgment today. I wanted to know if he had learned from his mistakes. Unfortunately, I am not confident that he has. After 2 weeks of reviewing his record, my concerns about whether Senator Hagel is ready to serve as Secretary of Defense have not diminished. Nothing in Senator Hagel's background indicates he would effectively manage the Department of Defense. In today's unprecedented environment of fiscal uncertainty, ensuring that defense investment decisions affecting an agency as massive and unwieldy as the Department of Defense do not adversely impact our military readiness is enormously challenging. It requires that the Secretary have, as Secretary Gates and Secretary Panetta had, a proven track record of successfully managing large and complex organizations. Senator Hagel has no experience. There are those of us who seek to cut waste, fraud, and abuse from the Department of Defense. Senator Hagel seeks something else entirely--to cut military capabilities that serve as tools to ensure our continued engagement throughout the world in support of America's interests and those of our allies. In the eyes of the President, at least, Senator Hagel, however, apparently is the right man to oversee the continuing drawdown of the Armed Services. Over the past 4 years, the administration has pursued a program of defense reductions that exceed those expected of a normal post-war drawdown, cuts that have begun to directly undermine U.S. global military power. Last week, Secretary Panetta said people would stand by and deliberately hurt this country in terms of our national defense by letting sequestration take place. My doubts about Senator Hagel's suitability extend beyond his prospective management of defense budgetary resources. The North Koreans recently tested another nuclear weapon. Iraq is unraveling. The Iranians just rejected Vice President Biden's proposal at the Munich Security Conference for one-on-one talks concerning nuclear weapons. Libya, Mali, Tunisia, and Egypt are in various states of unrest, for which we have no strategy. We are in the most unsettled period since the end of the Cold War, and I have serious concerns as to the quality of Senator Hagel's professional judgment and the acuity of his views on critical areas of national security, including security in East Asia and the Middle East. His record on Iraq was particularly troubling. As I alluded to a moment ago, in 2002 Senator Hagel voted to authorize the use of force against Iraq. By 2006, his support for the war had diminished. After Republican losses in the 2006 midterm elections, the Senator wrote an opinion piece for the Washington Post under the title ``Leaving Iraq, Honorably,'' foreshadowing his opposition to the surge and advocating ``a phased troop withdrawal from Iraq.'' When President Bush announced his decision to surge troops in 2007, Senator Hagel actively campaigned against it. He voted in February 2007 in favor of a bill expressing opposition to the surge and later in favor of measures to set a date certain for withdrawal of troops from Iraq, an equally bad policy. Senator Hagel wrote in his 2008 memoir, ``America: Our Next Chapter'' that ``history . . . will show'' that his legislative efforts to oppose the surge correctly framed the political matters at issue at the time. Carl Levin, on the other hand, said in 2009: In considering whether or not to surge troops in Iraq . . . I think that history will show that President Bush reached the right decision. Senator Hagel advocated the complete withdrawal of U.S. forces from Iraq by 2007 rather than negotiating an agreement for an enduring presence of U.S. forces. The President ultimately did exactly what Senator Hagel recommended, reportedly against the advice of military leaders. In response to written questions on this matter, Senator Hagel again stated that the complete withdrawal of U.S. troops in Iraq was the right call and asserted that Iraq is in a better place today because of it. That is another Orwellian statement. In fact, since the withdrawal of our forces in 2011, the fragile political accommodation made possible by the surge of 2007 has unraveled over the past year. Al-Qaida in Iraq is remobilizing. Iranian-backed Shiite militias are gaining strength. Meanwhile the country is on the brink of civil war as protests against the Maliki government draw thousands, Iranian aircraft are flying over Iraq with weapons for Syria, and there are many other examples. Nevertheless, Senator Hagel is equally quick to advocate full withdrawal from Afghanistan despite conditions on the ground or the advice of military commanders. Senator Hagel's views on Iran are also profoundly troubling. Consider, for instance, his recent set of incorrect and confused responses to basic questions about President Obama's Iran policy during his confirmation hearing last month, which one senior White House official rightfully described as ``somewhere between baffling and incomprehensible.'' I am more deeply concerned by Senator Hagel's overall record on this issue.

Mr. McCAIN. Madam President, I ask for 2 additional minutes.

Mr. McCAIN. Finally, Senator Hagel's opposition to the use of sanctions, his apparent confusion about administration policies and its implications, and his apparent incomprehension of the threat a nuclear- armed Iran poses to international stability is alarming and would cause other nations to doubt the credibility of the President's commitments. Senator Hagel is an honorable man who has sacrificed much and bravely for our Nation. About his character and love of country, there can be no doubt or debate. However, his positions on the principal national security issues facing our country--the Iranian nuclear program, the resurgent Islamist terrorist threat in North Africa and the Middle East, and, more broadly, whether we should maintain our ability to project strength in defense of our interests and allies'--indicate to me a disqualifying lack of professional judgment. Also, Senator Hagel's complete lack of experience in running an enterprise of such size and complexity casts further doubt. Therefore, despite my esteem for Senator Hagel, on the basis of his record, I will not support his confirmation. I say this with regret, but he is the wrong person at the worst time for the job this day. We can and must do better. I thank my colleagues. I yield the floor.

