Release No: 051-97
February 06, 1997
Secretary of Defense William S. Cohen today released details
of President Clinton's Fiscal Year (FY) 1998 defense budget. The
FY 1998 budget begins implementation of the Administration's FY
1998-2003 Future Years Defense Program (FYDP). Both the budget
and FYDP were developed under the direction of outgoing Defense
Secretary William J. Perry, before Secretary Cohen was sworn into
office on January 24.
President Clinton's FY 1998 budget requests $250.7 billion in
budget authority and $247.5 billion in outlays for the Department
of Defense (DoD). Budget authority for FY 1998 is $2.8 billion
above the amount the Administration last year planned for FY
1998, but $2.1 billion below the level Congress appropriated for
For FY 1999 through 2003, DoD budget authority increases
above projected inflation. This planned real growth was achieved
because President Clinton, during the final weeks of budget
preparation, added $7 billion to the DoD topline and allowed DoD
to keep $4 billion of inflation savings. This marked the fifth
time in four years that the President increased defense spending
above previously planned levels.
The new budget and FYDP continue to sustain high readiness
for U.S. forces and provide a good quality of life for military
personnel and their families. These are the Secretary's highest
budget priorities. Plans also call for a substantial increase to
procurement spending by FY 2002 to modernize aging weapons and
equipment. While the request for procurement funding in FY 1998
is modestly less than the Department planned last year, the full
program still holds to the goal of achieving a $60 billion level
of procurement funding by FY 2001.
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As the new budget is released, work is continuing on the
Department's Quadrennial Defense Review (QDR). The QDR is a
comprehensive reassessment of U.S. defense strategy, force
structure, readiness, modernization, and infrastructure.
Secretary Cohen will direct the completion of the QDR and its
presentation to the Congress later this year. One of the QDR's
key aims is to identify budget savings to sustain the increases
needed for weapons modernization.
Preserving Force Readiness and Supporting Ongoing Military
In the preparation of the new budget, strong support was
provided for training, maintenance, supplies and other essentials
needed to keep U.S. forces ready to fight and win decisively.
This readiness-related spending occurs mostly in the Department's
Operation and Maintenance (O&M) accounts. Reflecting the
priority given to readiness, O&M is the only appropriation title
given a dollar increase in the new budget: from $92.9 billion in
FY 1997 to $93.7 billion in FY 1998. Within its own O&M account,
each military service will work to sustain high levels of
readiness, while continually implementing initiatives to reduce
overhead costs. The success of this budget strategy is reflected
in the high state of readiness of U.S. forces -- as demonstrated
in Bosnia, Southwest Asia, and elsewhere around the world.
The Department continues to take action to prevent unbudgeted
costs of non-routine operations, like those in Bosnia, from
absorbing funds needed for readiness, modernization, and other
top priorities. To that end, the FY 1998 budget continues the
practice of budgeting for all known military operations. The
request includes $1.5 billion in FY 1998 in the Overseas
Contingency Operations Transfer Account to complete planned
operations in and around Bosnia. In addition, $.7 billion is
included in the Military Service/Defense Agency budgets for the
continuing operations in Southwest Asia.
In its FY 1997 defense bill, Congress appropriated $1.3
billion to cover military operations that were projected at the
time of the bill's completion. Since then, two developments have
occurred that now leave the Department facing $2.0 billion in
unbudgeted FY 1997 military operations costs. First, new
provocations by Iraq last September increased the intensity of
U.S. operations in Southwest Asia. Second, this past November
President Clinton approved participation of U.S. forces in a new
phase of operations in Bosnia to further advance the goals of the
Dayton Peace Accord. To cover these new projected costs, the
Clinton Administration is requesting a FY 1997 supplemental
appropriation of $2.0 billion. Of this $2.0 billion, $124
million is for Southwest Asia operations.
The Administration is also requesting authority for the
Secretary of Defense to rescind (cancel) $4.8 billion in
previously appropriated FY 1997 funds. The goal will be to
target spending that, in the Secretary's judgment, would not make
significant contributions to U.S. military capabilities. The
budget assumes that $2.0 billion of these rescissions would
offset the FY 1997 supplemental appropriation request for Bosnia.
The other $2.8 billion in rescissions is necessary to reach
Improving Quality of Life
Providing a good quality of life for our uniformed people and
their families is essential to sustaining readiness and the long-
term quality of U.S. forces. Reflecting that reality, the FY
1998 budget includes strong support for military pay, housing,
medical services, and other important services for our personnel.
The budget supports:
Military pay raises up to the maximum percentage
established by law for every year through the turn of the
century. The FY 1998 budget funds a 2.8 percent pay increase;
the outyears provide for 3.0 percent per year.
Construction, replacement, or refurbishment of about
5,900 family housing units. To solve its housing problems more
rapidly, the Department is pursuing public/private partnerships,
which will replace greater numbers of units with less of a budget
The construction or modernization of approximately
11,000 barracks living spaces, with the majority of the new or
modernized living spaces providing each unaccompanied service
member with more room and a private sleeping area.
Strong child care and family support, and morale,
welfare, and recreation programs.
For several years, the Defense Department has been able to
reduce its procurement of new weapons and upgraded capabilities
without undermining the battlefield superiority of U.S. forces.
The average age of military equipment has not risen
substantially, partly because many new weapons were procured in
the 1980's and partly because older equipment was weeded out as
forces were drawn down. This decline in procurement spending has
made room in the budget for robust funding for training,
maintenance, quality of life, and other components of near-term
Now, to ensure the long-term readiness and capability of the
force, it is necessary to begin investing in the procurement of
new systems. Consistent with that goal, spending for procurement
is projected to achieve real growth in excess of 40 percent
through FY 2002 from the $42.6 billion requested in FY 1998.
