A bill to provide for interagency tabletop exercises to assess the impacts of Department of Defense decisions during crises and evaluate United States Government tools available to augment Department of Defense capabilities in competition, crisis, and conflict, and for other purposes.

— 704 — Mandate for Leadership: The Conservative Promise Congress should make the Department of Defense (DOD) a CFIUS co-chair with the Department of Treasury. Making DOD an official CFIUS co-chair along with Treasury will establish a balanced committee process by elevating national security interests to an equal stature. The committee is currently imbalanced toward the interests of corporate America because Treasury is the sole chair of CFIUS and, in practice, runs a process that is not fully transparent and which biases it from the national security interests represented by DOD and the Intelligence Community (IC). For example, Treasury representatives will consult with the Commerce Depart- ment and the United States Trade Representative—which tend to favor permitting covered transactions to occur with little to no mitigation requirements—and these representatives will then obscure the results and purposes of such sidebar meet- ings from DOD and IC representatives. This hampers DOD, IC, and sometimes even State Department representatives from full participation in the process or from advocating national security interests as well as they should. Greenfield Investments. Congress should close the loophole on greenfield investments and require CFIUS review of investments in U.S.-based greenfield assets by Chinese-controlled entities to assess any potential harm to U.S. national and economic security. In the 2018 Foreign Risk and Review Modernization Act (FIRRMA),51 one important category of foreign transactions left out of the bill was greenfield investments, particularly by Chinese state-owned enterprises (SOEs). Greenfield investments by Chinese SOEs pose a unique threat, and they should be met with the highest scrutiny by all levels of government. Greenfield investments result in the control of newly built facilities in the U.S., and they were not addressed in FIRRMA primarily because governors and state governments embrace them. That is understandable; they typically bring the promise of creating American jobs. However, the goal of such Chinese SOEs is to siphon assets, technological innovation, and influence away from U.S. businesses in order to expand the global presence of the Chinese Communist Party. While the Chinese government keeps its domestic markets largely insulated from foreign influence, it regularly invests in the U.S. and other countries under the “green- field” model. Firms fully owned by China’s Communist regime are increasingly buying land, building factories, and taking advantage of state and local tax breaks on American soil. Treasury should examine creating a school of financial warfare jointly with DOD. If the U.S. is to rely on financial weapons, tools, and strategies to prosecute international defensive and offensive objectives, it must create a specially trained group of experts dedicated to the study, training, testing, and preparedness of these deterrents. Recent experience has demonstrated that the U.S. cannot depend on the rapid development and deployment of untested, academically developed finan- cial actions, stratagems, and weapons on an ad hoc basis. — 705 — Department of the Treasury Treasury must also seriously evaluate U.S. foreign direct investment in China. Particular focus should be paid to investments in CCP or other state-owned enter- prises, investments that result in technology transfers from the U.S. to China, investments that enhance China’s military capacity, and investments that pose risks to critical U.S. supply chains by sourcing critical components or feedstocks in China. An enhanced reporting system is warranted, and greater legal authority and restrictions are appropriate. IMPROVED FINANCIAL REGULATION One of the priorities of the incoming Administration should be to restructure the outdated and cumbersome financial regulatory system in order to promote financial innovation, improve regulator efficiency, reduce regulatory costs, close regulatory gaps, eliminate regulatory arbitrage, provide clear statutory authority, consolidate regulatory agencies or reduce the size of government, and increase transparency. Merging Functions. The new Administration should establish a more stream- lined bank and supervision by supporting legislation to merge