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IMMEDIATE RELEASE

Release No: 032-99
February 01, 1999

DEPARTMENT OF DEFENSE BUDGET FOR FY 2000

Secretary of Defense William S. Cohen today released details of President Clinton's Fiscal Year (FY) 2000 defense budget. The budget requests $267.2 billion in budget authority and $260.8 billion in outlays for the Department of Defense (DoD).

Proposed budget authority for FY 2000-2005 reflects President Clinton's plan to make available to DoD $112 billion in additional resources, $12.6 billion of which was added in FY 2000. This would constitute the first sustained long-term increase in defense funding since the end of the Cold War.

Secretary Cohen said that the $112 billion increase would "meet the most pressing requirements identified by our senior military leadership." He added, "Although U.S. forces continue to accomplish their missions splendidly, there are warning signs of potential problems. Recruiting and retention are increasingly difficult, readiness harder to maintain, and weapons modernization tougher to fund sufficiently. This budget will address these warnings."

To improve recruiting and retention, the budget includes the largest military pay raise in a generation and restoration of the traditional military retirement benefit of 50 percent of base pay after 20 years of service.

The budget also includes $53 billion for procurement of more modern weapons in FY 2000. Procurement is projected to reach nearly $62 billion in FY 2001, surpassing 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.

Secretary Cohen stressed that the President's funding increases do not diminish the Department's resolve to shrink the portion of its budget consumed by infrastructure. To that end, he renewed his call for Congress to approve two more rounds of base closure and realignment (BRAC) for FY 2001 and 2005.

  • Supporting the QDR Defense Strategy
  • The FY 2000 budget continues implementation of the Department's comprehensive Quadrennial Defense Review (QDR), which developed far-reaching recommendations for the post-Cold War era. The essence of this strategy is balance between current dangers and opportunities versus those that might be faced in the future. The strategy has three elements. It says that the U.S. must shape the international security environment in ways favorable to U.S. interests, respond to the full spectrum of crises, and prepare now for an uncertain future.
  • The defense strategy and program includes a major focus on countering the serious threat of weapons of mass destruction. Efforts to counter this threat include the Cooperative Threat Reduction (CTR) program to support the destruction and nonproliferation of weapons of mass destruction in nations of the former Soviet Union, the National Missile Defense program, the Chemical Weapons Convention, and various measures aimed at discouraging the proliferation of these weapons. The FY 2000-2005 budget includes $2.9 billion for the CTR program.
  • The requirements of the QDR strategy determine the size, composition, and posture of U.S. forces. The Defense program seeks to ensure that the U.S. military has the capabilities to dominate future foes and give national leaders a range of attainable options for promoting and protecting America's interests in peace, crisis, and war.

Increasing Defense Resources

  • The added $112 billion for FY 2000-2005 consists of an $84 billion increase to last year's planned topline and $28 billion in savings from lower inflation, lower fuel prices, rescissions, and other adjustments - savings the President directed DoD to retain and allocate to pressing needs. President Clinton's $84 billion topline increase reflects his proposal in the State of the Union address to allocate to defense spending a portion of the projected federal budget surplus once a resolution on Social Security is achieved.
  • For FY 2000 the $12.6 billion in additional resources consists of $4.1 billion from a topline increase and $8.5 billion from economic adjustments and other provisions. These added resources enabled DoD to increase military compensation, provide balanced support to readiness and modernization priorities, and fund the expected cost of Bosnia and other operations.

