Association of the Unite� States Army
Army Budget Fiscal Year 1995
An Analysis
May 1994
Institute of Land Warfare
Association of the United States Army
Army Budget Fiscal Year 1995
An Analysis
May 1994
Institute of Land Warfare
COMPILED BY THE STAFF OF THE AUSA INSTITUTE OF LAND WARFARE
May 1994
Reproduction of this report, in whole or in part
is authorized with appropriate acknowledgement of the source.
ASSOCIATION OF THE UNITED STATES ARMY
2425 Wilson Boulevard, Arlington, Virginia 22201-3385 (703)841-4300
CONTENTS
GLOSSARY ........................................................................................................................ vi
INTRODUCTION ............................................................................................................. vii
THE FEDERAL BUDGET ................................................................................................ 1
General. .......................................................................................................................... 1
Framework for Defense .................................................................................................. 3
THE DEPARTMENT OF DEFENSE BUDGET .............................................................. 5 General .............................. ............................................................................................ 5
Formulation of the FY 1 995 DoD Budget. ..................................................................... 6
Budget Numbers ............................................................................................................ 6
Bottom-Up Review (BUR) ............................................................................................ 7 Force Structure and Manpower ...................................................................................... 7
Manpower . . . ................. .......................................................................................... 8 Readiness . . . . . . . . . . . ............................. . ... . . . . .................... . . . . . . . . ........................................... 8 Modernization ............................................................................................................... 1 0
RDT&E ................................................................................................................ 11 Procurement. ................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................. . . . . . 12
Ballistic Missile Defense ............................................................................................... 13 Strategic Mobility ......................................................................................................... 14 Military Construction and Family Housing .................................................................... 14 Other Budget Considerations .................................................................... .................... 15
Environment .. ....................................................................................................... 15 Infrastructure and Base Closures ........................................................................... 15 Acquisition Reform ............................................................................................... 16 Masking Defense Costs ......................................................................................... 16
Key Factors Affecting Future Budgets: .......................................................................... 17 Roles and Missions Commission ............................................................................ 17 Future Years Defense Program (FYDP) ................................................................ 17
Defense Outlook ........................................................................................................... 18
THE ARMY BUDGET ..................................................................................................... 19 Army Budget Trends and Patterns ................................................................................. 19 Army Budget Breakout for FY 1995 ............................................................................. 21 Strategic Construct. ...................................................................................................... 21 Structure ....................................................................................................................... 22 Manpower ..................................................................................................................... 25
Drawdown ............................................................................................................ 25
Pay Costs .............................................................................................................. 26
Recruiting ............................................................................................................. 27
Training ........................................................................................................................ 27 Readiness ...................................................................... .................... ........................... 28 Operation and Maintenance (O&M) .............................................................................. 28
iii
The Legacy of FY 1994 .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 O&M for FY 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. 29
Modernization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .......... 30
Procurement. . . . .... .. . . ... .... . . . . . . ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Aircraft ................................................................................................................. 33 Missiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Weapons and Tracked Combat Vehicles (WTCV) ........... . . . . . . . .. . . . . . . . . . . . .... . . ... . . . . . .. . . 35 Ammunition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Other Procurement Army (OPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Research, Development, Test and Evaluation (RDT &E) .... ... . . . .... . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . 40
Military Construction and Family Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Military Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Family Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Strategic Mobility ... . . . . . . . . . . . . . . . . . ...... ....... ......... ...... . . .... . . . ... . .. . . . . .... .. ..... . . . ... . . . . ... . . . .... . . ..... 44 Other Budget-Related Items .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Chemical Demilitarization . . . . . . . . . . . . . . . . . . . ...... . ...... ...... ........... .... .. .... . ....... . ... . . . . . . . . . . . . . . 44 Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . ..... ................................ . . . . . . . . . . . . . . . . . . . . 45 Infrastructure and Base Closures ....... . . . ... ............... .. . . ..... ...... . . . . ... . . ... . . . . . . . . . . . . . . . . . . . . 46
Reserve Components Summary ..... .............. . ..... . . ..... . . ..... . . ..... . ..... . . . ... . . . . ... . . . . . . . . ... . . . . .... . 46 U.S. Army National Guard .. . . . . .... . ..... ... ... . . . . . . . ... .. ................................ . ............. .... 46 U.S. Army Reserve ......................... . . . . . . . . . . . . . ..... . ...... ....... . . . ... . . . .... . . . . . . . . . . . ... . . . . . . . . ... 47 Additional Notes on the Army RC Program .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . . . . . . . 47
An Assessment of the Army Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49
APPENDIX I
Budget Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .... .. ... . . . . . . . . . . I-1
APPENDIX II FY 1995 Army Budget Summary/Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . II- 1 Operation and Maintenance Army Budget Summary Data .. . . . . . .................................. II- 3 Procurement Budget Summary Data ................................ . .... . ...... . ..... . . .... . . . . ... . . ... ... . . . II- 5 Research, Development, Test and Evaluation Army Budget Summary ..... . . . . . ... . . ..... . . IT-10
TABLES
1. Outlays, Receipts and Deficits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. National Defense Topline . . . . . .... . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . . . . . . . . . . . 5 3. DoD FYDP vs. Topline . . . . . . . ... . . . ....... ... ... .. . . . ....... .. ... . . . .... . .... . . . ................. . . . . .. . . . . . . . . . 6 4. Budget Authority by Title . . . . . . . . . . . . . . . . . . . . . ... . . ... . . . . ... ....... . ... .... ... ...... . . ... . . . . . ... . . . ......... . . 6 5. Budget Authority by Pay and Nonpay Categories ................................................... 6 6. Force Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . .......... . . . . . . . . . . . . . . . . . 8 7. Operational Training Rates . . . . . . . . . . . . .... .. . . . . .. . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 9 8. RDT&E Profile for FY89 to FY95 . . . . . . .. . . .. ... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ........ ..... .. 1 1 9. Selected Programs RDT&E .. . . . ........ .... . . . . . . . . . . . . . . . . . . . . ..... . . ..... . . . . . ... ........ . . . . . . . . . . . . . . . . . . l1
10. Selected Procurement Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . ....................... . . . . . . . . . . . . . . . . ...... ... 12 11. Ballistic Missile Defense............... . . . . . . . . . . . . . . . . ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12. National Defense Sealift Fund . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 13. Military Construction and Family Housing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........... ... ........... . .... 15
iv
