Bloomberg News

CIA Director Panetta Gets Senate Nod as Next Defense Secretary

June 22, 2011

June 22 (Bloomberg) -- The U.S. Senate unanimously approved Central Intelligence Agency director Leon Panetta as the nation’s 23rd defense secretary, to wind down wars in Iraq and Afghanistan and improve cyber defenses in a time of budget cutbacks.

Panetta takes his new post on July 1, succeeding Robert Gates, who was appointed by former President George W. Bush and is retiring from government.

Panetta, 72, is a California Democrat who served in the U.S. House of Representatives from 1977 to 1993 and then as budget director and White House chief of staff under President Bill Clinton. He has been CIA director since February 2009, where he oversaw the search for Osama bin Laden and the operation that killed the al-Qaeda leader.

Arizona Senator John McCain, ranking Republican on the Senate Armed Services Committee, praised Panetta’s “extraordinary career of service.”

McCain yesterday urged all senators to vote for Panetta, and they did, 100-0.

Panetta faces three immediate tasks. The first is explaining to Congress and then overseeing President Barack Obama’s initial plan for withdrawal from Afghanistan. Obama is scheduled to announce his decision Wednesday night.

The second is overseeing a strategic review of U.S. military missions as a prelude to a $400 billion reduction in additional defense spending increases through 2023, as promised by Obama.

Cyber Strategy

The third is implementing a new “Cyber 3.0” strategy Deputy Defense Secretary William Lynn is scheduled to unveil by July 1. The strategy refines for military commanders a broad White House policy that equates such attacks with armed assaults on the nation.

Panetta’s experience as chairman of the House Budget Committee and as director of the Office of Management and Budget would position him as defense secretary to implement the president’s $400 billion plan.

Still, “Panetta will have to defend military programs he doesn’t fully understand, which is not a strong position from which to bargain,” said Loren Thompson, a defense analyst with the Arlington, Virginia-based Lexington Institute, who’s followed the nomination.

Economy-Defense ‘Mismatch’

“He knows he can’t resist cuts so strongly that he feeds ammunition to Republican hawks on the eve of a re-election campaign,” he said. “The biggest challenge Panetta faces is that America is generating 23 percent of global economic output but 46 percent of global military spending. This mismatch can’t continue indefinitely and yet few people in the military grasp how big the coming cuts will be,” he said.

Panetta told the Senate Armed Services Committee during his June 9 nomination hearing that “our challenge will be to design budgets that eliminate wasteful and duplicative spending while protecting those core elements that we absolutely need for our nation’s defense.”

Panetta said he shared Gates’s concern “about the possibility of hollowing out our force” through “automatic, across-the-board cuts” rather than careful, program-by-program decisions.

Panetta also warned about viewing defense spending cuts as the solution to the nation’s deficits. “Defense is by no means the causes of the huge deficits we are facing today,” he said.

‘Next Pearl Harbor’

The U.S. faces the “real possibility” of a surprise cyber attack, Panetta told the committee.

“The next Pearl Harbor we confront could very well be a cyber attack that cripples our power systems, our grid, our security systems, our financial systems, our governmental systems,” Panetta told the panel.

“This is a real possibility in today’s world,” he said. “As a result, I think we have to aggressively be able to counter that. It is going to take both defensive measures as well as aggressive measures to deal with it.”

The Cyber 3.0 strategy is intended to refine a military response to such an attack.

The White House on May 17 announced that cyber attacks ranked with military threats against the nation and “when warranted, the U.S. will respond to hostile acts in cyber space as we would with any other threats to our country.”

The strategy states that the U.S. reserves “the right to use all necessary means -- diplomatic, informational, military and economic -- as appropriate and consistent with international law,” to defend itself and its allies.

Army General David Petraeus has been nominated by Obama to succeed Panetta as CIA director.

Editors:

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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