Putting People First

  • Providing a good quality of life for America's military people and their families remains essential to sustaining U.S. military strength. Reflecting that reality and to address mounting warnings about retention and recruiting, this year's budget includes substantial increases in military compensation:
  • 1) The REDUX change in military retirement would be reversed by raising benefits from 40 percent to 50 percent of base pay for members retiring after 20 years. Also proposed are changes to ensure that retirees get cost-of-living (COLA) increases during periods of low inflation. Restoring military retirement benefits was the military leadership's top priority. For FY 2000-2005, these changes cost $6 billion.
  • 2) Military base pay in FY 2000 would be raised 4.4 percent -- the largest military pay increase since FY 1982. This raise exceeds the forecasted rate of civilian wage growth (employment cost index or ECI) and is more than two percentage points above the general inflation rate as reflected in the Consumer Price Index, projected at 2.3 percent for FY 2000. Planned FY 2001-2005 raises are 3.9 percent per year, which matches the projected ECI. For FY 2000-2005, the incremental cost of these higher pay raises compared with the lower raises planned for these years in the President's FY 1999 budget request is about $14 billion.
  • 3) Pay also would rise in connection with military pay table changes to increase the raises associated with promotions. This change will reward performance, compensate people for their skills and experience, and encourage them to continue their service. These targeted increases will range up to 5.5 percent, and will be in addition to the across-the-board raises. For FY 2000-2005, these pay table changes will cost $4.5 billion.
  • 4) For FY 2000-2005, the budget also includes another $2 billion for initiatives to improve recruiting and retention. For example, DoD is proposing higher compensation for military members possessing critical military skills.
  • From the $112 billion in additional resources for FY 2000-2005, the Department allocated a total of $36.5 billion to "put people first." This includes these four military pay and retirement increases plus $10 billion for higher pay raises for DoD civilians.

Protecting Readiness

  • Secretary Cohen is stressing that the readiness of first-to-fight forces remains high, and that overall U.S. forces continue to be fully capable of executing the National Military Strategy. However, the intensity of operations, the less-ready posture of some later deploying forces, and other concerns require extra measures to ensure sufficient readiness in the years ahead.
  • Bolstered by the addition of new resources, the FY 2000 budget funds the training, exercises, maintenance, supplies, and other essentials needed to keep U.S. forces prepared to achieve their combat missions decisively. Most of this readiness-related spending comes in the Department's Operation and Maintenance (O&M) accounts. When adjusted for today's lower troop strengths, O&M funding in FY 2000 is well above levels during the 1980s.
  • The FY 2000 budget funds the military services' most pressing readiness requirements -- those that could put readiness seriously at risk. It supports traditionally high OPTEMPO, flying time, and other readiness enhancers; readiness-related maintenance and improvements at DoD facilities; and readiness-related modernization, in areas like electronics and maintainability.
  • For FY 2000 the budget includes $1.8 billion for ongoing Bosnia-related operations and $1.1 billion for operations in Southwest Asia (SWA) at the force level and operating tempo in place last September. The Department has also incurred unbudgeted FY 1999 costs from providing assistance to Central America in the aftermath of Hurricane Mitch and from Operation Desert Fox in SWA. The FY 2000 budget contains an allowance to deal with these kinds of unanticipated emergencies.

Achieving Modernization Goals

  • As reconfigured by the QDR, the Department's weapons modernization plans include development of cutting-edge capabilities as well as cost-effective upgrades to existing systems. The $112 billion in added resources will enable DoD to make important augmentations to its previous modernization plans. For example, for FY 2000-2005 it will enable the Department to add eight ships to the Navy's shipbuilding plan, procure additional aircraft, and fix several funding shortfalls. The complete Procurement funding profile:
  • Department of Defense Procurement

($ in billions)

Budget Authority FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05
QDR Goal 49 54 60 * * * *
FY 2000 budget 49.0 53.0 61.8 62.3 66.6 69.2 75.1

