Panetta to Congress: There’s a way out; Sherry Rehman on drone strikes; Two more women begin Corps infantry training; Out this morning: Iranian nuke report; Navy trims its fleet; RIP Stripes’ daily editions in the Pacific, Europe; and more.

Panetta to Congress right now: it’s not No Way Out for the Pentagon. Defense Secretary Leon Panetta is giving what will probably amount to his last major policy speech, right now at Georgetown University in Washington in which he beseeches Congress to do something. The thrust, of course, is the perilous position in which sequestration puts the Pentagon. The speech is his parting shot at Congress, which Panetta says would be responsible for an irresponsible $46 billion abrupt cut that would be a "serious disruption" in programs and a "sharp decline in military readiness," putting 46,000 civilian jobs at risk, widespread furloughs, reductions in Army training and maintenance, "shrinking global Naval operations" and reducing Air Force flying hours and maintenance – all things that would reverberate in the form of shaking a fragile American economy in some of the very states and districts of Congressional members.

Panetta: "We have begun an all-out effort to plan for how to operate under such a scenario, but it is already clear that no good options exist."

He continues, according to his prepared remarks: "My fear is that there is a dangerous and callous attitude developing among some Republicans and Democrats alike that these dangerous cuts can be allowed to take place in order to blame the other party for the consequences. That same attitude led to a government shutdown in 1995 that badly hurt the American people and politically damaged those who were blamed for that crisis. Those who do not learn the lessons of history are bound to repeat the mistakes that were made," he’s saying right now.

"Governing by crisis" is what Panetta calls it. "This is not a way to govern. This budgetary crisis creates uncertainty, it creates doubt and distraction for the men and women who put their lives on the line for us, and it puts at risk our fundamental mission of protecting the American people. And worst of all, it is a self-made crisis."

Read Kori Schake’s piece about how Panetta "won’t face up to his budget disaster," on FP.

Welcome to Wednesday’s edition of Situation Report, where it’s hard not to be creeped out by Kim Jong-il’s homemade propaganda video featuring pirated images of Manhattan under attack while an instrumental version of "We are the World" plays in the background. Follow me @glubold. Or hit me anytime at gordon.lubold@foreignpolicy.com. Sign up for Situation Report here or just shoot me an e-mail and I’ll put you on the list. And as always, if you have a report, piece of news, or tidbit you want teased, send it to us early for maximum tease.

FP’s Rosa Brooks says Obama’s legal rationale for schwacking Americans is so broad you could fly a drone through it. And she’s probably not talking about the little palm sized one that Danger Room just wrote about the other day. Rosa does a spot analysis, "Death by Loophole," of the 16-page white paper leaked this week on the White House’s policy. Rosa: "In and of themselves, each appears uncontroversial — but the sum of the parts amounts to a recipe for legally sanctioned error and abuse."

Once more and with feeling. Two women stepped forward to take the Marines’ tough Infantry Officer’s Course. The E-Ring’s Kevin Baron reports that the women, both lieutenants who recently graduated from the Corps’ Basic School are on deck at the IOC at Quantico, Va. Two other women dropped out of the course last fall after show-stopping injuries. Amos, a pilot, has led the Corps to accept women in combat roles since Defense Secretary Leon Panetta announced last month that women would be formally integrated into combat roles over the next few years. The Corps’ infantry is seen as less than enthusiastic about the change. Amos, speaking to Marines in San Diego this week: "I don’t think there was this overwhelming majority that said absolutely not," he said of the results. "I think from the infantry side of the house, they’re more skeptical of women in infantry. That’s to be expected."

The Navy is trimming its shipbuilding goal. Instead of 313 ships, it will now only build 306, drawing criticism from Republicans who say the Navy is undermining its own plans for the pivot to Asia even as Navy officials say it’s enough to support the current defense strategy. The WSJ quoted Rep. Duncan Hunter, the Republican from California: "I think the Navy is making a mistake here," he said. "As we lose the ability to project force, that diminishes the U.S. role in the world. You simply won’t be able to respond."

The Pentagon will announce some benefits to same-sex spouses. The military will offer housing privileges, access to recreational facilities, and joint duty assignments, but not health care coverage. The WaPo broke the story yesterday that the Pentagon was poised to make the announcement, but Pentagon officials won’t comment. Health care coverage and other benefits can’t be extended to same-sex military spouses because of the Defense of Marriage Act, which defines marriage as being between a man and a woman and covers federal employees. Allyson Robinson, the executive director of the Servicemembers Legal Defense Network, an advocacy group, said despite Leon Panetta’s "strong civil rights record," his unwillingness to extend benefits is "baffling." Robinson: "Anything less than the full extent of benefits available under current law would be an anticlimactic end to an otherwise exemplary record on civil rights."

