President Clinton today released his Fiscal Year (FY) 1996-97 defense budget,
which Secretary of Defense William J. Perry said strongly supports his two most
important initiatives: readiness and quality of life. For 1996 the request
seeks $246.0 billion in budget authority and $250.0 billion in outlays for the
Department of Defense (DoD).
In detailing the spending plan, Secretary Perry noted that full funding for
his initiatives was made possible in December, when President Clinton added $25
billion to defense spending over the next six years. "This higher topline
enabled us to fund our plans to provide high readiness, full military pay
increases, better quality of life, and prudent weapons modernization," Dr.
The FY 1996-97 budget begins implementation of DoD's FY 1996-2001 Future Years
Defense Program (FYDP). Last summer when preparing its FYDP, the Department
faced a potential shortfall of $49 billion between the likely cost of the FYDP
and the projected defense topline for FY 1996-2001. This shortfall was
eliminated by the $25 billion added by the President, $12 billion saved because
of lower inflation estimates, and a net of $12 billion that DoD cut from lower
The new budget and FYDP culminate a year-long DoD assessment of defense
strategy, force structure, priorities, and programs. The assessment validated
the primary recommendations of the Department's 1993 Bottom-Up Review (BUR).
However, this year's budget contains important differences compared to last
year's--for example, full military pay raises authorized under current law. In
explaining his spending priorities, Secretary Perry said, "People come first."
The new budget plans also begin the "recapitalization" of U.S. forces--that
is, the modernization of weapons and equipment, after several years in which
the Department lived off its Cold War stocks of equipment. Budget authority
for procurement will end its 10-year real decline in FY 1996 and then increase
nearly 50 percent by FY 2001. Providing for greater modernization was a major
consideration in the President's decision to increase the defense budget.
DEFENSE DRAWDOWN IS NEARLY COMPLETE
BUR-based defense plans and funding projected in the President's budget
support a defense posture sufficient to protect U.S. interests worldwide and
preserve America's crucial global leadership role. More specifically, the
post-Cold War U.S. defense strategy requires combat-ready forces that will be
capable of fighting and winning two nearly simultaneous major conflicts. If
some U.S. forces are engaged in a major regional conflict, the remaining forces
must be sufficient to deter other potential aggressors from taking advantage of
the situation. If deterrence fails, these remaining forces will be needed to
defeat the aggression. Further, a defense posture designed to deal with two
major regional conflicts provides a hedge against the possibility that a future
adversary might one day confront this nation with a larger-than-expected
The drawdown of forces to the level called for by the new defense strategy
will be nearly complete by the end of FY 1996. At that time, DoD will have
reduced active military personnel and force levels by over 30 percent since the
beginning of FY 1990, the fiscal year in which the Berlin Wall fell.
Highlights of force structure changes by fiscal year, and the DoD goal are:
Force Structure Changes
1990 1995 1996 1997 Goal
Army-- active divisions 18 12 10 10 10
Reserve Component brigades* 57 48 47 42 42
Marine Corps divisions
(3 active/1 reserve) 4 4 4 4 4
Battle forces ships 546 373 365 358 346
Aircraft carriers-active 15 11 11 11 11
Training/reserve carriers 1 1 1 1 1
Carrier air wings-active 13 10 10 10 10
Reserve air wings 2 1 1 1 1
Fighter wing equivalents-active 24 13 13 13 13
Reserve 12 8 7 7 7
*An approximate equivalent. The BUR plan calls for 15 enhanced readiness
brigades, a goal that DoD will begin to reach in FY 1996. Backing up this
force will be an Army National Guard strategic reserve of 8 divisions (24
brigades), 2 separate brigades, and a scout group.
Reflecting cuts in forces and infrastructure, personnel end strength will fall
well below FY 1987 post-Vietnam peaks:
FY 1987 FY 1995 FY 1996 Change
Active military 2,174,200 1,523,300 1,485,200 -32%
Guard and Reserve 1,150,900 965,000 927,100 -19%
DoD civilians 1,133,100 866,900 828,600 -27%
By FY 1999 active military end strength will level off at about 1,445,000.
DoD civilian end strength will continue its sharp decline--to 729,000 in FY
2001, 32 percent below FY 1990.
America's defense drawdown has been carried out without harming quality and
morale. The involuntary release of personnel has been minimized through the
use of incentives and careful personnel management. Military promotion
opportunities have been relatively constant. Personnel quality has risen, as
reflected by standardized tests, percentages of high school graduates, and
recruiting success. By virtually every measure, the restructuring of the U.S.
defense posture has been a remarkable success. Moreover, during this time of
historic adjustment, America's armed forces fought and won the Persian Gulf
war, executed complex humanitarian and contingency operations, and all the
while sustained the high readiness and vigilance needed to ensure U.S.
security. An extraordinary record.
