Secretary of Defense William S. Cohen today released details of President Clinton's
Fiscal Year (FY) 1999 defense budget. It requests $257.3 billion in budget authority and
$252.6 billion in outlays for the Department of Defense (DoD). The President's proposed
defense spending levels for FY 1999-2003 are generally consistent with last year's
Bipartisan Budget Agreement.
Release of this budget is the culmination of intense scrutiny of the U.S. defense
posture carried out during Secretary Cohen's first year in office. The new budget begins
full implementation of the Department's comprehensive Quadrennial Defense Review (QDR).
The QDR examined the security threats and opportunities facing the U.S. and developed
far-reaching recommendations for the post-Cold War era.
The budget includes $48.7 billion for procurement of more modern weapons. Procurement
is projected to reach $61.3 billion in FY 2001, achieving the $60 billion goal previously
set by the Clinton Administration. DoD leaders consider this higher modernization spending
to be essential to the future readiness and battlefield superiority of U.S. forces.
While highlighting the importance of weapons modernization, Secretary Cohen also is
stressing that the long-term readiness of U.S. forces is threatened by the budgetary drain
of excess infrastructure. The Department of Defense is burdened with facilities and bases
that it neither needs nor can afford. To remedy this, Secretary Cohen today again urged
Congress to approve two more base closure and realignment (BRAC) rounds.
For near-term force readiness, Congress's support also is needed for DoD's plans to
streamline its business practices and organizational structure. Additionally, Secretary
Cohen warns that readiness could suffer late in FY 1998 if Congress does not give timely
approval to supplemental appropriations to cover unbudgeted operational costs. Such costs
are related to the President's stated intention to extend Bosnia operations beyond June
and to this year's increased intensity of operations in Southwest Asia.
With its strong support for both immediate force readiness and cutting-edge technology,
the new budget strikes a balance between current and future defense needs, as advocated in
the QDR. It continues Secretary Cohen's commitment to enhancing the quality of life of the
nation's military people and their families. And the budget reflects changes already
underway as a result of last November's Defense Reform Initiative, through which Secretary
Cohen and Deputy Secretary Hamre seek to substantially streamline and improve DoD support
Transforming the U.S. Defense Posture
The FY 1999 budget begins implementation of the QDR's plan for transforming U.S.
defense strategy and military forces.
Shorthand for the new defense strategy is: Shape, Respond, Prepare. It calls for the
U.S. to work to shape the international security environment in ways favorable to
American interests, be willing and able to respond to the full spectrum of crises
as needed, and prepare now for an uncertain future. The FY 1999 budget supports
this strategy primarily by ensuring continued American military superiority, high
readiness, and extensive overseas deployment of U.S. forces. It also advances the
transformation of U.S. forces and the organizations and activities supporting them so that
together they can best guarantee America's long-term security.
The transformation of U.S. military forces seeks to maximize their effectiveness across
the full spectrum of future crises and conflict scenarios. While we will transition to
forces that are different in character, the hallmarks of America's military will continue
to be top quality people, high readiness, and superior doctrine and technology. The FY
1999 budget includes strong funding for all these.
Transforming U.S. forces also requires implementation of Joint Vision 2010, the
Department's new conceptual framework for how future U.S. forces will fight and achieve
"full spectrum dominance." At the heart of Joint Vision 2010 is the
ability to collect, process, and disseminate essential information to U.S. forces, while
denying the enemy the ability to gain and use battle-relevant intelligence. Support of Joint
Vision 2010 in the FY 1999 budget is primarily for funding relevant new technologies.
The QDR recommended end strengths and force levels that are only slightly below those
already planned as a result of the Department's earlier post-Cold War adjustments. It
called for additional cuts of about 60,000 active military personnel; 55,000 in Selected
Reserves; and 80,000 DoD civilians. End strength trends and goals are shown below:
Department of Defense Personnel End Strengths (End of Fiscal
Year in thousands)
Ensuring Force Readiness and Enhancing Quality of Life
The continuing high readiness and quality of America's armed forces are evident
everywhere that those forces are deployed or training. To preserve this high readiness,
the FY 1999 budget provides strong support for training, exercises, maintenance, supplies,
and other essentials needed to keep U.S. forces prepared to achieve their combat missions
decisively. Traditional operational indicators of readiness e.g., tank miles and
flying hours are projected to remain stable.
The Department's preparation of the new budget ensured that the military services
followed Secretary Cohen's direction that they fully fund their readiness-related
accounts. When adjusted for today's lower troop strengths, FY 1999 Operation and
Maintenance (O&M) funding is well above levels during the 1980s.
Providing a good quality of life for our nation's uniformed personnel and their
families remains essential to sustaining the quality and readiness of U.S. forces.
Reflecting that reality, the FY 1999 budget includes strong funding for military pay,
housing, medical services, child care, and other important benefits. The budget supports
military pay raises up to the maximum percentage established by law. It funds a 3.1
percent pay increase for FY 1999 and a 3.0 percent rise for the outyears.
