Chapter 24
DEFENSE BUDGET
President Clinton's FY 1998 defense budget begins implementation of the FY 1998-2003 Future Years Defense Program (FYDP), the DoD blueprint for ensuring America's security and sustaining the nation's vital global leadership role. The new budget and FYDP strike a prudent balance between immediate military needs, such as high readiness and troop morale, and long-term safeguards, such as procurement and research and development (R&D).
About the time the Department was finalizing the FYDP and FY 1998 budget, intense work began on the Quadrennial Defense Review (QDR). The QDR is a comprehensive reassessment of U.S. military strategy, force structure, readiness, modernization, and infrastructure. Conducting just such a comprehensive review every four years was one recommendation of the Commission on Roles and Missions, and that recommendation was accepted by Secretary Perry. Although the Department was planning its QDR for 1997, Congress in its FY 1997 authorization bill decided to mandate the review, as well as some important details regarding it.
The Department will begin to take account of QDR recommendations as soon as they are approved by the Secretary of Defense. But the first budget to fully reflect the QDR findings will be the FY 1999 budget, which the President will submit to Congress in February 1998.
THE DEFENSE TOPLINE
The President's FY 1998 budget requests $250.7 billion in budget authority and $247.5 billion in outlays for the Department of Defense. Budget authority in FY 1998 is $8.1 billion above the level the President requested for FY 1997, but $2.1 billion below the level finally appropriated by Congress ($252.8 billion). This decline partially reflects the fact that last year Congress added about $10 billion to the President's budget request for FY 1997.
Data include a requested $2.0 billion supplemented appropriations for FY 1997 and a proposal for rescinding $4.8 billion in FY 1997 appropriations.
Funding for programs in the FYDP was based on current estimates of inflation
and the latest program execution information.
| Table 30 |
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| FY 1997 | FY 1998 | FY 1999 | FY 2000 | FY 2001 | FY 2002 | FY 2003 | |
| BUDGET AUTHORITY | |||||||
| FY 1998 Budget | 250.0 | 250.7 | 256.3 | 262.8 | 269.6 | 277.5 | 284.6 |
| Percent Real Growth | -- | -2.3 | 0 | +.2 | +.2 | +.5 | +.1 |
| OUTLAYS | |||||||
| FY 1998 Budget | 254.3 | 247.5 | 249.3 | 255.2 | 256.2 | 261.4 | 276.1 |
DoD budget authority requested for FY 1998 is, in real terms, about 40 percent below its level in FY 1985, the peak year for inflation-adjusted defense budget authority since the Korean War. FY 1985 budget authority of $286.8 billion equates to $414.5 billion in FY 1998 constant dollars.
As a share of America's gross domestic product, DoD outlays are expected to fall to 3.0 percent in FY 1998, well below average levels during the past five decades. Other long-term trends for defense spending are detailed in Appendix B. Requested budget authority by appropriations title and by DoD component, in current and constant (inflation-adjusted) dollars, is also shown in Appendix B.
PRIORITIES IN THE FYDP AND FY 1998 BUDGET
Readiness, People, and Quality of Life
The FYDP and FY 1998 budget continue to give top priority to keeping U.S. forces ready to fight and win. This commitment to force readiness is reflected in strong funding support for training, supplies, maintenance of weapons and equipment, and other preparedness essentials. Since requirements are mostly paid for in the Operation and Maintenance (O&M) accounts of the Services, the sufficiency of these accounts was a crucial concern in the formulation of the FY 1998 budget.
Force readiness also requires taking good care of uniformed people and their families, which in turn requires strong support for quality of life (QOL) issues like pay, housing, and medical services. During his tenure, Secretary Perry placed great emphasis on QOL issues, and that is reflected in the latest defense plans. For example, DoD budget projections fund the full military pay raises provided for under law. The budget also reflects Secretary Perry's continued support for construction and maintenance of family and bachelor housing; cost-of-living allowances; child care; community and family support; and morale, welfare, and recreation programs. These funding increases supplement already strong DoD quality of life programs.
Ensuring force readiness and putting people first are mutually reinforcing goals. On the one hand, enabling U.S. forces to train rigorously and prepare properly for possible future combat is key to preserving the high morale and quality of military people. On the other hand, the quality and morale of men and women in uniform determine -- more than any other factor -- the readiness of America's armed forces.
