How would you react to an E2 who "smart mouths" you in formation?

Well it would be the last time that The E2 would do that, Because after I have professionally rip a new one in this E2 I would make an example of him for others to see that insubordination and disrespect towards leadership is unacceptable and will not be tolerated and that there is no room for it in our Military.
disciplinary action would follow.
Rehabilitation remedial training and if this does not change the Soldier then after proper documentation separation will follow.

You have to be careful not to compromise yourself in any way. Counsel the individual privately to determine what is going on. His behavior is not "normal." Maybe he is having a really bad day or maybe he is just an insubordinate jerk.

If you learn it is the former, let him know that his behavior will not be accepted and that he must accept some nominal punishment for what he did, but then try to help him through his troubles. Maybe his wife left him, his girlfriend cheated or his dog died. Give him some crappy jobs as punishment.

On the other hand, if after speaking with him privately you find he is just plain insubordinate, escalate the problem to the next higher level of command.

When I was an O-3 we had a similar issue with a new E2. When the issue came to me, I did exactly as I described above, learned he was insubordinate, "could not handle others lling him what to do," and did not belong in the US Navy. I got him an administrative discharge. I was happy, my petty officers (non-coms) were happy, and amazingly he was happy.

Soldiers love their personal time!!! I feel like wasting your time today talking about disrespect. Next time you'll be on that pretty red carpet talking with the Commander about " your money" that you may or may not be getting!

Every NCO, SNCO and officer who would have heard would have been all over his ass the second the words came out of his mouth. I saw only 2 or 3 instances of defiance in the Corps, but when they happened, they were very quickly stamped out. I had a brand new PFC question me once and I had him engage in some 'Incentive Training'. Never had an issue after that.

Article 15, Office Hours. Your are in charge he's the E-2, since when does E-2's tell E-5's what they will not do and shove it. That's disobeying a direct order if he had disobeyed orders in combat many marines would die. Let me tell you a short story while I were on my way to Cambodia., As a Fire Team Leader a marine came to me and told me no way, no how that he were going to fire his weapon in combat, I continued to convince him to do so but he wouldn't budge, and he stated to me as a Fire Team Leader, you all are going to die because I'm not firing that weapon. I reported the incident to the Gunny, the Gunny reported it to the Captain, word came back when the shooting starts, he wanted the whole Fire Team to turn there weapons on the marine and fire.

Being in formation you are either at a position of "attention" or "at ease" or "parade rest". Remind the malcontent that none of those positions includes the the option of talking, unless directed to talk. If that does not work have a private conversation with him/her and remind the idiot of what NCOs are there for. If that doesn't work take the idiot to the company CDR and recommend an article 15/Office Hours. Read him his rights. I had to do this when I was in-charge as a 1LT and a 2LT thought it appropriate to give me some crap in formation. He did that just once.

In my time, that would not have flown. That E-2 would have been on report and looking at an Article 15 of some sort. I fault the change to a "Kinder Gentler" Military starting in basic. The discipline just doesn't seem to be what it was in my time. As an E-2 out of basic, I have a had a lot of work assigned that I didn't like, but did it. When I was aboard ship as an E-3, I found myself filling an NCO billet eventually. That meant that after morning quarters, I would pull the log and hand out assignments. Some things were routine, such as checking Fuel and water. Being Coast Guard, on a shore unit it was a lot of cleaning and painting of the spaces you were responsible for and other routine stuff ( which can be boring ). Aboard ship, I started with the Engines ( Mains and Generators ). That was mostly Just checking the oil and fuel levelas and taking readings everythor whileunder way on Watch ( two 4 hour watches per day ). During the work day ( 0800 - 1600 ) you were doing routine maintainance. I eventually got moved to the BT gang ( Boilers and evaps ). That was pretty much skate duty. That had its moments. Whne you had to open up a Steam Drum and go in and "Punch" tubes. That is dirty, and you are in a very claustrophopic environment. I only had two guys plus myself that were even small enough to get in there. Everybody knew who was going to get the job. Long story short, had the first guy up there working, I went and got my coveralls on and when it came time to relieve him, up I went. Didn't like it as i don't like being in close places, but it cut the amoiunt of time that one man had to stay in there. The other bad one was Fires sides. In that, you remove the cover and crawl into the fire box of the boiler with a steam wand and use to to clean the soot and stuff off the water tubes down there. Now that was really dirty. I would get some grumbling when it came time to do one, but that was it. Nothing serious and it was expected. I didn't like it either. Point is, there are some nasty jobs, and people will grumble, but they have to get done, and do get done. I have never heard anyone say they weren't going to do something.

I read most of these comments which speak of counseling. Counseling? Joined The Corps in 66.
The only counseling we got were the knuckles or boots of our DI's.
When out of MCRD and into the mainstream Corps, many of our E5,E6's and above were from the Korean War and the counseling they would give some insubordinate SOB was a sound ass kicking behind the barracks,
Our CO Gunny was in WWII and Korea and he took absolutely no BS from anyone.
Maybe we need to get back to basics and respond with dipshits who think it has to be their way with some good old fashioned ass thrashing.

Keep your cool first of all. Article 15's still exist after s a very detailed counseling session. If you let him/her get to you and nothing is done, you'll lose some of your other troops. There's also extra duty which could also lead to more discipline but nothing is done over night. Also, try pulling him aside and ask him what's going on. Leaders lead by example and we can't take it personal.

Pull them out of formation and have a private discussion of what is in their head, see if they need medical or psychological help. Send them to get evaluated. Take further action depending on results.