Mr. McCAIN

Mr. McCAIN. Madam President, on behalf of Senator Grassley, and probably to his dismay, I call up the Grassley amendment.

Mr. McCAIN. I ask unanimous consent that further reading be dispensed with.

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER (Mr. King.) Without objection, it is so ordered.

Mr. McCAIN. Mr. President, I ask unanimous consent that I speak as in morning business.

Mr. McCAIN

Mr. McCAIN. Mr. President, this past year, our national debt passed a staggering $16 trillion, more than $51,000 for every man, woman, and child in America. Today, several very serious fiscal matters that would seriously impact the Department of Defense and the U.S. defense industrial base, including budget sequestration, the debt limit, and disposition of the defense budget for fiscal year 2013 remain unresolved. Underpinning all of these matters is the larger issue of why the culture of how the Department of Defense does business must change. While daunting, this question provides us with a valuable prism through which Senator Hagel's nomination, now pending consideration by the Armed Services Committee, should be considered. By ``culture,'' I mean that the mindset that has for years pervaded how the Department of Defense buys goods and services and manages assets and resources without regard to either their affordability or what our service men and women actually need to defend the Nation. After years of developing legislative initiatives intended to reform how the Department does business, I am convinced that the single most effective agent of cultural change at the Department is the right leadership: leadership that recognizes that the Department owes to the taxpayer a stewardship obligation to extract maximum value for every defense dollar spent, and a moral responsibility to the warfighter that these dollars are being spent wisely, to effectively procure desired combat capability. We need strong fiscal leadership to reject the use-or-lose mentality that incentivizes managers of the Department's programs and activities to spend every dollar, no matter what our priorities really are, and replace it with a process that actually rewards sound program management, incentivizes efforts to cut costs, and rewards those who use entrepreneurship and ingenuity to meet mission requirements, while returning taxpayer funds to the U.S. Treasury. In other words, cultural change needs leadership that not only rejects ``business-as-usual'' but also challenges it. Where Senator Hagel is on this is not clear. One area that reflects how desperately the Department of Defense needs to change its culture of inefficiency is how it procures goods and services, in particular, how it acquires major weapons systems. While reforms in this area have been attempted for more than 25 years, the same deplorable outcomes--major cost overruns, schedule slips, or failures to perform as promised--all persist. Why? It is because despite these efforts, the underlying culture within the Department of ``business-as-usual,'' which predisposes its largest programs to these outcomes, has been allowed to live on. In how the Department procures its largest and most expensive weapons systems, this translates into a mindset that so fails to recognize the need for affordability that it has made the Department more willing than it should be to accept (at any cost) more risk than it can responsibly manage. There are far too many examples of where the Department begins a major program without knowing what it really wants or how these requirements should translate into technical specifications that are designed to generate the combat capability it really needs. Also, all too many times, there is no traceability between these specifications through a test regime that is sufficient to ensure that the system the Department is procuring is operational effective, suitable, and survivable before entering operational testing or early production. So what happens? These systems stay ``on rails''; blow through their original cost and schedule estimates; and, at the end of the day, bear little resemblance to what the war-fighter actually needs. But program management, fixated on ``keeping the money flowing'', push the program--many times, reimbursing the contractor for its costs throughout, and with the parochial support of Members of this body-- down the development pipeline, offering facile excuses for poor performance and, ultimately, less-than-desired capability. All of this happens within an overall management system that is overly cumbersome and costly and provides for no meaningful accountability. In the aggregate, this has been a ``perfect storm''. A defense procurement culture that is content with promises of exquisite solutions over actual affordability has squandered literally billions of taxpayer dollars. According to a recent study, since 2004, programs canceled by the Army alone consumed between $3.3 billion and $3.8 billion per year. That is 35 to 45 percent of the Army's annual budget for development, testing, and engineering over this period. Obviously, this is simply unacceptable and unsustainable. Yet it happened again just recently. A couple of months ago, the Air Force, quite rightly, decided to kill a huge logistics supply chain management business system called the Expeditionary Combat Support System, ECSS. But it did so only after, one, sinking about $1 billion into the program since its start in 2005; two, recently finding that another $1.1 billion would be needed to field just 25 percent of ECSS's promised capability; and, three, extracting from the taxpayer's total $1 billion investment less than $150 million in usable hardware and software. I repeat: A total $1 billion investment, less than $150 million was obtained in usable hardware and software. This is a travesty. In terms of how little benefit we realized compared to how much was spent, it is one of the most egregious examples of mismanagement in recent memory. Some reforms have helped, but much work needs to be done. The Weapons Systems Acquisition Reform Act of 2009 and its prescription