the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Reserve’s non-monetary supervisory and regulatory functions. U.S. banking law remains stuck in the 1930s regarding which functions finan- cial companies should perform. It was never a good idea either to restrict banks to taking deposits and making loans or to prevent investment banks from taking deposits. Doing so makes markets less stable. All financial intermediaries function by pooling the financial resources of those who want to save and funneling them to others that are willing and able to pay for additional funds. This underlying principle should guide U.S. financial laws. Policymakers should create new charters for financial firms that eliminate activ- ity restrictions and reduce regulations in return for straightforward higher equity or risk-retention standards. Ultimately, these charters would replace government regulation with competition and market discipline, thereby lowering the risk of future financial crises and improving the ability of individuals to create wealth. Dodd–Frank Revisions. Congress should repeal Title I, Title II, and Title VIII of the Dodd–Frank Act.52 Title I of Dodd–Frank created the Financial Stability Oversight Council, a kind of super-regulator tasked with identifying so-called systemically important financial institutions and singling them out for especially stringent regulation. The problem, of course, is that this process effectively iden- tifies those firms regulators believe are “too big to fail.”53 Title VIII of Dodd–Frank gives the FSOC similarly broad special-designation authority for specialized financial companies known as financial market utilities.54 Title II of Dodd–Frank established the controversial provision known as orderly

— 129 — Department of Defense 20. Staff Study, IC21: Intelligence Community in the 21st Century, Permanent Select Committee on Intelligence, U.S. House of Representatives, 104th Congress, 1996, p. 71, https://apps.dtic.mil/sti/pdfs/ADA315088.pdf (accessed February 15, 2023). 21. Ronald O’Rourke, “Great Power Competition: Implications for Defense—Issues for Congress,” Congressional Research Service Report for Members and Committees of Congress No. R43838, updated November 8, 2022, https://crsreports.congress.gov/product/pdf/R/R43838/93 (accessed February 15, 2023). 22. U.S. Government Accountability Office, Defense Intelligence and Security: DOD Needs to Establish Oversight Expectations and to Develop Tools That Enhance Accountability, GAO-21-295, May 2021, https://www.gao.gov/ assets/gao-21-295.pdf (accessed February 15, 2023). 23. The U.S. military has a long history of providing support to civil authorities, particularly in response to disasters but for other purposes as well. The Defense Department currently defines defense support of civil authorities (DSCA) as “Support provided by U.S. Federal military forces, DoD civilians, DoD contract personnel, DoD Component assets, and National Guard forces (when the Secretary of Defense, in coordination with the Governors of the affected States, elects and requests to use those forces in Title 32, U.S.C., status) in response to requests for assistance from civil authorities for domestic emergencies, law enforcement support, and other domestic activities, or from qualifying entities for special events. Also known as civil support.” U.S. Department of Defense, Directive No. 3025.18, “Defense Support of Civil Authorities (DSCA),” December 29, 2010, p. 16, https://www.dco.uscg.mil/Portals/9/CG-5R/nsarc/DoDD%203025.18%20Defense%20Support%20 of%20Civil%20Authorities.pdf (accessed February 15, 2023). 24. U.S. Army, “Who We Are: The Army’s Vision and Strategy,” https://www.army.mil/about/ (accessed February 17, 2023). 25. “[T]he Army’s internal assessment must be balanced against its own statements that unit training is focused on company-level operations [reflective of counterintelligence requirements] rather than battalion or brigade operations [much less division or corps to meet large-scale ground combat operations against a peer competitor such as Russia or China]. Consequently, how these ‘ready’ brigade combat teams would perform in combat operations is an open question.” “Executive Summary” in 2023 Index of U.S. Military Strength, ed. Dakota L. Wood (Washington: The Heritage Foundation, 2023), p. 16, http://thf_media.s3.amazonaws. com/2022/Military_Index/2023_IndexOfUSMilitaryStrength.pdf (accessed February 15, 2023). 