The Clinton Administration's commitment to ensuring the high readiness and quality of U.S. forces is best measured by the actual preparedness and performance of U.S. forces. When called upon for a wide variety of missions, America's armed forces continue to react swiftly and decisively.
Force Structure and End Strength
The drawdown of U.S. military forces in response to the end of the Cold War is virtually complete. The U.S. force structure is roughly two-thirds of its size when the Berlin Wall fell in November 1989. The Clinton Administration's budgeted force levels are somewhat lower than those proposed by the Bush Administration's Base Force plan. (See Table 31.)
Table 32 shows the decline in personnel strengths since FY 1987, the post-Vietnam War peak for the end strength of both active duty military and DoD civilians. Selected Reserve strength peaked at 1,137,600 in FY 1991. The decrease in DoD civilians reflects reductions in forces and facilities, as well as reforms to streamline defense infrastructure and improve management. Other personnel data is in Appendix C.
| Table 31 |
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| Cold War FY 1990 | Base Force Planb | FY 1997 | FY 1998 | |
| Army -- active divisions | 18 | 12 | 10 | 10 |
| Reserve component brigadesc | 57 | 34 | 42 | 42 |
| Marine Expeditionary Forced | 3 | 3 | 3 | 3 |
| Navy aircraft carriers (active/reserve) | 15/1 | 12/1 | 11/1 | 11/1 |
| Carrier air wings (active/reserve) | 13/2 | 11/2 | 10/1 | 10/1 |
| Battle force ships (active/reserve) | 546 | 430 | 354 | 346 |
| Fighter wing equivalents (active/reserve) | 24/12 | 15/11 | 13/7 | 13/7 |
| a Dual entries in the table show
data for active/reserve forces, except for carriers, which depicts
deployable/training carriers. b Bush Administration's planned FY 1995 force levels, as reflected in the January 1993 Annual Defense Report. c An appropriate equivalent. Includes 15 enhanced readiness brigades. Backing up this force will be an Army National Guard strategic reserve of eight divisions (24 brigades), two separate brigade equivalents, and a scout group. d One reserve Marine division, wing, and force service support group supports the active structure in all cases. |
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| Table
32 (End of Fiscal Year Strength in Thousands) |
||||
| FY 1987 | FY 1997 | FY 1998 | Percent Change FY 1987-1998 |
|
| Active Military | 2,174 | 1,452 | 1,431 | -34 |
| Army | 781 | 495 | 495 | -37 |
| Navy | 587 | 402 | 391 | -33 |
| Marine Corps | 199 | 174 | 174 | -13 |
| Air Force | 607 | 381 | 371 | -39 |
| Selected Reserves | 1,151 | 902 | 892 | -22 |
| DoD Civilians (FTEs*) | 1,133 | 799 | 772 | -32 |
| * Full-time equivalents | ||||
Recapitalization of U.S. Forces
During the years following the end of the Cold War, the Department was able to reduce its purchases of new weapons without undermining the battlefield superiority of U.S. forces. One reason was the modernization achieved during the years of strong defense spending during the 1980s. Moreover, in spite of a sharp decline in procurement funding, the average age of U.S. military equipment did not increase, because as the forces were drawn down, older equipment was weeded out. But now that the drawdown in forces is virtually over, DoD's reprieve from equipment aging is over as well.
To ensure military readiness in the long term, the Department must modernize U.S. forces with new systems and upgrades to existing systems in order to maintain America's technological and qualitative superiority on the battlefield. Over the next several years, DoD will begin a recapitalization of U.S. forces which will be critical to the readiness of U.S. forces in the next century.
In his FY 1998 budget and FYDP, the President retains the goal of increasing procurement funding to $60 billion by FY 2001, a target the Administration established in its FY 1996 budget. By FY 2002, procurement spending is projected to reach $68 billion -- in real terms 48 percent higher than in FY 1998.
The goal of DoD's modernization/recapitalization plan is to ensure a ready,
flexible, and technologically superior force for a changing security environment.
Numerous programs will help preserve America's battlefield dominance by
exploiting information-age technology like advanced sensors, computers, and
communications. The DoD modernization plan reflects several priorities:
DoD modernization plans call for other new systems as well, including the Comanche armed reconnaissance helicopter, F-22 and F/A-18E/F fighter/attack aircraft, the Joint Strike Fighter, V-22 Osprey, Advanced Assault Amphibious Vehicle, LPD-17 Amphibious Transport Dock ship, DDG-51 guided-missile destroyers, and a new attack submarine.