14. Army Budget Summary . . . . . . . . . . . . . . . . . ...... . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . ... . . . . .... . . . . . . . . . ... . . . ...... 19 1 5 . Total Obligational Authority Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 16. Combat Force Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 17. A Shift to CONUS ............................................................................................... 23 18. Army End Strength . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 19. Army Military Personnel Costs . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. ... .. . . . . . .. .. ... . .. ... ... . . .. . . . . . . . . . .... ... . 27 20. Army Operation and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 21. Procurement Summary by Appropriation .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . .. ........ 32 22. RDT&E Summary by Budget Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 23. Army Military Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . ... .. . 43 24. Army Family Housing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 25. Chemical Agents and Munitions Destruction, Defense ........................................... 44 26. ARNG Budget Summary . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 27. ARNG Force Structure and Manning Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 28. USAR Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 29. Army Reserve Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
FIGURES 1 . FY 1995 Federal Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. Domestic Discretionary, Defense and Mandatory Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 . Defense Outlays as a Share of GDP . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4. Defense Outlays as a Share of Federal Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 . 1995 DoD Budget by Service ......... .................... ........ ............. ................................ ? 6. DoD Manpower Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7. Procurement Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 8. Army Real Growth Trends FY70-FY95 ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . 20 9. Army Dollar Resource Trends . . . . . . . . . . ..... . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10. Army Program Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 1 1 . Force Closure Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 12. Division Stationing by the End of FY95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1 3 . The Army Engaged (as of April 1 994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 14. Army Active Component Personnel Strength FY93-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 15. Army Reserve Components Personnel Strength FY 93-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1 6. Army Civilian Personnel Strength FY 93-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 26 17. Procurement Funding Profile ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 18. Aircraft Procurement. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . ..... . . . . . . . . . . . .. . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . 33 19. Missile Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 20. WTCV Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 21 . Ammunition Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 22. Other Procurement. . . . . . . . . . . . . . . . . . ...... . . . . . . . . . . . . . . . . . . . . .... .. ... .. . . .. ....... .. .. . . ..... ..... .. ... .. ... ... 39 23. Army RDT&E Funding Profile ..... . .. ... ........................ ........................................... 40 24. Environmental Funding (Total Army) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
v
GLOSSARY
AFAS Advanced Field Artillery System MRC Major Regional Conflict
AFH Army Family Housing MSE Mobile Subscriber Equipment AGS Armored Gun System MSL Missile ARNG Army National Guard MYP Multiyear Procurement ASM Armored System Modernization NBC Nuclear-Biological-Chemical BA Budget Authority NFIP National Foreign Intelligence Program BA 1 Budget Activity 1 NG National Guard BA 2 Budget Activity 2 NMD National Missile Defense BA 3 Budget Activity 3 NTC National Training Center BA 4 Budget Activity 4 O&M Operation and Maintenance BAT Brilliant Anti-Armor Submunition OPA Other Procurement-Army BMAR Backlog of Maintenance and Repair OPTEMPO Operating Tempo BMD Ballistic Missile Defense OSD Office of the Secretary of Defense BMDO Ballistic Missile Defense Organization PAC Patriot Advanced Capability BRAC Base Realignment and Closure PIP Product Improvement Program BUR Bottom-Up Review POMCUS Prepositioning of Materiel Configured C2 Command and Control to Unit Sets C3 Command, Control and Communica-
RC Reserve Component tion
RCAS Reserve Component Automation CINC Commander in Chief
System CONUS Continental United States
RDA Research, Development and Acquisition CTC Combat Training Center
RDT&E Research, Development, Test and DA Department of the Army
Evaluation DERA Defense Environment Restoration
ROTC Reserve Officer Training Corps Account
DoD Department of Defense RPM Real Property Maintenance
ED Engineering Development SAD ARM Sense and Destroy Armor
EMD Engineering and Manufacturing S&T Science and Technology
Development SATCOM Satellite Communications
ERINT Extended Range Interceptor SAW Squad Automatic Weapon
FARV Future Armored Resupply Vehicle SOF Special Operations Forces
FY Fiscal Year SSB Special Separation Benefit
FYDP Future Years Defense Program STARS Surveillance Target Attack Radar
GDP Gross Domestic Product System
HMMWV High Mobility Multipurpose Wheeled THAAD Theater High Altitude Area Defense
Vehicle TMD Theater Missile Defense
HIV Human Immunodeficiency Virus TOA Total Obligational Authority
JCS Joint Chiefs of Staff TSSAM Tri-Service Standoff Attack Missile
LAM Louisiana Maneuvers USAR United States Army Reserve
MCA Military Construction-Army V SI Voluntary Separation Incentive
MLRS Multiple Launch Rocket System WTCV Weapons and Tracked Combat Vehicles
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INTRODUCTION
This year's defense budget is the product of several converging thrust lines: the administration's plan to reduce military structure and costs while maintaining modem forces; the Bottom-Up Review's vision of a military strategy which could effectively handle two nearly simultaneous major conflicts, plus peacekeeping missions and missions short of war; and a total defense package within a preset but declining fiscal top line through 1 999.
The FY 1 995 budget analyzed here is simply the first step on the way to the 1 999 objective.
Several major questions loom: Are the forces now projected adequate to meet the future requirements spelled out in the Bottom-Up Review? Will the dollars be made available over the next five years to meet modernization demands, even with the reduced force? While the administration contends all this can be done if assumptions hold, there are other serious challengers who say that we are simply cutting too much, too fast.
There is very little slack if the assumptions are not valid or are overtaken by events, and the probability of this is very high.
What is sadly lacking for proper analysis of this budget and the five-year plan that accompanies it is a clear statement of national military strategy derived from an equally clear statement of national security policy. With such statements, we could judge and debate security needs much more intelligently. What we are now using is the vision of military strategy from the Bottom-Up Review. This, by itself, lacks the depth and legitimacy to make all the important decisions that commit major defense resources into the next century.
All the military departments share concerns for the future, i.e., the apparent gap between future capabilities and future mission requirements, and the uncertainty of future funding, particularly investment and modernization. The Army is particularly vulnerable in both respects.
Focusing on the Army, over the next five years it will face a modernization crisis unless adequate funding is forthcoming. By all comparisons, the Army is running a poor third in relation to the other military departments. The Army's research, development, test and evaluation and procurement combined is only 14 percent of the DoD total. The adequacy of future Army forces directly depends on maintaining technical superiority; the existing research, development and acquisition (RDA) funding levels of $11 billion or less per year will not get it there. It is my judgment that about $3 billion more per year is needed to meet minimum Army RDA needs into the next century.
In the meantime, Congress is debating the FY 1995 budget. Facing real uncertainties with respect to the nation's security policy and needs over the next few years, Congress should avoid making major changes or cuts in the President's budget. It should especially refrain from imposing future outlay cuts without a program rationale. This simply mortgages the future without considering the resulting force implications.
May 1994
Jack N. Merritt General, USA Retired President, AUSA
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---------------------------------------------------------------------------------,
THE FEDERAL BUDGET
GENERAL
The proposed federal budget for FY 1995 reflects outlays of $ 1 .518 trillion, FY 1995 estimated receipts of $1 .342 trillion and an estimated deficit of about $ 1 76 billion.
The state of the national economy and deep public concerns over deficit spending are driving federal policy through the budget. The FY 1 995 budget is just one segment in a series through the rest of the decade and it is necessary to look at the full fiveyear extension. This is the span considered by Congress in the Budget Resolution. The FY 1995 Budget of the United States Government with extensions through 1 999 is shown in table 1 .
4.4 percent and o n 10-year Treasury notes at 5.8 percent; and overall real growth in the Gross Domestic Product (GDP) from three percent initially, but slowing somewhat to about 2.5 percent by 1999. These assumptions, however, are now the best bases for macro projections.
How does all this affect national security and defense spending, both for FY 1995 and beyond? First, let us look at where the outlays are expected to go for FY 1995 (see figure 1 ).
