Sec. of Defense William Cohen and Joint Chiefs of Staff chairman Gen. John Shalikashvili discuss plans to modernize the U.S. military. Key to their strategy: axe bases to afford new technology. A background report on the Congressionally mandated Quadrennial Defense Review is followed by the Newsmaker panel.

JIM LEHRER: Now to Secretary of Defense Cohen and General Shalikashvili, the Chairman of the Joint Chiefs of Staff. I talked with them earlier today. Mr. Secretary, General, welcome. Mr. Secretary, what is really new about this plan?

WILLIAM COHEN, Secretary of Defense: What's new about it, it's the first time we've had a really comprehensive examination of where we need to get from today and into tomorrow, and so the QDR really is assigned to formulate a strategy that will last not only for today's strategy but carry us forward beyond the year 2010, joint vision 2010, which Gen. Shali has offered as such and put together well into the future. This is the first time I think such a comprehensive examination has been undertaken.

JIM LEHRER: But isn't it just kind of more or less the same, in other words, a few less troops, a few less pieces of hardware, conceptually is there anything new about this?

SEC. WILLIAM COHEN: Conceptually, the strategy is different, but the strategy is much more comprehensive. We're not just focusing upon two major regional contingencies, but, rather, a small--

JIM LEHRER: --major war, to be able to fight two wars at once.

SEC. WILLIAM COHEN: Nearly simultaneously. We're looking at small-scale contingencies, humanitarian rescue missions all the way up to the major type of conflicts, but to devise a strategy that allows us to shape the international environment in a way that's favorable to us, to be able to respond to the full range of crises, and then prepare for the future. And that's different in this particular QDR study.

JIM LEHRER: General, a lot of people have wondered how you can cover this full range of contentions, say as the Secretary just talked about, with fewer troops, less hardware, and a smaller budget.

GEN. JOHN SHALIKASHVILI, Chairman, Joint Chiefs of Staff: Well, let me make two points about it. First of all, in the Quadrennial Defense Review we have had probably what some would call unprecedented involvement by the combatant commanders and by the service chiefs and their staffs. And so we have done an enormous amount of work together, so we from the military point of view understand. We've also done more analytical work, more war-gaming, more computer work on it to--and to try to understand not just what two theater wars would demand of us but for the first time to truly understand what's shaping this environment to any means, what specific military tasks are involved. Once we began to understand it, then we tried to build a force that would, in fact, be required to execute that strategy. And we learned all of a sudden what was over-stressed up to now.

JIM LEHRER: Give me an example.

GEN. JOHN SHALIKASHVILI: For instance, our military policemen are everywhere in this new environment. Our civil affairs units are needed everywhere, and so we found we have units from electronic jamming aircraft to these military police units, to civil affairs, to patriot units that are over-stressed, and we need to devise ways to help that.

On the other hand, we also found out there were some units that we could thin out, some capabilities we could thin out, such as, for instance, we have certain headquarters that we found had no utility. We have some support structure that we found we could, we could thin out. We have some, for instance, in the Air Force units that were devoted to the defense, the air defense of the United States that in this new environment we could reduce, so we--all of a sudden, as a result of this extensive work, we'd have a much better understanding what is stressed very heavily, and which we need to fix, and that which can be thin, and so that the changes we made in the force were in those areas where the chiefs and the C-IN-C's and I could all agree.

We could safely make those downward adjustments in order not to only free up money for modernization which we needed but also to free up people to go into the units, for instance, that were over-stressed.

JIM LEHRER: But, Mr. Secretary, what you all were still talking about is the same basic strategy, is it not, that the ability to fight two big wars at one time, what does that come from? Was that--did you all sit down and say wait a minute, do we really need to do that?

SEC. WILLIAM COHEN: We started with the threats. One of the threats that we face today--obviously the threat from the former Soviet Union has been greatly diminished. We now have a much better relationship with Russia, still has many thousands of nuclear weapons, and we're trying to negotiate those levels down. But they no longer pose the kind of global nuclear economy and encounter we might have had during the Cold War. We looked at the threats that currently exist, Southwest Asia and Northeast Asia. Korea, by way of example, we still have 37,000 troops there to prevent and deter any kind of attack upon the South Koreans.

Now, that's still important. We have to maintain them. We have to be concerned about Saddam Hussein. He still poses a threat to his neighbors. Iran may pose a threat in the future as far as the stability of that region, or access to oil in the Middle East. So looking at the nature of the threats, we say they're still there. One day they may be gone, and we'll have to reassess what our obligations are at that point. But for the near-term mid-term we still have those two major regions to contend with.