*QDR did not specify funding goals beyond 2001. For FY 2000, funding of critical readiness and personnel needs left DoD $1 billion short of the QDR's Procurement goal. However, in real terms Procurement at $53 billion is nearly 7 percent higher than the FY 1999 level, and it will grow another 15 percent in FY 2001. America's military preeminence depends on investments in new technologies. A high priority for achieving this is DoD's science and technology program, which funds research that should help field superior weapons and support systems at affordable prices. Also critical are advanced concept technology demonstrations (ACTDs), which link relatively mature technology with new operational concepts and enable us to expeditiously evaluate important innovations. Major Service Programs The ambitious DoD modernization program is especially critical for achieving the needed transformation of U.S. forces to reflect new technologies and other military-related trends. Transforming U.S. forces requires implementation of Joint Vision 2010, a new concept for how U.S. forces will fight and achieve what is termed "full spectrum dominance." Modernization of aviation forces includes DoD's largest acquisition program: the Joint Strike Fighter (JSF). The aim is a family of aircraft, with variants configured to meet several sets of requirements. The JSF will replace the F-16 in the Air Force, F/A-18C in the Navy, and F/A-18C/D and AV-8B for the Marines. The JSF will continue in its concept demonstration phase into FY 2001, in preparation for procurement to commence in FY 2005. The F-22 will replace the F-15C/D in the air superiority role and have substantial air-to-ground capability as well. Aircraft testing is continuing, and F-22 production is expected to build to 36 aircraft per year by FY 2004. The Navy's F/A-18E/F will provide much greater survivability and payload over earlier F/A-18 models. Initial operational capability is planned for FY 2001. 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.

  • 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 upgrades of utility and attack helicopters and the AV-8B.
  • Modernization of naval forces includes procurement of the DDG-51 Destroyer, LPD-17 amphibious transport dock ship, T-ADC(X) logistics support ship, and New Attack Submarine (NSSN). The tenth Nimitz-class carrier (CVN-77) is fully funded in FY 2001. The budget also supports development of the next generation aircraft carrier and destroyer.
  • The FY 2000 budget advances the QDR-stressed capability of projecting military power to distant regions. Procurement of 120 C-17 aircraft will be completed by FY 2003, and further purchases are planned for FY 2004-2005. The C-5 transport and KC-135 tanker will receive major avionics upgrades and other enhancements.
  • The new budget continues the QDR's emphasis on precision munitions -- both with new systems and upgrades to existing missiles, bombs, etc. Also supported are the scores of lesser-known programs needed to ensure the decisive combat superiority of America's armed forces.
  • Ballistic Missile Defense
  • The FY 2000 budget continues DoD's strong ballistic missile defense (BMD) programs, which remain critical to a broader strategy seeking to prevent, reduce, deter, and defend against weapons of mass destruction and missile threats. The Department remains committed to advancing its missile defense efforts as fast as technology risks allow.
  • Theater air and missile defense programs are 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, as well as allies and friends. To defeat shorter-range missiles, 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, an Airborne Laser system is being developed.
  • This budget includes substantial new resources for the National Missile Defense (NMD) program. It increases NMD funding by $6.6 billion, including $600 million from FY 1999 supplemental appropriations. Total NMD funding for FY 1999-2005 is $10.5 billion. This substantial investment includes funding for NMD deployment and underscores the Administration's commitment to NMD. However, no deployment decision has been made. A decision about deployment is planned for June 2000 and is expected to be based primarily on the maturity of NMD technology as demonstrated in development and testing.
  • The primary mission of the NMD system being developed is the defense of the U.S. -- all 50 states -- against a limited strategic ballistic missile attack such as could be posed by a rogue nation. Such a system also would provide some capability against a small accidental or unauthorized launch of strategic ballistic missiles from more nuclear-capable states.

Streamlining and Reforming DoD Infrastructure and Support

  • Secretary Cohen's Defense Reform Initiative (DRI) continues to spearhead a comprehensive DoD campaign to streamline and reform our support activities. The goal is to substantially improve these activities and get them to consume a smaller portion of the defense budget.
  • During its first year DRI made major progress. For example, increased use of public-private competition is projected to save $11.2 billion from 1997 to 2005, and $3.4 billion per year thereafter. For FY 1997-2005 about 229,000 DoD positions are expected to be competed.
  • Congressional approval of two more rounds of base closure and realignment (BRAC) is urgently needed - otherwise scarce defense dollars will continue to be spent on excess infrastructure, rather than on the vital needs of America's armed forces. The estimated up-front costs for implementing decisions of new BRAC rounds in FY 2001 and 2005 are included in the FY 2000-2005 budget and plans. These BRAC actions could begin to generate savings by 2005 and ultimately save over $20 billion by 2015.
  • Between 1988 and 1995 four BRAC Commissions proposed the closure or realignment of 152 major installations and 235 smaller ones. Complete implementation of those decisions is projected to net $14.5 billion in savings by FY 2001. After FY 2001 recurring savings from them will be about $5.7 billion per year.