When Congress addresses possible tradeoffs or reductions to improve the deficit situation, the only flexible part of the federal budget over which they have direct control is that segment called discretionary spending. This is the part Congress must ap-
Table 1
OUTL AYS, RECEIPTS A ND DEFICITS ($ billions*)
FY94 FY95
Outlays 1,484 1 ,5 1 8 Discretionary (550) (542) Mandatory (730) (763) Interest (203) (21 3)
Receipts 1 ,249 1,342
Deficit 235 176
*Numbers may not add due to rounding.
Source: Budget of the United States FY 1995
It should be noted that the above numbers reflect no changes resulting from a new health care plan. Also, the estimates are based on certain economic assumptions which could vary, to include: a consumer price index ranging from 3.0 percent in 1994 to 3.4 percent in years 1997 to 1 999; interest rates on 91-day Treasury bills ranging from 3.8 to
1
FY96 FY97 FY98 FY99
1,584 1,660 1,738 1,830 (544) (544) (548) (554) (8 15) (88 1 ) (945) ( 1 ,021 ) (225) (235) (245) (255)
1 ,410 1 ,480 1,55 1 1 ,629
173 1 8 1 187 201
prove and appropriate on a regular basis. Altogether, this represents about one-third of the budget today, but it is a decreasing share as mandatory costs rise. The current ratios are 35 percent discretionary, 14 percent interest on the federal debt and 51 percent mandatory. By 1999 they are expected to change to about a 30: 14:56 ratio.
Fig. 1. FY 1995 Federal Outlays
DEBT INTEREST 14%
Mandatory Spending
ENTITLEMENTS 50%
$1.52 Trillion
17%
INTERNATIONAL 1%
Discretionary Spending
r---- DEFENSE 18%
Source: Budget of the United States FY 1995
Discretionary spending is where the action is played, and about half of the discretionary spending in the budget is attributed to defense. Any initiatives to cut outlays overall or to beef up other domestic programs would clearly target defense and,
furthennore, would be applied to defense budgets
which are already programmed on a downward slope
in real tenns. Trends in mandatory, domestic discre
tionary and defense outlays as projected through
1999 are shown in figure 2.
Fig. 2. Domestic Discretionary, Defense and Mandatory Outlays
40
20
0
-20
-40
% Cumulative Real Changes FY 1990 - FY 1999
································•·························································· ·································
Domestic Discretionary
Spending Increases 12%
Defense Outlays Decrease 35%
I····································································································· ·······················
Source: Budget of the United States FY 1995
2
FRAMEWORK FOR DEFENSE
Defense spending has gone down some 35 percent in real (inflation-adjusted) terms since FY 1985. This will probably increase to about 40 percent by FY 1 999.
Figures 3 and 4 show the relationship of defense spending, in outlays, as a share of the GDP and as a share of federal spending. Figures for FY 1 994 and beyond are estimates. Both of these will represent the lowest percentages for defense since pre-World War II.
Fig. 3. Defense Outlays as a Share of GOP
12
10 fi------------------· ·····---------··············· -----·············--- ----········ ·-··-·--------· ···········-----··············· ··-----------·········· ··· ·--··--··········
1-z 8 w () 0:: w 6 a..
4
2
0 50 55 60 65 70 75 80
FISCAL YEARS
85 90 95
Source: Budget of the United States FY 1995
Fig. 4. Defense Outlays as a Share of Federal Outlays
50
1-z 40 w ()
ffi 30 a..
20
10
0 50 55 60 65 70 75 80
FISCAL YEARS
3
85 90 95 99
So urce: Budget of the United States FY 1995
Congressional caps have been placed on total discretionary spending, of which defense spending is about half, but there is no longer the "firewall" barrier that existed from FY 1991 through FY 1993 precluding the diversion of defense funds for other purposes. This leaves defense in a vulnerable position in which the budget could shape future national military policy.
Congress has (as of May 12) completed its reconciliation of the FY 1995 Federal Budget and, by
- -· --
=· ---------------------------
4
vote of both houses, approved a $1 .518 trillion budget in terms of outlays. The allocation for national defense was $270.7 billion in outlays.
This action is directive to the rest of Congress but does not need the President's signature. Further suballocations must be made by the Appropriation Committees. While this establishes broad spending limits, it is not binding on specific programs.
---- -
__ = --------
THE DEPARTMENT OF DEFENSE BUDGET
GENERA L
The Department of Defense(DoD) budget (often identified as the Pentagon Budget) represents 95.6 percent of the total national defense funding. National defense also includes about $11.5 billion for Department of Energy military activities and certain other military-related activities such as the Federal Emergency Management Agency (FEMA).
The FY 1995 budget request is now before Congress and was accompanied by the required five-year projection (through FY 1 999).
An overall display of national defense top line figures in terms of budget authority and outlays is contained in table 2.
Both budget authority and outlays are important. Budget authority is the language of congressional appropriations and provides legal authority
to obligate these funds for buying goods and services, including pay for military and civilian personnel. Outlays, on the other hand, are the actual payments made in any particular year.
Outlays are important because these payments are dollar outflows which impact directly on the deficit. They are the key considerations in setting budget caps. In defense, with heavy investments which spend out over a period of time, about 35 percent of the outlays in any particular year are based on prioryear contracts (or obligations). Only pay and operating costs can provide a high percentage of outlays during the first year of obligation. If outlays have to be curtailed with a short planning lead time, this invariably hits current operations, since pay is usually fixed in the near term.
Unless otherwise indicated, the rest of this section on the DoD budget will be in terms of budget authority.
Table 2
NATIONAL DEFENSE TOPLINE (Current$ billions)
FY94 FY95 FY96 FY97 FY98 FY99 Budget A uthority
DoD Military 249.0 252.2 243.4 240.2 246.7 253.0 DoE and Other 1 1.9 1 1.5 11.9 1 1 .8 12.0 12.1 Total National Defense 260.9 263.7 255.3 252.0 258.7 265. 1 % Real Change -9.0 -0.9 -5.9 -4.0 -0.2 -0.3 (adjusted for inflation)
Outlays DoD Military 267.4 259.2 249.1 244.6 244.7 245.5 DoE and Other 1 2.5 1 1.5 1 1 .9 1 1 .8 11.9 12.0 Total National Defense 279.8 270.7 261.0 256.4 256.6 257.5 % Real Change -6.0 -5.2 -6.4 -4.5 -2.7 -2.4
Source: DoD
5
FORMU LATION OF THE FY 1995 DOD BUDGET
The FY 1995 budget reflected the results of the Bottom-Up Review directed by then Secretary of Defense Les Aspin. This generated the concept of the two almost simultaneous rna jor regional conflicts (MRC) with other requirements for humanitarian activities and peacekeeping, as well as domestic missions. From this, the force structure and manpower criteria through FY 1999 were developed.
FY 1995 is the first step in the five-year journey to the new 1999 objectives. Congressional action of the prior year (FY 1994) budget and continuity with FY 1994 were also key factors. Radical changes were avoided. Overall sizing of the FY 1995 budget, however, was already dictated by the administration's imposed budget cap.
When the budget was prepared, adjustments were made in the Future Years Defense Program (FYDP) through FY 1999. These figures were provided with the budget. It was acknowledged, however, that the costing of the revised FYDP through FY 1999 was about $20 billion higher than established ceilings during this same period (see table 3). How this will be absorbed is still to be determined.