to ``start programs off right,'' was a move in the right direction. I am pleased to report that in its last of the three reports focused on how effectively the Department has been implementing that act, the Government Accountability Office recently found that the Department has been taking positive steps to implement this reform act. It did so having sampled 11 weapons acquisition programs, including the KC-46A tanker, the SSBN(X) Ohio-class ballistic, missile submarine replacement, and the Ground Combat Vehicle, GCV. But getting rid of poor cost-, schedule-, and performance-outcomes and how the Department procures goods and services will require the sustained and enduring change that only a change in culture can provide. When it comes to defense procurement, a change in culture is possible only with leadership that recognizes that for government to act as a responsible steward over defense dollars, it must be as knowledgeable, skilled, and sophisticated a buyer as industry is a seller. Whether Senator Hagel would serve as the right leader at the Department of Defense to foster needed cultural changes in the Department's procurement practices is unclear. What we do know is that the right person must embrace the following principles: Set realistic requirements early and manage changes to those requirements aggressively. The Department must enforce better discipline and achieve greater accountability in how it meets its most critical military needs by dismantling stovepipes among the requirements, acquisition policy, and budgeting communities and ensure clear lines of authority within acquisition organizations. With the benefit of robust participation by the uniformed military, requirements should be frozen early, allowing for sufficient trade-space among the program's cost- schedule- and performance-variables to ensure that it is effectively managed throughout its lifecycle. Exquisite high-risk, next-generation solutions should be spiraled out over time. In other words, programs should be set to shorter acquisition timelines and should be managed to them. Improve the Department's ability to price risk--effectively and independently of industry--and budget to that cost. By ``risk,'' I mean the risk that a system is exposed to throughout its life cycle: technical-, software-, development-, integration-, manufacturing-, and sustainment-risk--all of them. Acquiring weapons systems thoughtfully vis-a-vis risk would minimize funding instability which can absolutely decimate a program's ability to deliver required capability on budget and on time and ultimately result in reliable systems that will be affordable to own and operate. Revitalize, and where necessary, build-up the Department's ``organic'' workforce in areas most vital to ``buying smart'', like cost-estimating, technical- and systems-engineering, developmental testing, et cetera. The Department must be able to conduct proper should-cost analysis to inform its positions when it negotiates contracts and conduct engineering trade-off analysis to manage programs effectively over their lifecycles. With the benefit of this capability, the Department will be able to more effectively target affordability and control cost growth. Require the use of the type of contract that is most appropriate to the level of risk to be managed in the fee structure that is most appropriate to the type of performance to be incentivized. This requires the Department to know what it needs and, in connection with that requirement, exactly what kind of contractor performance it wants to incentivize. To that extent and as quickly as possible, the Department must get its programs into a low- to moderate-risk environment where it can use fixed-price contracts to effectively incentivize cost control. Better incentivize productivity and innovation. Rationalize profit policy and effectively use performance-based contracting and other tools in the contracting toolkit to incentivize and reward contractors for effectively managing costs, successfully managing their supply chains and indirect expenses, and actually delivering promised capability. Promote real competition, instead of ``checking the blocks''. Nothing drives costs down and enhances quality more effectively than competition. The Department has to make sure that competition, or the option of competition, is brought to bear on a program throughout its lifecycle, at both the systems and subsystems level. To the extent that the Department has been recently successful with some of its large, high-profile procurements, it is because it has been able to leverage competition aggressively. Improve how the Department acquires services. Military departments that have started diving into this area have already found massive opportunities for savings and efficiency- easily amounting to billions of dollars. This initiative should not only continue; it should expand throughout the defense enterprise. Reform how the Department procures information systems, especially, major automated information systems. While the technical aspects of these products are, of course, fundamentally different from major weapons systems, the basic tradecraft, especially those that reflect best business practices, shouldn't be that different. Procuring cyber- security capability may, however, require greater agility and flexibility than what can be provided under the long and slow ``deliberative'' acquisition process. Improve the ``rapid acquisitions'' process. In support of on-going operations, the war-fighter cannot rely on the ``deliberative'' acquisition process to satisfy its needs. The process by which these sorts of urgent operational requirements are satisfied reliably and cost-effectively needs to be reformed. Rein in the Department's ability to reprogram funds. I have been appalled that in fiscal year 2011 alone, the Department of Defense transferred nearly $27 billion among Defense accounts and that only $11 billion, or 40 percent of these transfers, received any type of congressional oversight. That oversight was limited to just 8 Senators out of 100. The oversight of the