Put cyber in! The chair of the Congressional Cyber Caucus, Rep. Jim Langevin, the Democrat from Rhode Island, wants Obama to make sure cyber is part of the State of the Union speech this month, Killer Apps’ John Reed reports in a post that includes the letter he sent POTUS.  

Ambassador: the Pakistanis aren’t giving private approval to the U.S. to conduct drone strikes. Pakistan’s ambassador to Washington Sherry Rehman, told a group of reporters at a Christian Science Monitor breakfast that there’s no wink-wink when it comes to U.S. drone strikes inside Pakistan. "Let me assure you that since we have been in government, there has been no quiet complicity, no question of wink and nod," she said at the breakfast.

For years, the Pakistanis have been thought to talk out of two sides of their mouth on drones: publicly and for a Pakistani audience, senior Pakistani leaders lament the use of American drones over sovereign Pakistani territory, but secretly rejoice at the effect they’re having against militants along the border regions. At the same time, there has been much hype about the gradual thawing of relations between the U.S. and Pakistan in recent months. One analyst there told Situation Report that relations are indeed warming. "But the fundamental areas of disconnect remain intact," Moeed Yusuf, the senior Pakistani expert at the U.S. Institute of Peace, said by phone last night from Pakistan. Nuclear issues, India, and drones remain an issue for the Pakistanis, he said. "At best, I think you’re going to have a troubled friendship, and drones remain one key sticking point."

This morning the Arms Control Association is releasing "Solving the Iranian Nuclear Puzzle," an overview of Iran’s nuclear history, the status of its nukes program, sanctions, military options, and the history of diplomatic efforts to prevent a nuclear-armed Iran. The report finds that international sanctions have "slowed Iran’s nuclear program and increased pressure on Tehran to respond more favorably to P5+1 overtures," according to an advance copy provided to Situation Report. "Yet these sanctions, even if tightened further, cannot stop Iran’s nuclear pursuits." And the military option isn’t one, not really: "The use of military force against Iran’s extensive and highly dispersed nuclear infrastructure, short of a complete military occupation of the country, can only temporarily set back Iran’s program and would likely prompt Iran to eject the IAEA inspectors and actively pursue nuclear weapons."

From the conclusion: "Consequently, the military option would be counterproductive and costly, and would foreclose diplomatic options, erode international support for sanctions, lessen Iran’s isolation, and possibly trigger a regional war leading to enormous civilian casualties and human suffering…. Pursuing a diplomatic solution will continue to be difficult, but remains the best option on the table to prevent a nuclear-armed Iran. With greater flexibility and creativity, a deal that addresses the most urgent proliferation risks — including enrichment to 20% levels — is within reach."

Stars and Stripes is going to five days for some editions. Publisher Max Lederer told Situation Report yesterday that the Europe and Pacific editions of Stripes, begun in 1942 and 1945 respectively, will cease publishing seven days a week and begin a Monday-through-Friday schedule starting this week. This Friday’s edition will be double the normal, 40-page book to accommodate the extra content — namely lifestyle, commentary, and other sections that were normally published over the weekend. Not surprisingly, Lederer blamed a declining readership that has more options.

"It’s a hard decision anytime you go from a daily to something less," Lederer told Situation Report, saying more readers are migrating to digital publications. That will hopefully include his own. By the end of this month, Stripes will launch a new daily iPad edition. The savings from not having staff producing a daily publication for the Europe and Pacific editions will be reinvested in the iPad product, he said. "There is dwindling readership and therefore dwindling revenue in the daily paper as more people have more options to spend their time," he said. As recently as a few years ago, the Sunday paper was the biggest seller. Today it is one of the lowest. Stripes’ "readership" — not circulation per se — is about 325,000 per day. The U.S. edition will remain a weekly and the Middle East edition of Stripes will continue to be published seven days a week, Lederer said.

And next week Defense News will replace the weekly edition it has published overseas with the new "Defense News International," which will come out every other week now, we’re told. Defense News will continue to publish weekly for domestic audiences.

Heritage hands Rand Paul a mic today. Sen. Paul, the Republican from Kentucky, will talk national security and "his vision of a foreign policy that respects the plain language of our Constitution, the legal powers of Congress and the important role of a strong presidency," according to a Heritage release. "He will stress the need for maintaining the strongest national defense among nations while also questioning what constitutes actual ‘defense.’" This morning at 11 a.m. at Heritage.

Noting

• Middle East Times: Ahmedinejad humiliated by shoe attack as Cairo visit sours. 
• The Iran Primer: What is Iran’s strategy at new talks? 
• Global Post: Turkey bombing lifts lid on leftist militants. 
• Afghanistan Analysts Network: Ustad Atta for president?
• Duffel Blog: Patriotism, Jeep sales skyrocket after Superbowl ad. 
• AFP: U.S., Egypt defense chiefs back security ties. 
• Rashmee Roshan Lall:Could a pirate ever be a poster boy for the U.S. government?