As he has publicly stated, President Clinton intends to support an extension of the
U.S. mission in Bosnia past June of this year in order to ensure continued compliance with
the Dayton Accords. The size and structure of U.S. forces that will be committed to Bosnia
is still undetermined, and thus a budget-quality cost estimate for the mission extension
is not yet available. The President's intent is to provide a request for Bosnia funding
before Congress completes deliberations on its FY 1999 Budget Resolution to ensure that
Bosnia is considered as Congress sets its spending priorities.
FY 1998 appropriations fund previously planned Bosnia operations, which assumed that
U.S. forces would be out of Bosnia by the end of June. However, DoD faces unbudgeted FY
1998 costs related to the proposed extension of Bosnia operations and to this year's
increased intensity of operations in Southwest Asia. To cover these costs, the
Administration will propose an emergency, non-offset FY 1998 supplemental appropriations.
Speedy passage of supplemental FY 1998 appropriations will be crucial to preventing
readiness problems during the final few months of this fiscal year.
To cover FY 1999 Bosnia costs, the Administration will submit a non-offset budget
amendment, which also will be designated as an emergency. The President's FY 1999 budget
request contains an allowance for undistributed funds to cover contingencies, such as
Bosnia and natural disasters. The President considers Bosnia funding to have first claim
on this undistributed allowance and has informed the relevant committees in Congress of
In sum, the Administration has structured its Bosnia-related funding requests so that
resources are not diverted from DoD's current and future appropriations, which should
avoid damage to military readiness.
Modernization of U.S. Forces
One of the QDR's most important contributions was to detail a plan to ensure that the
Department could fulfill its ambitious and essential plans to modernize U.S. weapons. The
QDR endorsed the importance of increased procurement funding both to prepare for future
challenges and to upgrade aging systems. It also recommended numerous changes to specific
major modernization programs and proposed ways to reduce the future likelihood that the
Department would need to shift funds out of investment accounts to cover must-pay costs
like unbudgeted operating expenses.
To support implementation of the QDR, procurement is funded as follows:
Department of Defense Procurement ($ in billions)
|FY 1999 budget
Among its major modernization initiatives, the new budget emphasizes the advanced
information-technologies needed to fulfill Joint Vision 2010. It accelerates acquisition
of new command, control, communications, computers, intelligence, surveillance, and
reconnaissance (C4ISR) capabilities. For example, funding was added to accelerate by two
years the fielding of the Army's first digitized division and corps. Numerous such
advances will enable military commanders to more effectively direct forces, transfer
information between them, and dominate future adversaries. Also funded are key
surveillance assets such as unmanned aerial vehicles and critical navigation aids like the
Global Positioning System.
Modernization of ground forces will stress upgrades of primary combat platforms like
the Army's Abrams tank, Bradley Fighting Vehicle, and Apache Longbow helicopter. Major
development efforts include the Comanche helicopter and Crusader artillery system. Marine
Corps modernization features the V-22 tilt-rotor aircraft, the Advanced Amphibious Assault
Vehicle, and the 4BN/4BW helicopter upgrade.
Modernization of naval forces includes procurement of the DDG-51 Destroyer, LPD-17
amphibious transport dock ship, and New Attack Submarine (NSSN). The tenth and final
Nimitz-class carrier (CVN-77) is fully funded in FY 2001, a cost-saving acceleration of
one year. The budget also supports development of the next generation aircraft carrier and
The QDR confirmed the need for, but made major adjustments to DoD's three major
programs for modernizing U.S. tactical aircraft. New budget plans reflect DoD's decision
to reduce and delay some planned procurement of the Joint Strike Fighter (JSF), F-22, and
F/A-18E/F. The JSF will continue in its concept demonstration phase into FY 2001, in
preparation for procurement to commence in FY 2005. Funds for the first two production
F-22s are requested for FY 1999, leading to a gradual buildup to procurement of 36
aircraft per year by FY 2004. Production should soon increase for the F/A-18E/F, which has
greater survivability and weapons payloads than earlier F/A-18 models. For the longer term
the Navy plans to transition from F/A-18E/F to JSF procurement at a time based on the pace
of JSF development.
The new budget supports the QDR's emphasis on munitions of superior precision.
Substantial funding is provided for ATACMS/BAT, Longbow Hellfire, SADARM, and Javelin for
the Army; Sensor Fuzed Weapon for the Air Force; and JSOW, JDAM, and AMRAAM for both the
Air Force and Navy. The Navy will continue to improve its inventory of Tomahawk missiles
and convert anti-ship Harpoon missiles to SLAM-ER land attack missiles.
The QDR stressed America's ability to project military power to distant regions, and
the new budget continues the Department's airlift and sealift investments. Some 120 C-17
aircraft will be procured by FY 2003. All KC-135 tankers will receive major avionics
upgrades. To improve sealift, FY 1999 procurement includes the last LMSR transport vessel,
needed to move early-deploying Army divisions.