transfer of billions of dollars is confined to the oversight of eight Members of the U.S. Senate. I happened to be one of them for the last 6 years, but I don't think it is appropriate to transfer that kind of money without all 100 percent being apprised of the need to do so. Despite that the Department cannot be audited--the Department of Defense has never been audited--we continue to provide it with the flexibility to engage in what amounts to budget gamesmanship where certain accounts, such as operation and maintenance and base-operations support, which are intended to satisfy ``must-pay'' bills, are historically underfunded in the President's annual budget request, with the understanding that the Department will be able to transfer funds between accounts down-the-road. In my view, this type of budget gamesmanship is a big reason why the Department cannot annually produce auditable financial statements and frustrates objectively assessing the priority or urgency of the Department's requirements. This brings me to the other major area of how the Defense Department ``does business'' that underscores the need for cultural reform, defense financial management, and the most significant thing that can be done in this area is finally getting the Department auditable. There can be no doubt that the ability of the Department to be audited independently would help ensure that the defense dollars are not wasted, lost, or otherwise misused. Absent auditability, the Government Accountability Office (GAO) has, since 1995, designated the Department's financial management as ``high-risk''. Today's fiscal challenges bring new urgency to the issue of auditability at the Department of Defense. To navigate successfully through this period of austerity and fiscal uncertainty without inadvertently impinging on military readiness, the Department will have to make management decisions that are fully informed and carefully calibrated. To ensure intended results, the Department has to make sure these decisions are being executed as planned. From well-managed companies in the private sector, which have to make decisions like this all the time, we know that reliable financial data, effective internal controls, efficient business processes, and sound business systems are needed to support an organization whose finances can be audited. Granted, the Department won't use auditable financial statements themselves to make important management decisions, but the high quality of the financial information that feeds into financial statements that are ready-for-audit would be incredibly valuable, indeed indispensable, for identifying opportunities for savings and efficiencies; successfully implementing initiatives and management controls to realize these savings and efficiencies; and making sure that increasingly scarce defense dollars are redirected to higher defense priorities. This would give the primary stakeholders in how the Department is managed--the war-fighter and the taxpayer--confidence that the defense management decisions can be relied upon to produce intended results. Given the state of financial management at the Department of Defense today, we do not now have that confidence. One big reason why we don't is that to date the Department's commitment to achieving financial auditability has been characterized by blown-deadline after blown-deadline. Various statutes, including the Chief Financial Officers Act of 1990, the Government Management Reform Act of 1994, the Federal Financial Management Improvement Act of 1996, and other provisions in various Defense authorization and appropriations acts, have required financial improvements at the Department of Defense for the Department to produce auditable financial statements. After continuous failure, we are at a point now where, for example, when then-Secretary of Defense Gates was trying to find efficiency and reduce waste at the Department a few years ago, he said what he was doing was ``something akin to an Easter egg hunt''. He explained, ``[M]y staff and I learned that it was nearly impossible to get accurate information and answers to questions such as `[h]ow much money do you spend?' and ``[h]ow many people do you have?''' For this reason, after succeeding Secretary Gates, Secretary Panetta immediately elevated financial improvement to a top priority of the Department by directing the Department to cut in half the time to make a key financial statement, called the Statement of Budgetary Resources (SBR), ready-for-audit. This goal must be achieved by fiscal year 2014. Seeking to leverage Secretary Panetta's initiative and with the assistance of Senator Ayotte, the Senate Armed Services Committee included a provision in its authorization bill this year that formalizes this goal. I am pleased to say that while much work needs to be done for the Department of Defense to achieve its audit-readiness goals, the Department has made some limited progress, particularly through its Financial Improvement and Audit Readiness (FIAR) plan, which the Senate Armed Services Committee legislated as a requirement a few years ago. The House Armed Services Committee's Panel on Defense Financial Management and Auditability Reform found early this year contained a ``reasonable strategy and methodology.'' In my view, it is no longer the case that top defense managers ``just don't get it'' or that they are dragging their feet because they don't see financial improvement as a priority. Indeed, perhaps the silver- lining in today's fiscal challenges is that it seems to have united top management at the Pentagon into finally realizing how important it is for the Department to become financially auditable. Indeed, over the last few years, some agencies within the Department, such as the Army Corps of Engineers, the Military Retirement Fund, Defense Contracting Audit Agency, and TRICARE's Contract Management Activity have received clean audit opinions. As GAO's Director of Financial Management and Assurance Asif Khan recently said, Secretary Panetta's directive has resulted in a ``change in tone at the top'' that has ``reset'' the