JIM LEHRER: And did you--was the assumption you made that only the United States could--would be a factor in a major war here, a major war there?

SEC. WILLIAM COHEN: As a matter of fact, we rely very strongly upon our allies to cooperate. We have to be prepared to act unilaterally if we have to, when vital American interests are at stake, but we are calling upon our allies to help in South Korea, for example. We call upon regional allies to help reinforce us to allow the use of bases and facilities to carry out our responsibilities. We look at the area in the Middle East.

We count upon the Saudis, the Kuwaitis, other Gulf partners in that region to help us should there be another war launched by Saddam Hussein. So we are calling upon our allies, and we would work very cooperatively, as we do now. The British are very helpful, the French and others, in enforcing no-fly zones, so we depend upon our allies, but when the time comes and we have to act unilaterally, we have to have that capability as well.

JIM LEHRER: General, when you and the Secretary go to Congress tomorrow and the big debate begins where you have to defend all of this, are you as the spokesperson for the military, are you in a position to say, yes, what the secretary just outlined, all of these contingencies, all of these possibilities with what we want and what we think we need, we can, in fact, do all of that?

GEN. JOHN SHALIKASHVILI: Yes, I can say that, and I will say it, and I'm not alone, as among the senior military people. I think all of us combatant commanders and service chiefs who have looked at it both from the standpoint of day to day shaping of the environment and from the standpoint of engaging in two widely separated areas in major conflicts, that--the structure that we have and that the Secretary just talked about is a structure that can handle that. I--

JIM LEHRER: A lot of people--

GEN. JOHN SHALIKASHVILI: I think we understand that now better than we did four years ago. We've had four years of studying it. We've now been able to make adjustments to it, and I feel comfortable that the structure we are presenting is a structure that can do the mission.

JIM LEHRER: One of the specifics that's already raised some concerns, of course, is closing military bases. Now, you called on, what, two more rounds of base closings. What's the alternative to that?

SEC. WILLIAM COHEN: Well, the alternative is to carry the weight. We can continue to carry excess weight and not do the modernization that we have to do to put the kind of technology in the hands of young men and women who are serving us on combat lines, as such. We can say we're going to carry the excess weight and we're not going to give you the weaponry.

JIM LEHRER: It's that stark a choice?

SEC. WILLIAM COHEN: Well, we look at this very carefully. We can continue doing what we're doing. We can continue to carry exactly the force structure that we have now, all the facilities, all the sub-structure, and carry out our present obligations. We can continue to respond to crises, but we can't modernize, and so we look--

JIM LEHRER: Modernize meaning--new weaponry, new technology.

SEC. WILLIAM COHEN: We're trying to move the--the future closer to the present. We're trying to move what they call Force 21 from the Army, from other types of technologies forward much closer to the present so that we'll have the most sophisticated and the best, most lethal, most precise weaponry in the hands of our fighting forces that we can.

JIM LEHRER: For those of us who don't follow this very carefully every day, as the two of you do, give us a feel for how big a problem the base--the over-capacity problem is.

SEC. WILLIAM COHEN: Well, in raw numbers if we look during the past few years we have cut down our force structure roughly 33 percent. It will go to--

JIM LEHRER: Force structure, that's number of people.

SEC. WILLIAM COHEN: Number of people in units, reduced by about 1/3 during the past ten years. We have also--we will increase to 36 percent, assuming we make the deductions contained in this particular proposal, and we've only reduced our support structure--our infrastructure of the base's facilities by about 21 percent, so we're carrying roughly 14, 15 percent in that neighborhood of excess capacity. If we were a corporation carrying that kind of capacity, we'd say slim down, get rid of that capacity to out source, privatize, and basically get fit. I try to use a sports metaphor, and that is we're a decathlon champ. We're competing in the Olympics.

And we can't be good in just one area, we can't just run the hundred yard dash. We had to do the 10-K. We had to do the pole vault. We had to do the high jump. We've got--we can't carry the excess weight and do all of that and be competitive, so we have choices to make. We can either choose to carry the weight, or we can choose to slim down and get prepared to compete. And that's something that's going to require sacrifice. It means going on a diet. It means really disciplining our appetite and doing what we think is best to make us champs. And we are the best in the world. We want to stay that way. I've said many times before we never want to engage in a fair fight. We want to be unfair in our favor, so that's why we want to keep our military the best in the world.

JIM LEHRER: General, are you comfortable with these base closings that this is going to require?