Table 3
DOD FYDP VS TOPLINE (Current$ billions)
Cumulative FY96-
FY95 FY99 Budget A uthority FYDP 252.2 Topline 252.2
Funding Difference
Source: DoD
BUDGET NUMBERS
1 ,003.4 983.3
20.1
A breakout of the DoD FY 1995 budget in several different configurations is reflected in tables 4 and 5 and in figure 5.
6
Table 4
BUDGET AUTHORITY BY TITLE ($ billions*)
FY93 FY94 FY95
Military Personnel 76.0 70.8 70.5 Operation & Maintenance 89.2 88.0 92.9 Procurement 52.8 44.5 43.3 RDT&E 38.0 34.8 36.2 Military Construction 4.6 6.0 5.0 Family Housing 3.9 3.5 3.3 Other 3.0 1 .5 0.9
Total 267.4 249.0 252.2
*Numbers may not add due to rounding.
Source: DoD
Table 5
BUDGET AUTHORITY BY PAY A ND NONPAY CATEGORIES
($ billions*)
Pay Civilian Payroll Active Military Pay Retired Pay Accrual Other Military Personnel
Total Pay
Nonpay O&M Excluding Pay Procurement, RDT &E
and Construction Total Nonpay
Total DoD
FY94 43.3 49.2 1 2.1
9.4 114.1
FY95 41.6 48.4 11.9 10.2
112.1
52.9 59.1
82.0 80.9 134.9 140.1
249.0 252.2
*Numbers may not add due to rounding.
Source: DoD
Fig. 5. 1 995 DoD Budget by Service (Percentage)
Air Force
Navy 31.1
(Includes Marine Corps)
29.5
Defensewide
15.3
Army
24.1
FY 1995 = $ 252.2 billion
BOTTOM-UP REVIEW (BUR)
Guidelines for the budget and revision of the
FYDP were derived from the Bottom-Up Review,
conducted in the Office of the Secretary of Defense last year and made public in September 1993.
•
•
•
Stated goals of the Bottom-Up Review were to:
establish essential force structure- two nearly
simultaneous major regional conflicts;
sustain overseas presence;
ensure continuing readiness of forces;
• launch initiatives to reduce threats;
•• military-to-military cooperation;
•• cooperative threat reduction;
•• counterproliferation;
•• expanded peacekeeping capabilities;
• preserve key elements of modernization and in
dustrial base;
7
• strengthen defense foundations; •• environmental security; •• defense reinvestment.
Source: DoD
From this came the strategic visualization, force structure, manpower levels, modernization guidelines and priorities. The Bottom-Up Review did not address nuclear forces, but DoD is now conducting a study, the Nuclear Posture Review, to address this range of issues.
Because the Bottom-Up Review focuses on a 1999 objective force, and since the FY 1 995 budget needs to be discussed in a broad context, projections in this paper will extend through 1999 when applicable.
FORCE STRUCTURE AND MANPOWER
The Bottom-Up Review would cut major combat forces below those projected in the Base Force, which was the end-state structure projected in the last Bush budget and prior to BUR. Some of the reductions are already reflected in FY 1995.
Table 6
FORCE STRUCTURE
Cold War Base FY90
Land Forces Army Active Divisions 18 Army Reserve Component Divisions 10 Marine Corps (3 Active/1 Reserve) 4
Navy Ship Battle Forces 546 Aircraft Carriers
Active 15 Reserve 1
Navy Carrier Wings Active 13 Reserve 2
A ir Force Active Fighter Wings 24 Reserve Fighter Wings 12
Source: DoD
Manpower
Manpower adjustments follow force structure changes. Civilian reductions are based largely on assumed shrinkage of infrastructure over time. Altogether, the cost of personnel has a large impact on the budget and accounts for $112.1 billion out of $252.2 billion in the FY 1995 budget.
For projected manpower levels by category, see figure 6.
The budget provides for a 1.6 percent pay increase for both military and civilian personnel.
The budget also includes more than $1 billion to continue transition assistance to separating personnel, both military and civilian.
8
Base BUR Force FY95 Plan
1 2 1 2 10 8 8 5 plus 4 4 4
430 373 346
1 3 1 1 1 1 1 1
1 1 10 10 2 1 1
15.3 13 13 1 1 .3 7.5 7
READINESS
The DoD budget submission emphasizes readiness as its top priority. This is reflected in the FY 1995 budget with an increase of $5 billion (plus 5.6
percent) in Operation and Maintenance (O&M) funding over the FY 1994 level.
While there are many aspects to total force readiness, the Operation and Maintenance appropriations provide funding for training, maintenance, base support, and other requirements to keep soldiers and units in a ready-to-fight condition.
Of course, not all of the $5 billion goes directly to readiness-related items or activities. A substantial portion must be applied to price increases and civilian pay raises, but the overall thrust is clear.
Fig. 6. DoD Manpower Levels
Active Military Down 32% 2151
(End Strengths in Thousands)
Selected Reserves Down 20%
*Bottom-Up Review
Civilians Down 29%
804
Source: DoD
Table 7
One measure used to gauge training is the oper
ating tempo (OPTEMPO) from which costs of fuel,
parts, maintenance and other support are derived.
These are largely O&M funded. The FY 1995 bud
get fully funds the service operational training rates,
as outlined in table 7.
OPERATIONAL TRAINING RATES
Another important aspect of readiness is main
tenance. To curtail a growing depot maintenance
backlog, the FY 1995 budget increased the a11oca
tion for this purpose more than 20 percent, from $5.1
billion in FY 1994 to $6.3 billion.
As pointed out in the interim report on readiness
by the Defense Science Board (DSB) Task Force,
the real question is, readiness to do what? The task
force emphasized that readiness must be viewed in a
joint perspective involving all ofthose things which
relate to the ability of forces to react to contingen
cies. This includes readiness at home stations,
deployability, and ability to perform the necessary
missions in the theater of operations. In this respect, the whole mission environment needs a more com
prehensive definition with meaningful readiness indicators, thus permitting better resource allocations.
9
Army Annual Tank Miles Flying Hours per Crew
per Month Navy
Flying Hours per Crew per Month
Ship Steaming Days per Quarter
• Deployed Fleet • Nondeployed Fleet
Air Force Flying Hours per Crew
per Month • Fighter/Attack
Aircraft • Bombers
Source: DoD
FY93 FY94 FY95
588 620 800
13.5 14.5 14.5
24 24 24
54.9 50.5 50.5
28.3 29 29
20.7 19.7 19.7
21.8 18.0 19.9
In the past when readiness has been seriously degraded, it usually meant that O&M had taken significant budget cuts or had been used to fund other things. When the damage is done, it takes consider
able time to rebuild and retrain. Readiness remains DoD's primary peacetime mission.
MODERNIZATION
Modernization, as discussed here, refers to all
aspects of research, development and acquisition (RDA).
Guidelines prescribed by the Secretary of Defense for modernization consistent with the BottomUp Review include:
• sustainment of a strong science and technology base;
• continuation of investment in next generation weapon systems;
• refocusing of ballistic missile defense program;
• sustainment of a strong intelligence program;
• preservation of key elements of the industrial base
that would otherwise disappear.