26. For background on the USN’s fleet size, see Brent D. Sadler, “Rebuilding America’s Military: The United States Navy,” Heritage Foundation Special Report No. 242, February 18, 2021, https://www.heritage.org/sites/default/ files/2021-02/SR242.pdf, and Ronald O’Rourke, “Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress,” Congressional Research Service Report for Members and Committees of Congress No. RL32665, December 21, 2022, https://crsreports.congress.gov/product/pdf/RL/RL32665 (accessed February 15, 2023). 27. The Joint Capabilities Integration and Development System (JCIDS) is the process by which the services develop and the Joint Staff approves the requirements for major defense acquisitions. See Defense Acquisition University, “Joint Capabilities Integration and Development System (JCIDA),” https://www.dau. edu/acquipedia/pages/articledetails.aspx#!371 (accessed February 15, 2023). 28. The board would seek to balance a mix of active military and civilians with expertise in and responsibility for major acquisitions and former military and civilians with experience in strategy and acquisitions. The proposed composition would include the Vice Chief of Naval Operations as Chairman, with three-star level membership from the Joint Staff, the Navy and Defense Acquisition Executives, and the Naval Sea Systems Command. In addition, there would be four-star retired naval officers/Navy civil servants as members, one each named by the Chairmen of the House and Senate Armed Services Committees, the Secretary of the Navy, and the Secretary of Defense. Finally, there would be a member appointed by the Secretary of the Navy who had previous senior experience in the defense industry. 29. See James Mattis, Secretary of Defense, Summary of the 2018 National Defense Strategy of the United States of America: Sharpening the American Military’s Competitive Edge, U.S. Department of Defense, https:// dod.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-Strategy-Summary.pdf (accessed February 17, 2023), and U.S. Department of Defense, 2022 National Defense Strategy of the United States of America Including the 2022 Nuclear Posture Review and the 2022 Missile Defense Review, https://oldcc.gov/ resource/2022-national-defense-strategy (accessed February 17, 2023). — 130 — Mandate for Leadership: The Conservative Promise 30. U.S. Air Force, “The Air Force We Need: 386 Operational Squadrons,” September 17, 2018, https://www. af.mil/News/Article-Display/Article/1635070/the-air-force-we-need-386-operational-squadrons/ (accessed February 17, 2023). 31. General David H. Berger, Commandant of the Marine Corps, “Force Design 2030,” U.S. Department of the Navy, U.S. Marine Corps, March 2020, https://www.hqmc.marines.mil/Portals/142/Docs/CMC38%20Force%20 Design%202030%20Report%20Phase%20I%20and%20II.pdf?ver=2020-03-26-121328-460 (accessed February 17, 2023). 32. Department of the Navy, United States Marine Corps, “Force Design 2030,” March 2020, https://www.hqmc. marines.mil/Portals/142/Docs/CMC38%20Force%20Design%202030%20Report%20Phase%20I%20and%20II. pdf?ver=2020-03-26-121328-460 (accessed February 15, 2023). 33. Philip Athey, “Here Are Some of the Ways the Marines Are Trying to Improve Retention,” Marine Corps Times, November 15, 2021, https://www.marinecorpstimes.com/news/your-marine-corps/2021/11/15/treat-people- like-human-beings-here-are-some-of-the-ways-the-marines-are-trying-to-improve-retention/ (accessed February 15, 2023). 34. Megan Eckstein, “Marines, Navy Near Agreement on Light Amphibious Warship Features,” Defense News, October 5, 2022, https://www.defensenews.com/naval/2022/10/05/marines-navy-near-agreement-on-light- amphibious-warship-features/ (accessed February 16, 2023). 35. Megan Eckstein, “Marines Explain Vision for Fewer Traditional Amphibious Warships,” Defense News, June 21, 2021, https://www.defensenews.com/naval/2021/06/21/marines-explain-vision-for-fewer-traditional- amphibious-warships-supplemented-by-new-light-amphib/ (accessed February 16, 2023). 36. See Sidney J. Freedberg Jr., “Trump Eases Cyber Ops, but Safeguards Remain: Joint Staff,” Breaking Defense, September 17, 2018, https://breakingdefense.com/2018/09/trump-eases-cyber-ops-but-safeguards-remain- joint-staff/ (accessed March 7, 2023); Dustin Volz, “White House Confirms It Has Relaxed Rules on U.S. Use of Cyberweapons,” The Wall Street Journal, September 20, 2018, https://www.wsj.com/articles/white-house- confirms-it-has-relaxed-rules-on-u-s-use-of-cyber-weapons-1537476729 (accessed March 7, 2023); and Federation of American Scientists, Intelligence Resource Program, “National Security Presidential Memoranda [NSPMs]: Donald J. Trump Administration,” updated March 7, 2022, https://irp.fas.org/offdocs/nspm/index. html (accessed March 7, 2023). 