For these DoD modernization programs to be realized, the President's defense topline for FY 1998-2003 must be approved by Congress. It also is critical that Congress support the specific spending allocation proposed for DoD weapons development and procurement and refrain from diverting funds to unrequested uses. Finally, the Department also must achieve its projected savings from infrastructure reductions, most importantly base closings, and from acquisition reform.
The Department's modernization/recapitalization plan is the result of intense assessments by many highly experienced defense leaders. They have produced a balanced, prudent plan to ensure the long-term readiness of U.S. forces well into the 21st century.
Research and Development
The new budget and FYDP support research and development (R&D) funding and programs that will ensure the future superiority of U.S. forces and weapons. Of particular note, the Science and Technology program seeks to foster both established technologies and longer term ones that promise greater military capabilities and/or reductions in costs. The Advanced Concept Technology Demonstration (ACTD) initiative seeks to accelerate the fielding of maturing technologies that are likely to yield high payoffs for U.S. forces.
Streamlining Infrastructure, Improving Management, and Outsourcing
Streamlining the U.S. defense infrastructure (bases, facilities, and support organizations) is a critical part of the restructuring of America's defense posture. It requires both reductions to infrastructure, as well as realignment to achieve optimum effectiveness and efficiency. Major reductions are being accomplished through the base realignment and closure process.
To get the most from every defense dollar, DoD leaders are vigorously pursuing improvements in all major management areas. Of particular note, fundamental acquisition reforms are achieving significant budget savings, as well as exploring applications of world-class practices to accomplish cost and time reductions in the development and production of defense materiel.
The Department continues to work hard to identify which of its functions might be transferred to the private sector without adversely affecting operations. The goal of this outsourcing is to increase efficiency, save money, and enhance efficiency. (See Chapter 13.)
DEFENSE BUDGET ISSUES
Readiness and Contingency Operations Costs
The Department continues to take action to prevent unbudgeted costs of operations like those in Bosnia or Southwest Asia from diverting funds needed for readiness, modernization, and other top priorities. While the Department does its best to mitigate the impact of these diversions, they are still disruptive and counterproductive. Fortunately, Congress has been very helpful in the financing of costs for these operations.
In its FY 1997 defense bill, Congress appropriated $1.3 billion to handle contingency operations costs that were projected at the time of the bill's completion. After that, two relevant developments occurred that now leave the Department facing $2.0 billion in unbudgeted FY 1997 contingency operations costs. First, last September new provocations by Iraq increased the intensity of operations in Southwest Asia. Second, this past November President Clinton decided to have U.S. forces participate in a new phase of operations in Bosnia. To cover these new projected costs, the Clinton Administration is requesting a FY 1997 supplemental appropriation of $2.0 billion.
Also being forwarded to Congress is a request for authority for the Secretary of Defense to rescind $4.8 billion in previously appropriated FY 1997 funds. The goal is to target spending that, in the Secretary's judgment, would not make significant contributions to U.S. military capabilities if spent. About $2.0 billion of these rescissions would be to offset the FY 1997 supplemental appropriations, and $2.8 billion would be to prevent DoD outlays from exceeding its budget targets in FY 1998 and FY 1999.
The FY 1998 budget carries forward the practice, begun last year, of requesting all funding projected to be needed for any operations expected in the new fiscal year. It requests $1.5 billion in FY 1998 for the Overseas Contingency Operations Transfer Account, to complete planned operations in and around Bosnia. Costs of other planned operations, such as Southern Watch in Iraq, are budgeted for in the various DoD account in which those costs are projected to occur.
Unrequested Spending
Each year Congress includes substantial spending in the defense budget that was not requested by the President. This invariably drains money from expenditures that would better enhance the nation's security. Sometimes the additions are for weapons or other uses included in the FYDP, but not planned for inclusion until some time after the budget year. In these cases, the issue is the timing of the expenditures -- not whether the spending is needed. But when the additions are for non-FYDP uses, there is a more clear-cut diversion of funds from the spending requirements determined during the Department's rigorous program and budget review. Unrequested spending is especially damaging when it fails to take account of the future spending that it will generate.
CONCLUSION
Events since the end of the Cold War have demonstrated the need for America to retain a strong global leadership role and a prudent defense posture. President Clinton's FY 1998 defense budget, and the strategy and plans on which it is based, support that need while remaining fiscally responsible.