GEN. JOHN SHALIKASHVILI: I have maintained for some time now that that's exactly what we have to do to free up the resources, to modernize the force, something we have not been able to do for a number of years now. So that's one of the necessary steps, I think, to get there from here. I have no doubt that that's necessary. And I hope that we can in a collaborative effort between the Secretary and the services and Congress can come to that conclusion and get support for it.

JIM LEHRER: Some would argue that that's the toughest pill of all politically to handle and you're just kind of handing it over to Congress and others to actually take--take the swallow.

SEC. WILLIAM COHEN: Well, not at all. As a matter of fact, we're handing this document over, and saying, here's our best advice, here's our blueprint for the future, but we need Congress to work with us. I can't come down from any kind of a mountaintop and say, we have a mission that requires the Congress to join in this, and the Congress has to make trade-offs as well. We've cut back on weaponry; we've cut some almost in half. We have slowed the production ramp, and that means jobs in some districts as well. And what we're trying to say is these are the kinds of options we've looked at. Now we have an opportunity to join in analyzing this.

If you have better ideas we're prepared to accept them and work with you. If you have constructive criticism, that too is very good for us. We have a national defense panel that's revealing what we are recommending and we'll make further recommendations all as part of a first step toward building a bipartisan consensus for the long-term. What is most devastating as far as defense planners are concerned is if you have great instability, that if you have a program on one year and off the next, it contributes to an enormous amount of waste and instability in the program, and adds billions of dollars to the procurement of those systems we're going to need.

So this is the first step in a long-term dialogue that we have to have with the Congress and with the executive branch, with the President, and he is supportive of this particular approach, to say, let's work together to come up with the best possible solutions that we can. We think this is the appropriate approach.

JIM LEHRER: One of the loudest criticisms of you all's plans thus far has been from one side, General, is that you didn't cut any weapons systems. You cut back on the numbers but cut back on people but not on hardware.

GEN. JOHN SHALIKASHVILI: Well, I think, again, we looked at not an issue whether we should cut a system or trim it or not, but what would give us the best force equipped with the weapons that we need, and it was our judgment and our recommendation to Sec. Cohen that in the case of those major weapons systems that we retained each one of them for a different reason in different numbers, but that they were all necessary to bring us forward and move us in the direction of the kind of a force that we would need in the 21st century.

In some cases it is because what they are replacing is aging, and aging rapidly; in other cases because it gives us such a quantum increased capability that we will need in that kind of a force in the 21st century that will keep us dominant over any other adversary that we could have. There were always very good reasons. This was not a deal about cutting and looking bold. This was about building the best force that would protect America's interests near-term, mid-term, and in the long-term.

SEC. WILLIAM COHEN: Could I add just one postscript to that?

JIM LEHRER: Sure.

SEC. WILLIAM COHEN: There's some notion that we don't have to worry about any other force in the foreseeable future. It ignores the fact that weapons are proliferating on the part of other countries. We have weapons of mass destruction which are proliferating at a very rapid and dangerous pace. We have missile technology which is proliferating, so our forces are superior, as we are today, nonetheless, are facing increased risk, and that's the reason we have to constantly be in the business of preparing for the future, because technology cannot be any more than time stuffed in a bottle.

It's out there; it's widespread; and so we have to make sure that our pilots, our soldiers, our sailors, our Marines, they are given the best technology possible to make sure that we are at least one or two generations ahead of the adversary.

JIM LEHRER: Finally, General, are you satisfied that this mix between the capability of fighting a mass war and the new capabilities that have been required, humanitarian efforts, peacekeeping, and all of that, that that mix is proper in this plan?

GEN. JOHN SHALIKASHVILI: I think we have the right force and the right capabilities within that force to deal with both; the shaping part of it, the influence in the environment, humanitarian operations, and non-combatant evacuations that we find ourselves involved in, and fighting a major adversary. We do have some challenges, though. One of them is the operations standpoint for the people. We need to be more astute in how we manage that.

We have to understand better how much time we can expect our young men and women to be away from home and from their families. The QDR addresses all those issues. How many of those exercises do we really need to be combat ready and how many are stepping over the line and are causing unnecessary turbulence? How much readiness? Obviously, we need a ready force, but are some of the things we do in terms of exercising and turbulence contributing to readiness, or beginning to become detractors? These are the things that we watch carefully; that we do not stress the force too much in a shaping side of it to leave them unprepared for the war fighting.

I think it is something that we have now four years of experience in, and we are much better at this now than we were when the bottom up review first discussed some of those issues. I am comfortable that it is not an easy task, but that we understand it, and that we can deal with it.

JIM LEHRER: All right, gentlemen, thank you both very much.