37. U.S. Government Accountability Office, DOD Cybersecurity: Enhanced Attention Needed to Ensure Cyber Incidents Are Appropriately Reported and Shared, GAO-23-105084, November 2022, p. 36, https://www.gao. gov/assets/gao-23-105084.pdf (accessed February 17, 2023). 38. See Paul Evancoe, “Special Operations and the Interagency Team,” U.S.Military.com, https://usmilitary. com/special-operations-and-the-interagency-team/#:~:text=Seldom%20considered%20are%20those%20 other%20government%20agency%20%28OGA%29,response%20and%20consequence%20management%20 to%20name%20a%20few (accessed February 17, 2023). 39. U.S. Department of Defense, Nuclear Posture Review, February 2018, pp. 54–55, https://media.defense. gov/2018/Feb/02/2001872886/-1/-1/1/2018-NUCLEAR-POSTURE-REVIEW-FINAL-REPORT.PDF (accessed February 17, 2023). 40. U.S. Department of Defense, 2022 National Defense Strategy of the United States of America Including the 2022 Nuclear Posture Review and the 2022 Missile Defense Review, pp. 3 and 20. 41. Patty-Jane Geller, “Missile Defense,” in 2023 Index of U.S. Military Strength, ed. Dakota L. Wood (Washington: The Heritage Foundation, 2023), pp. 507–508, http://thf_media.s3.amazonaws.com/2022/Military_ Index/2023_IndexOfUSMilitaryStrength.pdf. 42. Matthew R. Costlow, “The Folly of Limiting U.S. Missile Defenses for Nuclear Arms Control,” National Institute for Public Policy Information Series, Issue No. 505, October 18, 2021, https://nipp.org/wp-content/ uploads/2021/10/IS-505.pdf (accessed February 16, 2023). 43. Forum for American Leadership, “Don’t Hand North Korea a Win in the Missile Defense Review,” January 4, 2022, https://forumforamericanleadership.org/dprk-missile-threat (accessed February 16, 2023). 44. Patty-Jane Geller, “It’s Time to Get Homeland Missile Defense Right,” Defense News, January 4, 2021, https:// www.defensenews.com/opinion/commentary/2021/01/04/its-time-to-get-homeland-missile-defense- right/#:~:text=Restoring%20our%20eroding%20edge%20when,advanced%20technology%20and%20 new%20capabilities.%E2%80%9D (accessed February 16, 2023).

— 110 — Mandate for Leadership: The Conservative Promise there are no general or field-grade officers who served as planners or commanders against a near-peer adversary in combat. 4. Examine the logic of emerging Army concepts about employing massed long-range fires and effects without considering how to gain advantage by closing with and dominating an adversary on land. 5. Recognize that high-intensity land combat operations cannot be sustained through short-term individual or unit rotations in the style of the sustained low-intensity campaigns conducted over the past 20 years. 6. Transform how the National Guard is employed during extended operations short of declared war to preclude back-to-back federal and state deployments of National Guard soldiers in order to stabilize and preserve military volunteerism in our communities. 7. Revamp Army school curricula to concentrate on preparation for large- scale land operations that focus on defeating a peer threat. 8. Address the underlying causal issues driving increasing Army suicide rates, which have surpassed pre–World War II rates and are now eclipsing the rate among civilians. U.S. NAVY As noted at the beginning of this chapter, the U.S. Constitution gives Congress the power to “provide and maintain a Navy.” Inherent in this phrase is a recognition that there is a vital national interest in the maritime environment and that this national interest requires sustained planning and investment. This is as true today as it was almost 250 years ago and will remain true into the future. The U.S. Navy (USN) exists for two primary reasons: to project prompt, sus- tained, and effective combat power globally, both at sea and ashore, and to deter aggression by potential adversaries by maintaining a forward operating presence in conjunction with allies and partners. Today, the People’s Republic of China Peo- ple’s Liberation Army Navy (PLAN) can challenge the USN’s ability to accomplish its mission in the Pacific and Indian Oceans. In the production, employment, and control of maritime forces, the USN must consider the scope and rate of technological change and, where appropriate, adapt its processes and workforce development. In balancing the necessary long-term industrial model of naval platforms against emerging short-term opportunities, the USN must take account of advances that may present vulnerabilities and risks as well as what is assured and secure.