The constrained budgets for RDA, particularly procurement, make these guidelines difficult to achieve. It is clear for FY 1995, at least, that procurement had to pay for a big portion of the Opera
tion and Maintenance increases. RDT &E fared reasonably well, however. RDT &E funding levels ($36.2 billion for FY 1995) have been fairly consis
tent over the past five years. The science and technology program (basic research, exploratory development and advanced development) enjoys a priority status. Plans are to continue the level of effort for RDT&E.
Procurement was a different story. The DoD FY 1995 level of $43.3 billion is the lowest in many years. The drop in buying power since FY 1989
10
alone was about 54 percent. The plan to invest in the next generation of weapon systems must, of necessity, be very selective.
The rationale, as explained by Secretary of De
fense William Perry in his testimony on the budget, is based on several factors: The force is smaller, so future buys will be smaller than in the past; also, there is the cushion of existing inventory built up during the Cold War. Perry acknowledges, however, that levels of procurement cannot remain this depressed and will have to increase sometime between 1996 and 1999. The key question, however, is how the dollars will be generated to do this.
As indicated in the guidelines, the Ballistic Mis
sile Defense program will give priority to the Theater Missile Defense (TMD) portion. (See the sec
tion on BMD.)
Of special concern are the status and health of the defense industrial base. Clearly it is being eroded by the drastic drop in defense contracts as well as the closing down of major segments in the industrial side of defense.
The Bottom-Up Review stressed the importance of maintaining an adequate industrial and technological base. A vigorous research and development program and emphasis on dual-use programs provide some effort in this direction, along with greater emphasis on buying commercial items and using commercial specifications where possible. It is recognized, however, that some military systems are unique and that funding for certain critical defenseunique capabilities is in order. Items which fall under this industrial base rationale, along with FY 1995 budgeted amounts where applicable, include:
• nuclear aircraft carrier ($2.5 billion), justified on the basis of maintaining nuclear ship production
capability;
• upgrade of Bradley Fighting Vehicle and Abrams tank ($335 million); this upgrade program, in
conjunction with foreign sales, is needed to maintain production base for tracked combat vehicles;
• sustaining selected plant capacity for ammunition production ($75 million);
• Sealift Mobility Program ($600 million); while
fully justified by requirements for strategic lift, this program, which includes about $3 billion over the entire FYDP, will help sustain the faltering shipbuilding industry;
RDT&E
• submarine construction to keep the submarine industrial base at a minimum sustaining level. FY 1 995 shows $507.3 million (all RDT&E) in a new class of attack submarine, and the Secretary of Defense has stated a plan to invest in a new Seawolf nuclear submarine in the next few years because of the industrial base considerations.
Table S
RDT&E PROFILE FOR FY89 TO FY95 ($ billions)
FY89 FY90 FY91 FY92 FY93 FY94 FY95
Constant (FY 1995 dollars) 45.0 42.1 40.3 39.7 40.0 35.7 36.2
Current 37.5 36.5 36.2 36.6 38.0 34.8 36.2
Source: DoD
Table 9
SELECTED PROGR AMS RDT&E ($ millions)
Program Army
Navy
Armored System Modernization Comanche Longbow
FA-18 Squadrons (C/D and ElF) V-22A New Attack Submarines
Air Force F-22 Advanced Tactical Fighter B-2 Advanced Technology Bomber MILSTAR Satellite Communications Joint Surveillance(farget Attack Radar System (JSTARS)
Defensewide Ballistic Missile Defense
Source: DoD
11
FY94
147.9 366.7 277.7
1 ,454. 1 5.2
389.7
2,082.9 785.8 91 8.4 283. 1
2,617.2
FY95
1 75.5 525.2 1 9 1 .3
1 ,4 1 1 .9 496.9 507.3
2,461 . 1 408.5 648.0 190.4
2,979.9
Procurement
Fig. 7. Procurement Profile
100 {$ bil l ions)
80
60
40
0 FY89 FY90 FY91 FY92
Table 10
•constant FY 1995 $
(;2] Current $
FY93 FY94
SELECTED PROCUREMENT PROGR A MS ($ millions)
Program FY94 Army
UH-60 Black Hawk Helicopter (63) 427.6 (60) Bradley Fighting Vehicle Base Sustainment 192.4 Abrams Tank Upgrade Program 96.7 Self-Propelled Howitzer 155rnrn M 109 A6 159.5 SINCGARS Radio System 352. 1
Air Force C-1 7 Airlift Aircraft (6) 2,157.8 (6) E-8A Joint STARS (2) 560.0 (2) Tri-Service Attack Missile 159.6 (48) AMRAAM Air-to-Air Missile ( 1 ,007) 487.2 (413)
Navy FA-18C/D Hornet (36) 1 ,648. 1 (24) T45 Goshawk Trainer (12) 289.6 ( 12) Trident II Ballistic Missile (24) 1 ,098.6 ( 1 8) Tomahawk Cruise Missile (216) 257.5 (217) Nuclear Aircraft Carrier 1 ,200.0 (1 ) Aegis Destroyer (3) 2,637.9 (3)
Source: DoD NOTE: Quantity in parentheses.
12
FY95
Source: DoD
FY95
393.1 145.4 175.2 237.6 367.4
2,661.9 564.2 373.9 309.5
1 , 1 17.2 245.4 696.0 302.0
2,447.0 2,697.7
Procurement for FY 1995 represents 17 percent of the DoD budget, down from more than 33 percent in FY 1985. Also, Procurement is down about 23 percent in buying power since FY 1993 and some 54 percent below the peak in FY 1989. The ratio of Procurement to RDT &E is now close to 1.2: 1, while the ratios for many years prior to FY 1993 ranged from 1.7:1 to more than 3 :1. All this points to the fact that the present budget is indeed procurement poor.
BALLIS TIC MISSILE DEFENSE
The Ballistic Missile Defense program, fonnerly known as the Strategic Defense Initiative (SDO, was changed in early 1994 by direction of then Secretary of Defense Les Aspin to downgrade the strategic focus of a national missile defense and give the priority of effort and funding to a more urgent need -an effective theater missile defense. This was done in recognition that the threat of massive nuclear attack on the United States was not realistic in the foreseeable future, but that the proliferation of shortand medium-range missiles, along with weapons of mass destruction, was a growing threat.
The name of the program was changed to Ballistic Missile Defense and the old SDIO became the BMD Organization (BMDO). Priorities were also revised.
• First priority would go to the development and deployment of theater missile defense (TMD) to meet the growing threat from ballistic missiles to forward deployed forces.
• Second priority would be a scaled-back program for national missile defense of the United States. Efforts would be focused on maintaining the option to deploy a missile defense system of the United States, one capable of providing a defense against limited attacks by ballistic missiles. Most of the elements of the national defense system would remain as research and technology development programs.
• Third priority would be for advanced follow-on technologies.
13
Funding for Ballistic Missile Defense is now managed on a defensewide basis by the Ballistic Missile Defense Organization, which reports to the Under Secretary of Defense for Acquisition and Technology. In general, execution of the program is through the military departments, with allocation of funds from DoD to the services.
BMDO appropriation summaries for FY 1994 and FY 1 995 are shown on table 11.
Table 11
BALLISTIC MISSILE DEFENSE ($ millions)
FY94 FY95 ( Est.) ( Est.)
RDT&E 2,617 2,980 Procurement 12 1 273 Military Construction 3
Total 2,741 3,254
Source: DoD
At this stage, the program is essentially all RDT&E and represents about 8.2 percent of total DoD RDT &E funding for FY 1995.
