week or so should. >> pentagon does not have the authority to spend money so their budget is essentially zero. the exception is for essential activities and that's defined as necessary to prevent the loss of life or loss the property. what that means is 1.4 million active duty troops on the job, they will continue to get paid. about half the d.o.d. civilian workforce, though has been furloughed, sent home without pay, that's about 400,000 d.o.d. civilians, half of the total workforce has been furloughed. >> in terms of how this is going to play out up on the hill, we are seeing that for example speaker boehner is saying he's going to avoid a debt default under any terms. does that set up the negotiations for next step? >> yes, so i think increasingly these two issues being intertwined in how they are going to be resolved. you've got the government shutdown, as bad as that is and personally i think it's even dumber than sequestration, now we are faced with a possibility

of breaching the debt ceiling by august 17th, i think the resolution of the two are getting tied to each other because just because of the deadlines and ultimately, you know, that might be something that speaker boehner has to decide for himself, does he push forward a clean debt ceiling increase and a continuing clean resolution in order to get it passed to prevent the catastrophe from happening. >> likely losing or most certainly losing the speakership as a consequence. $75billion even with sequestration, there's $75 billion more down we can go to get to where the historic bottom cycle is over the last four cycles in defense spending. is defense spending going to get further cut as we look at doing a grand bargain which everybody says is likely -- not a grand bar done but -- bargain but at least a long-term solution -- >> you see that, the troughs after each peak we come down to a trough and you can draw a line out and you'll see that,

you know, history were to repeat itself which it doesn't but it often rhymes, that we should expect a defense budget to come as low as 400, $415 billion in today's dollars by the end of this cycle. so you play that out and that means, yeah, we could go down significantly less than the sequestration level cuts that are currently -- i've come to the view over the past six months or so that sequestration level cuts are not the floor for defense, they are more or less the ceiling at this point and we could go significantly lower. >> and how is the pentagon coping with this? because this is a multiple whammy, they cut 500, 500 more and maybe potentially several billion dollars more. >> not designed for this so they are caught flat-footed for fy14. not only do they not have any appropriate payson for -- appropriation for the shutdown and then sequestration will take effect on january 14th. they are caught out of cycle.

>> historically the government has paid its workers. is this savings going to get applied to sequestration? >> yes, so i don't think it's a given that workers are going to get their back pay once the government reopens. if they don't then that could count as some of the savings for 2014 sequester. >> thank you very much for joining us. coming up how the air mobility command is dealing with sequestration. you're watching "this week in defense news." s ludicrous. it's ludicrous! my proposal will go exactly the way i say it will. over my dead body! ( gasping and murmuring ) i think somebody needs a time-out.

♪ oh ♪ that's the power of one ♪ one grain of sand. you woulda thoughtalked from the name of it, it was gonna be packed with sailors. so i immediately picked out the biggest guy in there. and i walked straight up to him. now he looks me square in the eye, and, i swear he says, "welcome to navy federal credit union." ha! whoa friendly alert! i got a great auto rate outta that guy. with rates slashed across the board, it's a great time to buy a car. 4 million members. 4 million stories. navy federal credit union. the u.s. air force's air mobility command is the backbone of the nation's military airlift and aerial refueling capabilities vital to supporting each of the military services worldwide 24 hours a day, 365 days a year. headquartered at scott air force base in illinois the

command has some 55,000 airmen and civilians stationed around the world and directs 1300 military and civilian transport planes and refueling aircraft. last year it moved 2 million passengers 644,000 tons of cargo, 28 million gallons of fuel and 12,000 medical patients including wounded warriors. i spoke with amc commander general paul silva recently at the air force association's annual air and space technology exposition before the government shutdown. a spokesman says the command is trying to operate as normally as possible. silva has often said that budget cuts are not, his job is to support worldwide -- troops worldwide. i asked him how he's handle sequestration over the last fiscal year and what's ahead for this one. >> thank you for the opportunity to be here first. i think the question goes right to the heart of how we are having to operate in the military today. so with sequestration with day- to-day operations we find ourselves in a position where we have to address day-to-day