Department's efforts to achieve an unqualified audit opinion. How exactly would Senator Hagel, if confirmed, further Secretary Panetta's efforts here? This is not an academic question. As the Department of Defense's Deputy Inspector General for Auditing Dan Blair recently noted, for the Department to achieve an auditable statement of budgetary resources (SBR) by 2014, it must run what amounts to ``a big checking account with thousands of people being able to write checks'' and that capturing an ``auditable universe'' within it will require reconciling between a general ledger and subsidiary ledgers. A big problem is ongoing delay in implementing very expensive business computer systems called ``enterprise resource planning'' or ERPs, which perform a number of business-related functions vital to transforming the Department's business operations. The ECSS system I mentioned a few minutes ago is one of these ERPs. As of December 2009, the Department of Defense has invested over $5.8 billion in these ERPs and will invest billions more before they are fully implemented. Most of them are over budget and behind schedule or haven't provided promised capability. Yet these ERPs make up more than half of the Department's entire expenditure in the area of business transformation, costing the taxpayers more than $1 billion per year. This is vitally important. If the Department doesn't get ERPs right, like a system known as ECSS that cost $1 billion dollars, not only will the Department have squandered monies that it had already sunk into these programs but it will also severely undermined its ability to improve the efficiency and the effectiveness of scores of business- missions such as logistics and supply chain management, et cetera, that are key to supporting those service-men and -women who defend the Nation. What needs to be done? From the top down, lines of authority must be clarified. The relevant workforce must be well-versed in government accounting practices and standards and be experienced in related- information technology. Given how vitally important these ERPs are to this mission, people who have actual experience successfully implementing global business systems must be properly mixed into the workforce, and contractors hired to integrate these business systems into the Department must be the best-qualified partners and held to the same high performance standards that should apply to any other major defense acquisition. Within this overall structure, there must be sufficient oversight and accountability vis-a-vis a well-defined and federated business enterprise architecture that ensures that, in terms of organizational transformation and systems modernization, all the different elements of the Department are moving in the same direction toward a single goal. These kinds of issues need to have the day-to-day attention of the Department's Chief Management Officer, that is, the Deputy Secretary of Defense and the chief management officers within the military departments. At this point, I am of the view that, with all of the congressional reforms and mandates in the area of financial improvement over the past few years, the Department of Defense has all the tools it needs to have in its tool-kit to achieve audit-readiness on time and on budget. The issue is leadership and execution. As the House Panel on Financial Management and Auditability Reform noted, a vital part of that is ``ensuring that senior leaders are held accountable when audit readiness goals are not met, and conversely, rewarded when goals are achieved''. Also, defense financial improvement must no longer be regarded as an activity important only to the Department's financial community. Field commanders have to be fully engaged and interested in driving change outside the Pentagon. If Senator Hagel is confirmed, his setting this tone from the top will be vitally important. Is all this enormously challenging? It absolutely is, as befits an organization of the size and complexity of the Department of Defense. With an annual budget equal to the 17th largest economy in the world, as the Institute for Defense Analyses recently noted, the Department's ``business'' of achieving its unique and disparate missions worldwide on an ongoing and contingency basis equates more to an economy than a commercial business. Be that as it may, with an annual federal budget deficit of $1.3 trillion and defense reductions of at least $487 billion and possibly, with sequestration, another $500 billion over the next 10 years, the Department needs to have reliable financial management data to help it distinguish between defense budget cuts that are prudent and necessary, and those that may impinge on military readiness and, therefore, endanger our national security. Only a Department that can be audited can give us the assurance that the Department is moving in the right direction in terms of identifying the right opportunities to save defense dollars and eliminate waste, and redirecting increasingly scarce defense dollars to higher defense priorities. All I have discussed today illustrates how important sound leadership at the top of the Department of Defense is to ``buying smarter'' and getting the Department ready-for-audit. Without leadership fundamentally and unalterably mindful of the Department's responsibility to the American people to use defense dollars wisely, this cultural change will forever remain elusive. For this reason, this body's consideration of the President's nominee to serve as the next Secretary of Defense will be more important than it has been in recent memory. I would like to give credit to the present Secretary of Defense, Mr. Leon Panetta, who brought his knowledge and expertise on budgetary matters to his work at the Pentagon. I will say more about him later on, but I am very appreciative of the outstanding service present Secretary of Defense Panetta has provided to this Nation, with many long years of service both in elected as well as appointed office. We are proud to have Americans such as Secretary Panetta serving our Nation. I yield the floor.