The whole program was squeezed down when
Congress cut about $1 billion from the $3.8 billion BMD request in the FY 1994 budget, and it remains an attractive target for congressional budget cutters in FY 1995.
The major research and development (R&D) portion of TMD programs in the FY 1 995 budget includes Theater High Altitude Area Defense (THAAD), Ground Based Radar (GBR), the Arrow Continuation Experiment with Israel, Patriot PAC-3 and Extended Range Interceptor (ERINT). Decisions are still pending for the Corps Surface-to-Air
Missile (Corps SAM), the boost phase interceptor
and the sea-based wide-area TMD.
The National Missile Defense (NMD) program for the defense of the United States has shifted to advancing technical readiness for possible future deployment. Funding for the NMD portion amounts to about $584 million for FY 1 995. The previous Brilliant Pebbles program was tenninated and research on directed energy and particle beam technology cut way back. The main focus will be an exoatmospheric kinetic kill vehicle. Brilliant Eyes, a mid-course missile tracking program, will continue as an acquisition program because it can substantially increase the defended area of a TMD system like THAAD, which can be used for both Theater Missile Defense and National Missile Defense.
STRATEGIC MOBILITY
A critical pillar for the Bottom-Up Review concept is strategic mobility. There are four dimensions to this program: airlift, sealift, prepositioned equipment, and surface transportation and outloading in the United States.
All have major budget implications which must be funded if the projection concept is to work. Deployability is an important aspect of overall force readiness.
Airlift is tied in with the procurement of the C-17 air lifter. The FY 1 995 budget includes $2.7 billion for six additional aircraft. The Air Force has the authority to purchase 40 (out of a goal of 120) but no assurances beyond that. Since the C-1 4 1 fleet is aging, other needs may have to be met by a combination of C-5Bs, which means reopening the line, and purchase of modified commercial aircraft such as the Boeing 7 4 7-400 freighter aircraft. Another air mobility study is now in process. Funding for airlift is included in the Air Force budget.
Sealift is necessary to move heavy equipment. The Joint Chiefs of Staff Mobility Requirements Study represents the guide for additional sealift needs through 1 999 with the addition of nine prepositioning ships and 1 1 ships for surge sealift capability.
A National Defense Sealift Fund was established. The FY 1 995 budget shows the following funding levels.
14
Table 12
NATIONAL DEFENSE SEALIFT FUND ($ millions)
FY93 FY94 FY95
2,463 1 ,541 609
Source: DoD
About $3 billion is allocated to sealift over the
revised FYDP through 1999. Strategic sealift is man
aged by the Navy.
Prepositioning, the third leg, includes both
ground and floating prepositioning. Budgeted costs
are included in budgets of the military departments
involved.
Improvements for deployability in the United
States, including loading and transportation, are re
flected in military department budgets.
MILITARY CONSTRUCTION AND FAMILY
HOUSING
Both Military Construction and Family Housing
are contained in the Military Construction Appro
priations Bill. This is separate and distinct from the
Defense Appropriations Bill, which carries all other
DoD appropriations.
The DoD budget request for these programs for
FY 1 995 total $8.36 billion. Summaries of both
Military Construction and Family Housing are shown
in table 1 3.
Under the Military Construction portion, about
$2.7 billion will go for base closure activities and
$300 million for planning and design, leaving only
about $2.5 billion for construction other than base
closure-related.
Table 13
MILITARY CONSTRUCTION AND FAMILY HOUSING
(BA $ billions*)
FY93 FY94
Military Construction 4.55 5.96
Family Housing 3.94 3.50
Family Housing Construction (.82) (.69)
Family Housing Operations (2.99) (2.66)
Homeowners Assistance Fund (. 13) ( . 15)
Total Milcon and Family Housing 8.50 9.46
FY95
5.05
3.3 1
(.64)
(2.81)
( -. 1 3)
8.36
*Numbers may not add due to rounding.
Source: DoD
OTHER BUDGET CONSIDERATIONS
Environment
This is a comprehensive program covering
cleanup (or restoration), compliance, conservation,
pollution prevention and technology improvements.
Environmental-related costs are increasing with
an estimated $5.7 billion for FY 1 995, up from about
$3.5 billion in FY 1 993. These costs are embedded
in various appropriations and accounts.
DoD has been involved in cleanup at about 1 ,800
military installations and more than 8,000 formerly
used sites.
15
About 40 percent of the costs are going for sur
veys and studies of potential sites, but emphasis is shifting to actual cleanup. For FY 1995, an estimated $2.2 billion will be spent for cleanup of exist
ing bases and facilities and an additional $560 million for closed bases. These funds are identified in the Defense Environmental Restoration Account.
About $600 million in FY 1 995 is for Base Realignment and Closure actions. These include six military installations scheduled for closure or realignment under the presidentially-directed "fast track cleanup program."
Compliance costs for FY 1 995 will be about $2.3 billion and are embedded in budgets across the board.
Infrastructure and Base Closures
As the force is reduced it is imperative that infrastructure also be reduced and facilities consolidated if cost goals are to be achieved.
Base realignments and closures are an inherent part of this. Because of the many competing factors and political sensitivities concerning bases and faci1ities, the process has been controlled by legislation which created nonpartisian commissions to make the closure and realignment recommendations. Commissions met in 1 988, 1991 and 1 993. Their recommendations were approved by the President and Congress and are now being implemented. Another commission will meet in 1 995. This will be the big one, especially if it remains the last one established under the public law.
Infrastructure cuts have not kept pace with either DoD budget reductions or personnel strength cuts. The 1 5-percent cut in facilities in the United
States through BRAC 93 is only about half the total
reductions called for between now and the end of the decade.
DoD is now preparing lists for the next commission (BRAC 95); this could well double the amount proposed in the past, but anything this big may well
be indigestible or unmanageable. Don't be surprised to see Congress balk, and for Congress and DoD to agree on spreading this out, perhaps with a BRAC 97.
In the meantime, the big challenge is how to pay large base closing costs. Overall savings cannot be
expected for six to eight years. On the first three
rounds, the military departments and agencies had
planned to spend an aggregate of about $7.5 billion,
but total estimates are now higher. BRAC costs in
the FY 1 995 budget are shown as $2.7 billion ( under the Military Construction appropriations). These
are for the 1 988, 1991 and 1993 actions. The present
FYDP does not include anticipated base closure costs
for BRAC 95, but this will require a substantial chunk
of money which has to be fitted into the funding guidance for FY 1996 and beyond.
In connection with base closures, the President
has recently directed actions to facilitate early use by affected communities of these assets. This puts local redevelopment on a par with fast-track envi
ronmental cleanup.
The upcoming BRAC 95 will be an event of
major impact. The big question is the availability of
funds to cover upfront costs. Reducing the infrastructure to include facilities, civilian personnel and
other overhead costs will not produce savings for several years thereafter. To be realistic, most of the benefits (in dollar terms) from this will not accrue
until the next decade.