ops first and then look at the long-term implications of sequestration second. air mobility command what that means is we have to provide airlift to all of our joint war fighting partners and we can't compromise. the long term consequences of sequestration fall more on the training and availability of our crew force, the training and availability of our support airmen that make that crew force successful, our maintainers, our aerial porters, our air medical technicians that allow us to do those missions so when we talk about operating in the era of sequestration, day-to-day ops has not been materially affected in air mobility command because we have an active demand signal in afghanistan for all of those capabilities. but it does have an insidious impact over the long term as we train and field our force. >> how are you doing -- how are you making the cuts to make sure even when sequestration hits at the end of it i'm still going to have to get back into

the flying business, how are you making some of the cuts to make sure you're not too gravely impacting that long a range capability. >> seek a balance between what we have to do day to day and the ability to train our force for the future and so our compromise in the last few months has been to address day- to-day ops. so a long-term process of doing that would put us at risk in the out years, a year or two hence that we won't have the capabilities that we need to get the mission done. >> let me go to the lessons learned from iraq and afghanistan this past dozen years of war and how that sort of changed the airlift enterprise and how you guys think about getting the job done. >> i think we have learned several lessons, first of which we can be efficient and effective at the same time. combat effectiveness is our watch word. we are going to get the mission done but looking at the ability to effectively and efficiently manage a network that allows us to supply those capabilities to our forward operating forces is critical to what we do so integrating our commercial partners, integrating airlift with surface movement of cargo

allows us to increase the efficiency and effectiveness of the network. >> one of the key u.s. war fighting discriminatetors is our air mobility, the airlift capacity that we have that's second to nonas well as the air refueling capacity that's second to none and yet my understanding is in war game after war game one of the challenges is a shortage of strategic lift. do we have the right kind of lift assets now to do the kind of things that we expect we may need to do especially in the pacific, say over the next decade? >> i think we've sought a significant balance in that force and how we manage it so the airlift fleet consists largely of our c5 fleet which we are modernizing, adding new engines, new hydraulic systems, a suite of new reliability enhancements to the airplane. it's operating very effectively. that's the c5m. the c17 fleet we just delivered the last airplane production number 223. >> amazingly. >> to charleston on friday.

and amazing -- an amazing machine that has delivered everything that we expected from the airplane and a little bit more. we have learned a lot about the capability of the airplane over the last decade and we continue to exploit that capability in the fight as well as the c130 fleet where we have purchased a balance fleet of modernized h models and brand-new j models. so from a tactical level c130 all the way to the very strategic c5, i think we are in a pretty good place for the numbers of airplanes that bring the mass we need to support our war fighters forward. >> the kc10 aircraft is probably -- is the most capable tanker transport aircraft that we have in the inventory as a mixed capability particularly important in a specific scenario and yet the air force leadership is looking at divesting itself of entire fleet of what are considered specialized aircraft. and there are folks who are concerned a little bit about that. what are the implications of getting rid of the kc10 for you

in the business you are in as well as in the pacific? >> on that point i would make two points. one is the option to look at divesture of the kc10 is one of many options we have had to look at as we examine the consequences of sequestration over the long term. >> including dialing back c130s as well as 135s as well? >> looking at all the streets, yesterday we heard secretary fanning says one of the things we have to address are called vertical cuts. doesn't mean we do them instantaneously, without consideration for the strategic impact. in the case of the kc10 as we look at that option, we look at it in the context of having an active production line in the kc46 which brings to the table several similar capabilities to the kc10, the multirole tanker with the air refueling drones as well as the boom it's air refuelable, it operates more efficiently. so we've had to put all that on the table to make those

considerations as we look at our shift to the pacific. >> but as we look at the 46 which is an aircraft that the air force has high hopes for, the question is whether or not those aircraft are going to be coming online fast enough. you're only looking at about a dozen aircraft a year coming into the inventory and that's before there's change to the production stream and yet the airplane it's replacing is a 1960s vintage airplane that has been modernized over the years but still needs to be replaced. are you going to be getting the new tankers at a pace sufficient to retire the old ones and still maintain your overall capability? >> we believe we will be getting the airplanes at a reasonable pace. the question is what balance do you seek inside of those two inventories, the ck10 -- kc10 which represents about 12% of the fleet and the balance of the fleet with is over 400kc135s and in a way that's efficient. >> how do you stretch your existing capacity on a tight budget with all these pressures? what are techniques you can use to deliver greater capability?