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent that I be allowed 10 minutes.

Mr. McCAIN. Mr. President, I speak in opposition to the amendment evidenced by my friend, the Senator from Kentucky, which would prohibit the sale, licensing, approval, facilitation, transfer, retransfer, or delivery of any defense articles and services to the Government of Egypt, including F-16 aircraft and M-1 tanks. There are many problems with this amendment. I would like to explain. First, the amendment is not revenue neutral. The Congressional Budget Office has not provided an official score, despite my request, but there is a way to avoid the basic fact that there are numerous costs associated with this amendment. The defense articles the Senator from Kentucky wishes to block and prohibit are manufactured by American workers and defense companies. They have contracts to produce this equipment, and American workers are doing that as we speak. If the Federal Government steps in, as my colleague's amendment would mandate, those contracts would have to be immediately broken, and U.S. production lines would have to be shut down immediately. There is a cost of breaching a contract in this country, and there should be. That does not change just because the government is the one doing the breaching. This is also as it should be. So the Senator's amendment would obligate the Federal Government to pay the many costs to American businesses and workers for breaking our commitments to them. Furthermore, many of these defense articles have already been produced. They have already been paid for. They are technically the property of the Egyptian Government already. If the Congress prohibits these defense articles from being delivered to Egypt, they become the responsibility of the U.S. Government. We will have to store them somewhere, and that is not free either. In short, there are a lot of hidden costs in this amendment. If this provision becomes law in its current form, it will add to the national debt. This is fiscally irresponsible, and I cannot support it on these grounds alone. Second, and more important than the costs associated with this amendment, it is harmful to America's national security interests. I know as well as anyone that Egypt is beset now with many problems. I was in Egypt 2 weeks ago with a bipartisan delegation of my colleagues. The Muslim Brotherhood-led government, which I would remind my colleagues was elected by the Egyptian people, has done a poor job of governing in an exclusive and pluralistic way, establishing the rule of law, and building democratic institutions. The results of the Egyptian Government's failing are plain to see in the awful street violence and expanding unrest in Egypt. President Morsi's government has not been able to stem the violence and has often made matters worse. Egyptian police seem to have neither the capacity nor the legitimacy to restore order. The fact is, despite its flaws, the Egyptian Army remains one of the major stabilizing forces in Egypt today. If, God forbid, the current unrest worsens, and Egypt tips deeper into civil conflict, the one force in that country that might be capable of pulling Egypt back from the abyss is the Egyptian military. If the Senate were to adopt the amendment proposed by the Senator from Kentucky, we would not only be harming the effectiveness of the Egyptian military, which, by the way, is not objected to by the Israelis, who probably understand better than anyone what defense capabilities might be used someday to threaten their security, we would be rupturing a decades-long partnership and denying and squandering our influence with the leaders of one of the most important institutions in Egypt. The ramifications of this decision would be enormous, especially when it comes to the ability of U.S. ships, including U.S. aircraft carriers and other vessels, to transit the Suez Canal securely and effectively. I would urge the Senator from Kentucky to call the Chairman of the Joint Chiefs of Staff and ask him what effect this would have on the U.S. military and America's overall national security. As I say, this amendment would be even more detrimental to our ally Israel, for which the continuing instability in Egypt is an abiding, clear and present danger. I have seen no objections raised by our Israeli allies to U.S. military assistance to Egypt, nor do I expect to see any. Here too I would urge my colleague to pick up the phone and call the Israeli Ambassador or just recall what I am sure he heard from Israel's leaders during his recent visit there a few weeks ago. This amendment is absolutely harmful to the national security of our ally Israel. The timing of the amendment is also detrimental because our government is currently engaged in discussions with the Egyptian Government and military about the need to shift our security cooperation more toward the kinds of programs and equipment Egypt needs to combat the threats they increasingly face: porous borders, a rising threat from terrorism, deteriorating conditions in the Sinai, and a security sector in dire need of reform. It is in Egypt's interest to move in this direction, as they are beginning to do. It is in our interest to help them. If we adopt this amendment, the promise of this entire endeavor will be destroyed. Egypt will suffer, Israel will suffer, and the United States will suffer. I oppose this amendment because it is uninformed and oblivious to the world challenges America faces and our continuing need to work with America's partners, imperfect and frustrating though they may be, to defend our Nation, our interests, and our allies in an increasingly dangerous world. Finally, the Middle East is in a period of transition and change that we have not seen practically in its entire history. The Egyptians are key and vital to what happens in that part of the world. It is the heart, soul, and center of the Arab world. One out of every four Arabs who live in the Arab world lives in Egypt. It is the cultural and historic center of all the Arab world. It is vital we do whatever we can to see that Egypt makes a transition to a free, democratic, and open society. That is in grave danger today. To pass this amendment today and send this message to Egypt in this very unstable and unsure time, I believe, would be exactly the wrong message at this time. I would also point out that this legislation has nothing to do with Egypt. It has nothing to do with Egypt. A decision of this magnitude, in my view, requires hearings, debate, and legislation that would stand by itself, rather than in a 15- or 20- minute discussion on the floor of the Senate. For that reason alone, I urge my colleagues to overwhelmingly--as we have other amendments of the Senator from Kentucky--reject this amendment. I yield the floor.