Acquisition Reform
Acquisition reform by streamlining the way DoD buys its materiel and equipment is being pushed strongly by Secretary of Defense Perry. Major thrusts include:
• simplifying acquisition laws and regulations and
eliminating those not needed. Present require
ments are both cumbersome and costly. Some estimates indicate additional procurement costs
of 20 to 50 percent because of the complex fed-
16
eral requirements imposed (over those used in
commercial practice). Of particular importance
is the simplification of acquisition procedures for
items under $1 00,000. They represent about 98 percent of all the actions but only 1 1 percent of
the dollars.
• removing impediments to buying commercial
items and services, and restricting the use of special military standards, except when absolutely
required.
While many things can be done within DoD it
self, congressional support is needed with respect to
procurement laws. Congress did not act on legisla
tion in 1994. Several committees have overlapping
jurisdiction, so turf is at stake and compromises will
be necessary, but something positive should happen
during this session.
There are no savings for FY 1 995, but if Perry
gets what he wants, the downstream savings on ac
quisition costs could be significant.
Masking Defense Costs
Comparisons are often made (on an overall dol
lars basis) with previous years as a measure of the
nation's relative investment in defense. In the postCold War period, however, this can be deceptive.
There are increasing numbers of things being funded
by defense dollars today that did not exist in the past or were not considered traditional defense costs.
Regardless of their necessity or merit, these were
not major budget items in past years and, therefore,
distort historical comparisons.
A March 1 994 Congressional Research Service
(CRS) study estimated that DoD was spending al
most $13 billion in FY 1994 on projects with limited
defense applications. A Government Accounting
Office (GAO) report issued in November 1993 stated
there was a clear trend of funding civil programs
from defense appropriations. It said that military
budget support went up from $1.4 billion in FY 1 990
to $4.6 billion in FY 1993.
Some major items costing increased dollars for DoD today that we did not see in the past include:
• environment ($5.7 bi11ion in FY 1 995);
• closing down and realigning bases (BRAC actions) ($2.7 billion in FY 1 995);
• transition benefits ($ 1 .2 billion in FY 1 995);
• defense conversion and dual-use technology ($2.2 billion in FY 1995).
Everyone's list can be different, but it is clear that more and more is being included in the defense budget that was not there before, which means that the level of support for traditional warfighting capabilities is decreasing even more than the overall statistics would indicate.
KEY FAC TORS AFFEC TING FU T U RE BUDGETS
The FY 1995 budget is undergoing the normal congressional process. Whatever Congress does will clearly affect future budgets, particularly if future outlay cuts are mandated for discretionary spending.
The things to watch in the future are: 1 ) the outcome of the Roles and Missions Commission study; 2) the results of the next OSD Future Years Defense Program (FYDP) review, which matches programs and resources for six years from FY 1996 through FY 200 1 ; and 3) most unpredictable, the course of world events over the next few years. Anything in significant variance with present planning vectors could quickly change national security requirements and perspectives. Some brief comments on items 1 ) and 2) above:
Roles and Missions Commission
In February 1993, then JCS chairman Gen. Colin Powell issued his "Report on the Roles, Missions and Functions of the Armed Forces of the United States." This report was forwarded to Congress in
17
March 1 993 by Secretary of Defense Asp in with the comment that this was a first step; at the same time, he directed further study by DoD in a number of areas.
Congress, in general, was not satisfied with the results. The major criticism was that it did not go far enough or deep enough. As a result, the House Armed Services Committee Report (November 1 993) directed a special Commission on Roles and Missions of the Armed Forces to be appointed by the Secretary of Defense. The basic charter given to this commission was to recommend the functions for which each military department would organize, train and equip forces; the mission of combat commands; and the roles that Congress should assign to various military elements of the Department of Defense.
This commission has now been formed, with Dr. John P. White of Harvard University as chairman. There are a total of 1 0 participating members. Commission recommendations are due about May 1995, with Secretary of Defense review and comments 90 days later.
Clearly the approved report will not be ready in time to affect formulation of the FY 1996 DoD budget, but could have significant bearing on subsequent budgets.
Future Years Defense Program (FYDP)
DoD and the military departments are engaged in the biennial drill to generate the next FYDP, covering the period from FY 1996 to FY 200 1 . Defense Planning Guidance (DPG) provides instructions on programs and priorities to the submitting military departments and agencies. The instructions are consistent with the objectives of the Bottom-Up Review and Defense Fiscal Guidance (DFG) as derived from established budget top line figures.
Theoretically this guidance should be coordinated and compatible in advance, but don't expect it this year. There is a looming gap between resources and programs in the next FYDP. The projections are anything but optimistic in terms of the requisite
dollars to support currently defined security requirements in future years.
Final OSD decisions on the FY 1996-2001 program should be made by September 1994; the first year of the new FYDP will provide input for the FY 1996 DoD budget.
The wild cards are the happenings on the world scene, along with an evolving U.S. foreign policy.
No long-term assumptions are secure. Surprises will arise, so flexibility in national security planning is essential.
DEFENSE OU TLOOK
The FY 1995 DoD budget is characterized by added funding for O&M in the name of readiness, but with very restricted funding for RDA and Military Construction.
g ,. 18
What is missing as a basis for measuring the adequacy of the DoD budget is a clear written and approved statement of national military strategy. Instead, the output of the Bottom-Up Review is being used as a surrogate for a more formal presentation of policy, and this can lead to many interpretations and misunderstandings.
The open question now is what Congress will do with the FY 1995 budget. From a programmatic sense, Congress will probably make few, if any, big changes from the President's budget, but there will be the usual juggling ofline items. This is an election year; Congress doesn't want any more big issues on the table - health care is enough - and there is a good chance we could have a defense bill this year by Oct. 1 - almost unprecedented, but possible. The real danger is outlay cutting. This has already surfaced in budget resolution actions. Such action would almost surely hit at Operation and Maintenance funding, the very area where DoD has placed its top priority.
' '"
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"-., ---- · · -.. --..... � . - ..
THE ARMY BUDGET
The Army FY 1995 budget stands at 24.1 percent of the DoD FY 1995 budget.
A summary of the top line numbers in the Army budget are shown in table 14.
As with DoD overall, the Army is experiencing its l Oth consecutive year of a budget with less buying power than the year before.
While appropriations are made by Congress in terms of budget authority (BA), they are managed by the military departments and defense agencies in
ARMY BUDGET TRENDS AND PAT TERNS
The next three figures show patterns in Army budgets over time.
Figure 8 shows the percentage change in real terms for each year with respect to the previous year. The early- to mid-1980s increases contrast sharply with the 1 0-year decline since 1985.
Figure 9, shown in FY 1995 constant dollars, graphically portrays the loss of Army buying power over a six-year period, a drop of more than 32 percent.
Table 14
ARMY BUDGET SUMMARY ($ billions)
Current Dollars Total Obligational Authority Budget Authority Outlays
Constant (FY95) Dollars Total Obligational Authority
Source: DA
terms of total obligational authority (TOA). DoD uses this financial term to reflect the direct defense
program for the fiscal year. While TOA and BA are
essentially the same, they differ by such adjustments as legislative transfers, reappropriations, recisions
and offsetting receipts. For the Army, these differences are small, resulting largely from revolving and management fund adjustments, and affect only a few of the appropriations for FY 1995.
Unless otherwise indicated, TOA reflecting the direct Army budget plan will be used for discussion
of the Army budget in this section.