Major procurement programs in FY 1998 include:
The Army's Longbow Apache helicopter, Patriot PAC-3
missile, Family of Medium Tactical Vehicles, M1 Tank Upgrade, and
The Navy's F/A-18 E/F aircraft, DDG-51 destroyer, and
New Attack Submarine; and the Marine Corps' V-22 tilt-rotor
aircraft and remanufactured AV-8B light attack aircraft programs;
The Air Force's C-17 airlifter, E-8B JSTARS aircraft,
Global Positioning System (GPS) satellites, and Titan IV space
Munition programs such as the Joint Direct Attack
Munition, Joint Standoff Weapon, Javelin missile, Sensor Fuzed
Weapon, and Brilliant Antiarmor Submunition.
Various command, control, communications, computers,
intelligence, surveillance, and reconnaissance (C4ISR) upgrades
Major Research, Development, Test, and Evaluation programs in
FY 1998 include:
The Army's Comanche helicopter, Crusader artillery
system, and Battlefield Digitization program;
The Navy's Arsenal ship, Ship Self Defense and
Cooperative Engagement Capability programs;
The Air Force's F-22 aircraft, MILSTAR satellite
communications system, Space-Based Infrared System (SBIRS),
Airborne Laser and Evolved Expendable Launch Vehicle;
Joint programs such as the Navy/Air Force Joint
Advanced Strike Technology/Joint Strike Fighter; and various
smart munition programs such as the JASSM and AIM-9X missile;
Continued support of the stable Technology Base
program, particularly a robust Dual-Use Application Program of
$225 million and the Advanced Concept Technology Demonstration
(ACTD) Program at $121 million.
Ballistic Missile Deterrence and Defense
The proliferation of weapons of mass destruction (WMD) and
the ballistic missiles that deliver them pose a major threat to
U.S. forces, as well as to our allies and other friendly nations.
The Department of Defense is pursuing a robust Ballistic Missile
Defense (BMD) program, as part of a broader counterproliferation
strategy to reduce, deter, and defend against this threat.
The BMD program's highest priority is Theater Missile Defense
(TMD), to meet the threat that exists now. The goal is to
develop, procure, and deploy systems that can protect forward-
deployed and expeditionary elements of U.S. forces, as well as
allied and friendly nations, from theater-range ballistic
missiles. In general, these programs are structured to proceed
at the fastest pace that the technology risks will allow. Key
programs include the Patriot PAC-3, Navy Area TMD, Medium
Extended Air Defense System (MEADS), Navy Theater-Wide TMD,
Theater High Altitude Area Defense (THAAD) system, and Airborne
The next highest BMD priority is development of a National
Missile Defense (NMD) program that positions the United States to
field the most effective possible system to defend U.S. territory
in the future when the threat warrants such a deployment. The
third BMD priority is the continued development of a technology
base that improves the capability of both the Theater and
National defense programs to respond to emerging threats.
FY 1998 budget authority requested for Ballistic Missile
Defense is $3.5 billion. For FY 1999-2003 an additional $17.9
billion is planned. Beginning with the FY 1998 budget, all
procurement funding for TMD programs are in the appropriate Army,
Navy, or Air Force accounts. Funding for the Administration's FY
1998-2003 BMD program is $2.4 billion higher than the level
projected last year.
Force Structure and Manpower
The U.S. force structure has been reduced by about one-third
since 1990. Comparable cuts also have been made in support
activities and infrastructure, but efforts are ongoing to reduce
these costs further, without compromising quality and
Reflecting these changes, personnel levels have declined as
well. Active duty military strength is budgeted at 1,431,000 for
FY 1998, down 34 percent from its FY 1987 post-Vietnam War peak.
Selected Reserves will decline to about 892,000 in FY 1998, down
24 percent from their FY 1989 peak of 1,171,000. DoD civilian
manpower (full-time equivalents) will number approximately
772,000 in FY 1998, a 32 percent decline from FY 1987. Plans
call for a further drop to about 718,000 by FY 2003.
About $19 billion of the FY 1998 defense budget is for the
Reserve components, which provide essential capabilities and
892,000 Selected Reserve personnel to the Total Force. Budget
emphasis continues to be on maintaining readiness for wartime
missions and contingencies.
This budget continues to focus on the Reserve Component units
that would be needed earliest to fight two nearly simultaneous
major regional conflicts and fully funds continuation of their
high readiness levels. The budget also includes several
initiatives to increase the peacetime use of the Guard and
Reserve--which would reduce the stress on active forces, while
providing more realistic training for Reservists.
Efficiencies in the Budget
The new budget and FYDP reflect more efficient operations as
a result of several different changes. DoD civilian personnel
are being drawn down, partly as a result of post-Cold War force
structure reductions and partly because of management reforms.
Excess inventories of supplies are being reduced. Acquisition
reform is changing the way the Department develops and procures
new weapons, making the process less expensive both for the
Department and for its private contractors. Financial and
personnel management systems are being consolidated and
modernized, making them less costly and more responsive to both
customers and DoD decision makers. Initiatives to outsource
activities that can be done more cost effectively by the private
sector are included in the budget. The goal is to provide better
products and services to DoD customers at reduced cost.
The Department is continuing to carry out the decisions of
the Base Realignment and Closure (BRAC) process for streamlining
defense facilities within the United States. The results from
all four BRAC commissions should be implemented completely by the
end of FY 2001, and should provide a net savings of $14 billion
for the years FY 1990 through FY 2001. After FY 2001, the
Department expects to realize annual recurring BRAC savings of
about $5.6 billion.