>> some of the techniques we use are to combine our assets together, so for example we move airplanes into afghanistan to resupply the army, we use those very same airplanes in a very efficient scheduling process to do the retrograde of assets that are available to come out of the afghanistan area of operations. half a dozen years ago the efficiency of that process was about 50%, a couple months ago we reached 90% so 90% of the airlines that are moving in both directions are moving full in both directions. those are efficiency numbers that are pretty impressive. >> let me ask you, the last time in the last defense review in 2010 you were the air force lead on that. congratulations. now you're fortunately no longer involved in that business but what i want to ask you is, you know, as you look at this upcoming defense review, what do you think the key issues are and how important will it be for d.o.d. to reconsider its sort of fundamental force planning

construct? >> i think the key goes deeper than the force planning construct. it goes to the question of whether or not we can understand the strategic conditions that we believe we are going to face a decade out and using that vision then shape the thinking of the combatant commanders and the chiefs of staff of the services to do two things, one is to build the war plans that we believe we might be faced with in that threat environment and second distill those into the responsibility to equip the forces that are going to be at the disposal of the war fighting commanders to fight those fights. >> question of the white board. my understanding is the general -- is that general welsh has a board up. the question i've got is, if you look at it from a day-to- day operational standpoint, it's tanker and airlift missions predominantly by the guard and the reserve that constitute the bulk of the operations of the air force on

a daily basis. do you need to reconsider mission mix among the three active guard and reserve at some point in your business? >> i think we constantly review that balance between active guard and reserve participation in the missions of air mobility command. what we found is that in the airlift space about a 50/50 mix works and in the tanker space it's roughly 60/40, about 60% of the nation's capability resides in the garden reserves and we can work that very carefully within that construct to make sure it's available when the war fighters need it. >> thank you very much for your time. >> thank you very much. i appreciate it. up next, how the army is stepping up its cyber games. stay tuned.

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october is cyber security awareness month. in may army chief of staff recommended the formation of a combined cyber center likely to be located at fort gordon, georgia and yet to be approved by army secretary john mccue. it would consolidate the services of electronic warfare division, the ability -- with its broader cyber operations including collection of enemy electronic transmissions. here to discuss the initiative is colonel gym eckball and colonel carpal men chickalees.

welcome back. >> great. >> let me start with you, cyber obviously is a very important field right now. there's a government shutdown going on, a lot of the folks who are in the cyber community are civilians and contractors. what's the impact of the shutdown on your operation? >> well, the army has already furloughed over 150,000 da civilians and they are a crucial part of our team including our cyber team so i don't have the exact numbers on what we have had to give up out of the army cyber command and the network command that defend army networks and the like but they are a big part of our team so we are going to have to cover any of the gaps created by that. >> but there is a little bit of uncertainty in your mind about security at this point or are you pretty confident that you've got a good beat on the problem? >> i'm confident we can step up and fill any of the gaps that we have. >> colonel, let me come over to you. why is it important to consolidate these two career fields -- or i should say the multiplicity of the limits that go into army electromagnetic

spectrum. why is it important to do that? >> it's about mission command. it is of course the art and science that enables a commander to do what he needs on the battlefield in order to achieve victory. and inside of mission command there really are a couple of things. one of them is inform and influence activities, which is a staff task but there are also cyber electromagnetic activities. these two activities together combine to make mission command viable for the commander. so in order to do cyber electromagnetic activities you must have cyber space operations, electronic warfare and electromagnetic spectrum operations all linked to one another and that is why it's important. >> and obviously everything we do is increasingly whether it's on an ipad or radio and all military forces need that for logistics, weather, combat operations, but these career fields also have been historically different and proud to be different because they are very complex, as much art as it is science associated

with it. what are the challenges of bringing everybody together smoothly? >> one of the things the army is looking at is how do we bring this together typically to the centers of excellence. we have eight events to consolidate 32 schools. chief of staff recommended to the tray dot commander and to the secretary of the army that we really need to take a look at this and that is why the secretary of the army is considering do we need to have a cyber phase center of excellence, where will it be and what will it look like? >> and the training and document command tray dock, that's the organization that makes sure it's doing this. one of the challenges, though, is that you guys are geographically distributed, fort sill has an important piece of this. fort meade which is nsa headquarters, there's an element there. there's fort sill, fort leavenworth in kansas as well.