Strengthening Reserve Components

  • The FY 2000 budget reflects the essential role of the Reserve components in America's defense strategy, and it continues the critically important integration of the Active and Reserve components. The National Guard and Reserve were closely involved in resource decisions.
  • The FY 2000 budget provides $20 billion for Reserve component personnel, operations, and facilities accounts. For FY 2000, over $1 billion was added to previous plans for crucial training and other requirements including added funds for Active/Reserve integration, OPTEMPO, base operations, Reserve component support to combatant commanders, and programs to engender critical employer support required as a result of increased utilization of the National Guard and Reserve. This budget advances DoD's goals for equipment modernization and interoperability for the Reserve components by providing over $1.6 billion in FY 2000.
  • The new budget strongly supports the larger role that Reserve components are to play in increasing DoD's capabilities to support federal, state, and local agencies in responding to domestic incidents involving weapons of mass destruction (WMD). The Department has begun to train and equip members of the Reserve components to better support civilian authorities in mitigating the consequences of a WMD attack.

Projected Funding Allocations

(Some columns may not add correctly due to rounding)

National Defense Topline (Function 050) ($ Billions)

FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05

Budget Authority

DoD Military (051)* 262.6 267.2 286.4 288.3 298.7 307.6 318.9
DoE and Other 13.7 13.6 14.1 14.1 14.1 14.1 14.1
National Defense (050) 276.2 280.8 300.5 302.4 312.8 321.7 333.0

Outlays

DoD Military (051)* 263.6 260.8 268.6 278.3 290.2 300.0 317.6
DoE and Other 13.2 13.2 13.6 13.7 13.8 13.8 13.8
National Defense (050) 276.7 274.1 282.1 292.1 304.0 313.8 331.4

*Includes about $4.5 billion of FY 1999 supplemental appropriations, the amount that had been released when the FY 2000 budget was finalized.

DoD Budget Authority by Title ($ Billions)

FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05
Military Personnel 70.9 73.7 76.3 78.4 80.9 83.7 86.7
Operation & Maintenance 98.1 103.5 103.8 105.0 107.8 111.2 114.4
Procurement 49.0 53.0 61.8 62.3 66.6 69.2 75.1
RDT&E 36.6 34.4 34.3 34.7 34.5 35.0 34.2
Military Construction 5.1 *2.3 *7.1 4.2 4.3 4.5 4.8
Family Housing 3.6 3.1 3.8 3.6 3.7 3.9 3.9
Funds, Receipts, & Other -.7 -2.8 -.7 0 .9 .1 -.3
Total DoD (051) 262.6 267.2 286.4 288.3 298.7 307.6 318.9
% Real growth -.4 -.5 4.5 -1.8 1.0 .2 1.0

*These large funding changes in FY 2000 and 2001 reflect a one-time action to allow advance funding in Military Construction accounts.

DoD Budget Authority by Component ($ Billions)

FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05
Army 65.3 67.2 71.3 73.6 76.4 78.9 82.3
Navy/Marine Corps 81.9 83.3 91.4 89.2 93.1 96.2 100.3
Air Force 76.9 79.1 84.8 86.7 89.2 92.3 95.1
Defensewide 38.5 37.6 38.9 38.8 40.0 40.3 41.2
Total DoD (051) 262.6 267.2 286.4 288.3 298.7 307.6 318.9

Copies of Department of Defense budget documents are available at the following Internet address: http:www.dod.mil/comptroller/FY2000budget/