Mr. McCAIN. Mr. President, what is the parliamentary situation?

Mr. McCAIN. How much time is remaining?

Mr. McCAIN

Mr. McCAIN. Mr. President, when we debated the Hurricane Sandy Supplemental bill in the Senate prior to Christmas, I was unable to support the spending bill because much of the taxpayer funding in the bill had little or nothing to do with meeting the immediate needs of individuals misplaced by Hurricane Sandy. Unfortunately, not much has changed with the House bill that we will soon vote on. At a time when we face ongoing trillion-dollar deficits and a $16.4 trillion debt, we cannot justify this type of spending. While some of the projects included in this bill may hold merit on their own, many of the projects included should go through the normal budget and appropriations process, where Congress has time to vet the need for such spending requests. To drive home this point, the Congressional Budget Office--CBO--analysis of the bill tells us that only 7 percent of the funding in this bill will be spent this year--FY 2013--and roughly 70 percent of the funding will not be spent until FY 2015 and beyond. After examining this bill, I have found numerous examples of questionable spending: Millions to replace automobiles owned by the Federal Government, including: $1 million for DEA to replace 15 vehicles; $230,000 for ATF to replace three vehicles; $300,000 for the Secret Service vehicles; and $855,000 for ICE vehicles. The Federal Government currently owns or leases over 660,000 vehicles--surely we can find replacements within our current inventory. Shouldn't we focus on providing relief directly to those still trying to rebuild their lives before replacing a bureaucrat's car? There is $16 billion for Community Development Block Grant funds for 47 States and Puerto Rico that can be used for events in 2011, 2012 and 2013. There is $2 million to repair damage to the roofs of museums in Washington, D.C., while many in Hurricane Sandy's path still have no permanent roof over their own heads. The bill includes $50 million for National Park Service Historic Preservation grants, which was not included in the President's request; $180 million for the Department of Agriculture's Emergency Watershed Protection program, which helps restore watersheds damaged by wildfires and droughts for areas including Colorado; highway funding for the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands; $15 million for NASA facilities, though NASA itself has called its damage from the hurricane ``minimal.'' On the day after the storm hit, NASA's Wallops Island put out a statement stating that ``an initial assessment team surveyed roads and facilities at NASA's Wallops Flight Facility today reporting a number of downed trees but otherwise minimal impact in the wake of Hurricane Sandy.'' The bill includes $111 million for a weather satellite data mitigation gap reserve fund, a controversial program created by President Obama by executive order for ocean zoning planning; $8.5 million for weather forecasting equipment; $23 million for the USDA ``Forest Restoration Program'' for planting trees on private property. This program is actually a Farm Bill subsidy program that's run by a relatively unknown agency called the ``Farm Service Administration'' which is primarily responsible for managing crop insurance. Under this program, private landowners with about 50 acres of land can apply for up to $500,000 in free grants for tree planting activities. The bill also includes $118 million for taxpayer-supported AMTRAK, $86 million more than the President's request. While some of the funding will go for repairs, money will also go to increasing passenger capacity to New York and future mitigation efforts. In a 2-page letter from AMTRAK that gives a broad description of how the money will be spent, almost all of it falls under funding for future capital projects. This includes funding for the ``Gateway Program.'' According to AMTRAK, the Gateway Program, which was started in 2011 and is projected to cost over $13 billion, is ``a comprehensive program of infrastructure improvements to increase track, tunnel, bridge, and station capacity serving New York City that will improve current assets and allow the eventual doubling of passenger trains into Manhattan.'' I am not here to debate the merits or the need for new tunnels, but this is clearly a capital improvement project--unrelated to Hurricane Sandy. AMTRAK is up and running so it is not apparent why this funding is deemed ``emergency'' spending and included in this spending package. Keep in mind, AMTRAK receives roughly $1 billion in annual funding. Future mitigation projects should be debated in next year's budget process. The bill includes $100 million for Head Start; $1 million for Legal Services Corporation; $3.5 billion for the Army Corps of Engineers-- with little clarity on how the money will be spent. More projects are not something the Army Corps can handle. They are currently experiencing a backlog of construction and maintenance projects of approximately $70 billion. Furthermore, a 2010 report released by the Government Accountability Office noted that carryover funds have increased ``due to the large amount of supplemental funding the Corps has received in recent years.'' Clearly, supplemental spending on the Army Corps has not paid off. As a nation, we are $16.4 trillion in debt and dealing with trillion- dollar deficits. We do need to come to the aid of those who lost everything in Hurricane Sandy and are struggling to get their lives back together. Congress, however, cannot continue down this road of irresponsible spending. We must pass a true disaster spending bill that only spends money on disaster recovery and response, not pet projects.

Mr. McCAIN

Mr. McCAIN. Mr. President, before the Senator from Maryland leaves the floor, I would like to tell him how much I appreciate the remarks he just made. I think he gave a very accurate depiction of the agreement we reached after many hours of always pleasant conversation. The fact is we showed our colleagues and many others it is still possible for a group of us to join together on a very difficult issue and a very complex one. The Senator from Maryland stated his preference just a minute ago that he is for majority rule. But he also understood that in order for us to come together, that we had to move--each of us--in a more centrist direction. Without his input, his efforts, and his willingness, in my view, it is very likely we would not have agreed. I ask unanimous consent that the Senator from Maryland and I engage in a colloquy.

Mr. McCAIN. I think the Senator from Maryland and I would agree that even though this is not a headline-grabbing issue and a lot of people in America have no real idea what was at stake, that if we hadn't reached this agreement amongst us, it could have had repercussions for a very long period of time in the Senate; would the Senator agree to that?

Mr. McCAIN. Wouldn't the Senator from Maryland agree that the whole purpose of this is not to block? In fact, with our numerous meetings with the Parliamentarians, I think we reached a greater and fuller understanding that if someone really, really wants to block progress in the Senate, given the incredible--if the word isn't ``arcane,'' it is certainly ``detailed''--rules of the Senate, they can. But the real purpose of this and the outcome that the Senator from Maryland and I and Senator Kyl, Senator Barrasso, Senator Levin, Senator Schumer, Senator Pryor--and I note the presence of the Senator from Michigan on the floor; I think he would agree that this fix, this compromise we have all now agreed to--and hopefully we will agree to and pass shortly--is also intended to change an attitude in the Senate. Instead of blocking everything moving forward and blocking amendments, perhaps we could create a new environment in the Senate where we will let the minority have their amendments, but also the minority party will let the process move forward. I think that is the tradeoff that was the fundamental aspect of the negotiations we continued in the office of the Senator from Michigan for many days and many hours. I think the Senator from Michigan and the Senator from Maryland would agree; if someone wants to block the Senate from moving forward, they can at least do it for some short period of time. What has happened, looking back 10, 15 years ago, the tree wasn't filled. But at the same time, on the other side, amendments were not produced by the hundreds. I believe the object and I believe the outcome of this hard-earned compromise will be that there will be a greater degree of comity in the Senate which would allow us to achieve the legislative goals that all of us seek. I ask unanimous consent that the Senator from Michigan join the Senator from Maryland and me in this colloquy.