how does it work in the event it ends up at fort gordon, how does this entire system work? >> there will be organizations that consolidate wherever the center of excellence is, if it's fort gordon, it's fort gordon. i don't think that everybody will universally move. fort sill does the electronic warfare training as you just described. i don't know that that school needs to physically move in order for that to still continue on. it would still be under the purview of this cyber center of excellence. >> we are also talking about ultimately creating a new career field that is a little bit more consolidated than it would be now. how is life going to change for the troopers out there who are doing these jobs? >> i think that when you look at the two major contributors, two will be the intelligence community who has stood up the 35 quebec series and they are the intelligence community cyber security -- i'm sorry, cyber space experts and they are the ones who are developing that and so there's really going to be a lot of very good

opportunities to support the joint mission force as well as the services in the coming years to develop that skill. so really they will have opportunities to specialize and to grow and then likewise on the signal side we are developing an military occupational specialty so that signal soldiers will also have that ability and primarily focusing on the defensive side but eventually merging of all skills. >> what about on the electronic warfare side? >> the officers are learning how to integrate all pieces of seema, so that would be cyber space -- and so they are learning how to be the integrators of that. >> you're also looking at modernization programs, chiefly one of them is the integrated electronic warfare system. give us an update on the program. >> recently the electronic warfare planning and management tool has achieved what we call milestone b which means it's

moving in the acquisition process to eventually be fielded. don't know when that fielding is going to occur at this point. it is on schedule currently to be fielded in fy15 but of course that will still anyone on how the -- depend on how the -- >> and there are a lot of budgetary challenges ahead. gentlemen thank you very much. best of luck. we look forward to having you back to update us on this important field. >> thank you. coming up, my notebook. we wwhen we realized we'd ome left gear behind. rain

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government shutdown that doesn't appear likely to end anytime soon offers pentagon leaders time to reconsider their budgetary future. the side show that prompted the shutdown is positively meaningless compared to the coming battle to raise america's borrowing limit and keep it from defaulting for the first time in its history. those who believe such a default are living in a dangerous reality, flirting with default in 2011 prompted a downgrade in u.s. credit rating that cost trillions of dollars in lost wealth, an actual default would trigger a global economic catastrophe, damaging credibility and interest worldwide. another debt for us would also increase u.s. borrowing cost making debt more expensive, further pressuring government spending including defense. insiders say defense spending and entitlements will be bargaining chips in any deal. the reality is even when sequestration and adjusted for inflation, d.o.d. spending is still $75 billion higher than it's historic bottom over the last four spending cycles and if there's

one thing that politicians know is where to find money if they need t that's trouble for a pentagon -- need it, that's trouble for a pentagon struggling to come up with billions of dollars in additional cuts. get ready for another stickup. thanks for joining us for "this week in defense news." i'm vago muradian. you can watch this program online at defensenews.com or you can e-mail me at vagodefensenews.com. i'll be back next weekend at the same time. until then, have a great week. we wwhen we realized we'd ome left gear behind. rain we were up the creek without a paddle.

i mean, we literally needed paddles! campbell had left 'em in his garage. thankfully i had my navy federal credit union credit card on me, so we got new paddles and earned cash back. next time we'll remember the paddles. seriously? and forget campbell. 4 million members. 4 million stories. navy federal credit union.

the global biotech industry has raised -- who is being left out? this week biocentury's fourth quarter investment review. i'm eric pierce. welcome to "biocentury this week." >> your trusted source for biotechnology information and analysis, "biocentury this week." biotech is living a tale of two cities, it is the best of times for established companies and it is the worst of times for startups. the biotech bull market of 2013 hasn't slowed down. the jobs act and optimism about fda have fueled record setting ipo investing. mature biotechs are getting a double boost, stock prices going up and they are attracting new investment. on the flip side things aren't looking so good for the new generation of biotech inexcavators -- innovators. first time lifetime investments

by venture capital firms is close to a 20-year low, this according to the money tree survey from the accounting and advisory firm of pwc pricewaterhousecoopers. today we asked 2vcs and an investment banker to analyze the biotech funding system and pre ticket where it's heading -- predict where it's heading in the final months of 2013. we welcome ed mathers, jonathan less of deerfield management, and jamie streater of council and company -- cowen and company. this is a robust market. are biocentury -- bested the genomics bubble level last week. how good is it from your chair? >> well, candidly it's once in a generation market. we haven't seen anything like this for at least 12, 15 years and i think it's going to continue and i think candidly it's actually a