FY 1999-2003 Major Defense Modernization Programs (Procurement $
|M1A2 Tank Upgrade
|Longbow Apache Helicopter
|New Attack Submarine
|LPD-17 Amphibious Transport Dock Ship
|V-22 Tiltrotor Aircraft
|CV-22 Tiltrotor Aircraft
Countering NBC Weapons and Missile Threats
The QDR concluded that nuclear, biological, and chemical (NBC) weapons and the missiles
that deliver them will continue to threaten the security of America and its forces,
allies, and friends. More specifically, U.S. plans must assume that the threat or use of
chemical and biological weapons will be a likely condition of future warfare. The FY 1999
budget includes major investments to stay ahead of these dangers. It adds about $1 billion
in spending through FY 2003 to bolster existing U.S. capabilities to counter chemical and
biological threats. Much of the increase is for improved protective suits and masks, as
well as better detection and decontamination systems. The remainder of it will enhance our
capabilities to destroy or neutralize NBC weapons and materials. The budget also continues
DoD's strong missile defense programs, which remain critical to a broader strategy seeking
to prevent, reduce, deter, and defend against NBC and missile threats.
Our greatest emphasis is on theater missile defense aimed at meeting today's
regional threats. The primary goal is to develop, procure, and deploy systems that can
protect forward-deployed U.S. forces. To defeat shorter range missiles, our key lower-tier
programs include the Patriot PAC-3 and Navy Area systems. Key upper-tier programs are the
THAAD and Navy Theater Wide systems. To defeat theater-range missiles during their boost
phase, we are stressing our Airborne Laser development program.
Also a high DoD priority is the National Missile Defense (NMD) program. The primary
mission of our U.S. NMD system would be to defeat a limited strategic ballistic missile
attack such as could be posed by a rogue nation. The NMD program will develop and test
system elements that could be deployed when such a strategic threat begins to emerge.
FY 1999 budget authority requested for missile defense programs is $4.0 billion. For FY
2000 through FY 2003 an additional $12.8 billion is planned. This $16.8 billion total for
missile defense programs in FY 1999-2003 includes funds added as a result of the QDR.
Total Force Integration
The QDR concluded that the Reserve components will continue to be essential to the
success of U.S. defense strategy and the full spectrum of our nation's military
operations. The new budget reflects this conclusion with substantial funding to support
both the current readiness as well as future capabilities of the Reserve components.
The Department has moved decisively to integrate more effectively its active and
Reserve components. During development of the FY 1999 budget, Reserve component issues
were given unprecedented attention. As a result of the review, over $100 million was added
for Army National Guard OPTEMPO, over $200 million added for Reserve component equipment
funding, and other important adjustments were made. Additionally, Secretary Cohen has
established new positions for Reserve component general officers, with the aim of
enhancing Reserve component involvement in the DoD management structure.
The FY 1999 budget funds establishment of Reserve component teams to respond to
domestic use of weapons of mass destruction. Work also has begun on creating two Army
combat divisions that would each integrate three Guard brigades under an active component
headquarters. Meanwhile, Reserve components will continue their extensive support of
peacetime missions like aerial refueling, strategic lift, exercises, counter-drug
operations, and Bosnia peace implementation.
To best support DoD's warfighting plans, allocate scarce defense dollars, and fulfill
the Guard's peacetime mission, some combat elements of the Reserve components will be
converted over time into support units that are critically short. Projected savings from
QDR-directed cuts to Reserve components end strength will go toward increased funding for
new equipment, unit conversions, and other requirements of the Reserve components.
Reforming DoD Support Activities
Secretary Cohen's Defense Reform Initiative (DRI) aims to substantially streamline and
improve DoD infrastructure and support activities. The plan adopts the best business
practices responsible for success in America's private sector. It mandates four major
areas for change:
First, the DRI calls for the Department to reengineer its processes and
procedures to work better and cost less. Initiatives include paperless contracting,
increased use of a purchase card for lower-cost items, use of electronic catalogues, and
The second DRI mandate is to consolidate or streamline organizations to remove
redundancy and maximize synergy. DoD organizations will be expected to fundamentally
transform how they do business, while simultaneously cutting personnel.
In the third Reform area, the Department must compete that is, to apply
market incentives to improve quality, reduce costs, and meet customer needs. The goal is
to analyze every activity for which the private sector alternative may be better or
helpful in improving DoD operations.
The fourth DRI area requires that the Department eliminate excess support
structures and focus on core competencies. As part of this, Secretary Cohen is urging
Congress to approve two more base realignment and closure rounds for FY 2001 and FY 2005.
Defense Budget Topline
Plans for FY 1999 through 2003 call for DoD budget authority to generally keep up with
projected inflation. In real purchasing power, the FY 1999-2003 FYDP will buy more defense
than previously planned because President Clinton allowed the Department to keep about $20
billion in savings projected from lower estimates of future inflation.
Projected spending is shown in the attached three charts.
Copies of Department of Defense budget documents are available at the following
Internet address: http://www.dod.mil/comptroller/99budget/.
National Defense Topline (Function 050) ($ Billions)
|DoD Military (051)
|DoE and Other
|% Real Growth (051)
|DoD Military (051)
|DoE and Other
DoD Budget Authority by Title ($ Billions)
|Operation & Maintenance
|Funds & Other
|Total DoD (Function 051)
DoD Budget Authority by Component ($ Billions)
|Total DoD (051)