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FY93 66.7 64.8 72.2
69.5
FY94 61 .0 60.6 63.7
62.3
FY95 6 1 . 1 60.8 6 1 .5
6 1 . 1
Figure 10 shows relative comparisons of the Army budget broken out by functional elements for: 1) FY 1989 (before the drawdown) and 2) the current FY 1995 budget. It demonstrates the sharp cuts
in Research, Development and Acquisition (RDA) and Military Construction.
At the same time, military and civilian pay are taking a substantially larger share of the total despite the reduction in strength. Separation incentives and other transition costs have kept pay accounts higher than strength alone would indicate in recent years.
Fig. 8. Army Real Growth Trends FY70-FY95
1 5
1 0
5
0
-5
- 1 0
- 1 5
Fig. 9.
70 72 7 4 76 78 80 82 84 86 88 90 92 94 95
I• FY95 Constant $ I (Excludes Operation Desert Storm)
Army Dollar Resource Trends
95 90.0
90
85
80 TOA Reduced by over 32%
75
70
65
60
55 1-FY95 Constant $ bill ions I 50
FY89 FY90 FY91 FY92 FY93 FY94
*Does not include Desert Storm
20
Source: DA
61 . 1
FY95
Source: DA
Fig. 1 0. Army Program Balance
Civilian Pay 1 6%
Operations* ** 21 %
Civilian Pay 1 9% Operations**
2 1 % MiiCon * *
2%
24%
MiiCon** 1 %
* I ncludes Defense Medical (2.5%) **Excludes Civilian Pay
ARMY BUDGET BREAKOU T FOR FY 1995
The Army budget by basic title for FY 1993 to FY 1995 is shown in table 15. Army National Guard and Am1y Reserve have been integrated under the appropriate titles. For a more detailed listing by specific appropriation, see Appendix II.
Table 15
TOTAL OBLIGATIONAL AUTHORITY SUMMARY
(Current $ billions*)
Title FY93 FY94 FY95 Military Personnel 28.5 26.8 26.1 O&M 22.6 19.7 2 1 .5 Procurement 7.4 6.9 6. 1 RDT&E 6.1 5.4 5.3 Military Construction .7 .9 .8 Army Family Housing 1 .5 1 .3 1 .3
Total 66.7 61.0 61.1
*Numbers may not add due to rounding.
Source: DA
21
Source: DA
S TRATEGIC CONS TRUC T
Am1y planning is based on national security guidelines emanating from the Bottom-Up Review. This established the concept of being able to fight and win two nearly simultaneous major conflicts with recognition for minor contingencies and a variety of missions short of war such as peacekeeping, humanitarian assistance and natural disaster.
To accomplish this, the 1999 structure for the Army is projected as 1 0 active and five (plus) reserve component divisions with 15 enhanced Na-tional Guard combat brigades deployable within 90
I , days. Amly strength was set at 495,000 for the ac-tive force and 575,000 for the RC (combined Na-
tional Guard and Am1y Reserve).
The Am1y would become primarily a projection force from bases in the United States. Forces would be maintained overseas in Korea and Europe, but with a major drawdown in Europe to about 65,000.
The major projection requirement for the Am1y focuses on its five-division contingency corps, illus-
trated in figure 1 1 . This drives the requirement for strategic mobility as well the need for ready support forces, including reserve component units.
To meet future strategic commitments the Army must
• structure itself to respond to two nearly simultaneous regional crises;
• base the majority of forces in CONUS, but keep 65,000 in Europe and 26,000 in Korea to deter aggression and promote stability;
• ensure sufficient strategic mobility and force modernization to get the force to the fight and to win decisively when it gets there;
• embed capabilities within the force to respond to a range of new requirements (peacekeeping operations, humanitarian assistance, disaster relief, etc.);
• engage in aggressive overseas presence operations (exercises, unit and personnel exchanges, security assistance, etc.) to build and strengthen the coalition of democracies.
Fig. 1 1 . Force Closure Timeline
22
S TRUC TURE
The Total Army incorporates the active component, the reserve components and civilian employees. The military structure consists of a mix of heavy, light and special operations forces along with supporting elements and base structure.
The combat structure for FY 1 995 is based on four corps, 1 2 active divisions and eight National Guard divisions, plus five active and 1 3 National Guard separate combat brigades (excluding special purpose brigades and roundout/roundup brigades). Table 16 shows the types of units and any changes from FY 1 994.
Army forces will continue forward presence in Korea with one division (minus) and in Europe with a corps with two divisions of two brigades each. There has been a general shift, however, to the continental United States (table 17 .)
Total Army strength for this force as of the end of FY 1 995 would be 51 0,000 active soldiers, 642,000 RC soldiers, and 278,000 civilians - a drop below FY 1 994 numbers of 93,000 personnel in all three categories.
Source: DA
Table 16
COMBAT FORCE STRUCTURE
UNITS FY94* Changes FY95*
A ctive Corps 4 0 4 Divisions 12 0 12
Mechanized/ Armor (8) 0 (8) Light/ Airborne/ Air Assault (4) 0 (4)
Separate Brigades** 6 - 1 5 Mechanized/ Armor/
Armored Cavalry Regiment (2) 0 (2) Infantry /Light/
Light Cavalry Regiment (4) -1 (3) National Guard
Divisions 8 0 8 Mechanized/Armor (4) 0 (4) Infantry (3) 0 (3) Light/ Airborne/ Air Assault (1) 0 ( 1)
Separate Brigades 1 3 0 1 3 Mechanized/ Armor/
Armored Cavalry Regiment (6) 0 (6) Infantry (7) 0 (7)
A rmy Reserve Separate Brigades - 1 0
* Reflects status at year end. ** Does not include 177th Armor Brigade and 3rd Infantry Regiment.
Source: DA
Table 17
A SHIFT TO CONUS (thousands)
Active A rmy CONUS Europe Pacific Other
*Projected
Source: DA
FY89 FY95* 5 10 410 217 65
34 28 9 7
23
Division stationing as of the end of FY 1995 is reflected in figure 12.
Not shown in the division structure is an important piece of Army combat and combat support structure: the Army Special Operations Forces (SOF), with a strength of about 29,000 military (active and reserve components). The Army Special Operations Command, located at Fort Bragg, North Carolina, reports to the commander in chief (CINC) of the U.S. Special Operations Command (SOCOM). The budget for special operations is handled separately, with funds provided through DoD and the CINC of Special Operations Command under a separate major force program. Therefore, SOF operating and
1 ,
Fig. 1 2. Division Stationing by the End of FY95
1995: 4 CORPS - 20 DIVISIONS I Source: DA
acquisition funds are part of the joint command (SOCOM) budget and are not included in the Army budget. Nonoperational requirements, however, including base operations at Army facilities and bases, are still provided through Army funding.
Even though the Anny is becoming essentially a CONUS-based force, it continues to be engaged
worldwide. In addition to soldiers forward stationed in Korea and Europe, there are Army soldiers in
volved in all kinds of tasks in 63 countries around the world. During the past 12 months this number has varied from a low of about 12,000 to more than 20,000; these operations actually tie up about three times the number when training, orientation, and
coming and going are considered.
Fig. 1 3. The Army Engaged (as of April 1 994)
Humanitarian Relief . . . Joint Operations . . . Counterdrug ... UN Operations Source: DA
24