Mr. McCAIN. I think my friend from Maryland would also agree that we have found, for example, on the Defense authorization bill, that once we get onto a bill and once we have some amendments--in the case of our agreement it was four--that now the Members are sort of invested in moving the process forward. The logjam has always appeared before the bill is ever taken up for debate and amendments. By expediting that process, without depriving Members of their rights but expediting that process, hopefully, we will get onto the bill and some amendments that are already--four in one option--are already agreed to, and then we can move forward. I would like to point out one other thing, and I think my two colleagues would agree; that is, we are fairly well paid around here, and maybe sometimes we should work a 5-day workweek; and maybe, if absolutely necessary, God forbid, a 6-day workweek. We should be taking up legislation and completing that legislation before the end of the week or, depending on how massive the legislation is, at least 2 weeks. But there should be dates certain. It is funny how this body operates when there are deadlines as opposed to just extended periods of debate and amending.

Mr. McCAIN. It is a disgrace that we have not--in how many years?

Mr. McCAIN. I, again, would like to express my appreciation to Senator Schumer and Senator Cardin, Senator Pryor and my Republican colleagues, Senator Kyl and Senator Barrasso. But I would especially like to thank Senator Levin. We have known each other and worked together now for many years. We had very spirited and open and honest disagreements, but there is a level of trust and friendship that allows us, when committed to the same goal, to be able to--I believe, hopefully, in a very short period of time--achieve it. Maybe I am being a little bit too optimistic. Hopefully, because of this, we can start moving legislation through the Senate. The record that we have achieved over the last 2 years is less than admirable. We know that filling the tree has dramatically increased, but we also know the objections to moving forward also have. I am not placing any responsibility on either side. I am placing the responsibility on both sides. Maybe we can start a new day, take up some legislation, pass it, and do the people's will. Maybe we would improve our favorability ratings to exceed that of--I saw a poll the other day; I don't know if my colleagues did. A colonoscopy is more favorable than Members of the Congress. I don't know if they saw that. I hope we can at least raise it to some level above that. By getting things done around here I think that will probably enhance our chances of regaining some more favorability amongst the American people. Again, I thank the Senator from Maryland and my friend from Michigan and, hopefully, in a couple of hours we will have achieved something that, in my view, could avert a fundamental change in the Senate which maybe could never have been repaired. I view it with the utmost seriousness. I have never been involved in an issue that impacted this body to the degree that the nuclear option would have caused. We would have regretted it for a long time. Hopefully, in a few hours we will have avoided it. I just want to remind my friend from Maryland and the Senator from Michigan, this is going to be for 2 years. So we are in kind of an experimental phase. If we are unable to do the things that we aspire to, then I think you could see further Draconian measures considered by the majority. It is up to both sides to make this work.

Mr. McCAIN. I think it was about 383.

Mr. McCAIN

Mr. McCAIN. Some of the most vociferous proponents of this approach have never served in the minority. They do not appreciate that the course of action they were urging, if undertaken, ultimately would be to their disadvantage when they served in the minority, which inevitably some of them will. So Senators Alexander, Barrasso and I, along with our former colleague, Jon Kyl, began working with like- minded Members of the majority to diffuse this situation to meet the goals of making it easier for the majority to bring legislation to the floor and making it easier for a member of the minority to offer amendments to that legislation. We worked together to develop recommendations for the majority and minority leaders which we all believed would allow the Senate to function in a fairer and more effective way.

Mr. McCAIN. Mr. President, I ask that Senators Alexander and Barrasso engage in a colloquy with me about our understanding of the operation of the standing order that the Senate just adopted related to motions to proceed and nominations, and our intent in drafting it. The prospect of the majority, for the first time, changing the Standing Rules of the Senate by violating the provisions of those very rules was jarring to me and several of my colleagues, on both sides of the aisle, who care about this institution and the uniquely important role it serves in our Republic. Use of this unprecedented tactic for changing the standing rules would be a nuclear option, for it would irreparably damage the institution just to accommodate the desires of the current majority. Over the years Senators of both parties have eloquently stated where doing this would, in the words of the current majority leader in 2005, be: ``The end of the U.S. Senate.''

Mr. McCAIN. That is correct. And I want to underscore that the amendment construct we developed is not to be used as a ceiling to limit the ability of Members of the majority or the minority to offer just two amendments per side. Rather, we intend it to be used as an amendment floor--a minimum guarantee of amendments--that would serve to start the amendment process so as many Members as possible could participate in that process. Having a robust amendment process, especially on legislation of major consequence, is how the Senate has traditionally operated. It is something that has been sorely lacking for the last several years. And it is something that, when it has occurred, has invariably led to legislative achievement. It is for the purpose of strengthening the right to amend legislation that we helped draft the new procedure of a majority motion to proceed. If the majority instead begins to use this procedure to limit the minority to just two amendments before seeking to bring consideration of a bill to a close, then we would view that as an abuse of this procedure. It would break faith with us who worked in good faith. Under those circumstances, we would oppose cloture on the bill and would urge that our colleagues do the same.