READINESS IS PROTECTED
In formulating the new budget and FYDP, Secretary Perry accorded the highest
priority to preserving force readiness and the quality of life of military
personnel and their families.
Readiness essentials like training and maintenance are funded primarily in
Operation and Maintenance (O&M) accounts. O&M budget authority in FY
1996 is about the same as FY 1995, and declines slightly in FY 1997. Readiness
can be protected in spite of this decline because of force reductions and the
streamlining of DoD infrastructure and overhead. O&M funding will remain
fully sufficient to sustain high operations and training rates, prudent
equipment and real property maintenance, and other determinants of readiness.
The FY 1996-97 budget maintains traditionally high rates for the operating
tempo (OPTEMPO) of active U.S. forces. Army training rates will hold at 14.5
flying hours per month per tactical aircrew and 800 miles per year for tanks.
Navy steaming days per quarter will remain at 50.5 and 29 days for deployed and
non-deployed fleets, respectively. Navy flying hours per crew per month hold
at 24 hours. Flying hours per month for active Air Force tactical aircrews
will stay at about 20 hours.
The readiness of U.S. forces cannot be judged simply by O&M funding and
operating tempo measures. Ultimately readiness must be judged by the military
leaders who are responsible for it--from front-line commanders up to the
Defense Department's senior leadership. Before completing his FY 1996-97
budget request, Secretary Perry asked the Secretary and Service Chief of each
military department if the plan enables U.S. forces to remain ready. They said
that the requested funding is sufficient so long as any unbudgeted DoD costs
for contingency operations are paid for without draining readiness accounts.
In the last quarter of FY 1994, readiness suffered because already strained
O&M funds had to be diverted to pay DoD costs for unbudgeted contingency
operations in Rwanda, Haiti, and elsewhere. Supplemental appropriations,
congressional approval of reprogramming requests, and some of the operations'
bills themselves occurred too late in the fiscal year to prevent this diversion
of funds. For FY 1995 President Clinton is requesting a supplemental
appropriation that should--assuming no new major contingencies emerge--obviate
the need to consume funds needed for readiness. The Administration also is
requesting authority that will enable it to avoid diverting money from
readiness to pay for unbudgeted contingency operations late in the fiscal year.
The National Guard and Reserve will continue to execute the plan to
downsize in FY 1996-97. Only those units needed to support current defense
strategy are being retained, but the role of Reserve Component forces is as
important as ever. Under the "Mission Readiness" concept, readiness funding
for Guard and Reserve units will be directly determined by how early in a
crisis they are scheduled to deploy. Proposed funding also supports greater
use of the Guard and Reserve for peacetime operations, to help prevent
excessive strain on active forces; an added benefit is more realistic training
for reservists, creating a double payoff for the dollars spent.
QUALITY OF LIFE IS SUPPORTED
Providing a good quality of life (QOL) for service members and their families
is both the right thing to do and crucial to sustaining the readiness of U.S.
forces. Reflecting this conviction, the new budget funds the full military pay
raises provided for under law. In addition, Secretary Perry has added $2.7
billion over the next six years for family and bachelor housing; cost-of-living
and housing allowances; child care; family assistance; and morale, welfare, and
recreation programs. This action supplements already strong DoD
To enhance quality of life, the new budget supports:
- Full by-law military pay raises of 2.4 percent for FY-1996 and 3.1
percent for FY 1997.
- A new allowance for military families living in high cost areas. About
30,000 people will
- The first step in a phased plan to restore the Basic Allowance for
Quarters to the DoD objective
level of 85 percent of average housing costs. Benefits 700,000 people in
- $800 million in voluntary separation programs for military personnel.
- Full protection of commissary benefits.
- Payment of the Basic Allowance for Subsistence (about $200 per month)
for most married
service members deployed on operational missions. Previous policy
prohibited such payments
to enlisted members.
- Over 49,000 new or renovated living spaces for single service members
and over 28,000 new or
renovated quarters for families, during the next six years. For living
facilities, DoD will invest
$4 billion for new construction and $2 billion for renovation.
- A 23 percent increase in child care spaces by FY 1997. For FY 1995-96,
20 child care centers
will be constructed or expanded, for $56 million.
- In FY 1995-96, 18 new recreation centers, chapels, and fitness centers,
requiring $108 million.
- Increased resources for family assistance.
Beyond these traditional concerns, Secretary Perry recognizes that quality of
life can deteriorate when military people spend excessive time away from their
home station--such as for lengthy contingency operations. He is taking steps
to ensure that DoD standards for length of deployments for service members are
maintained, except for unavoidable circumstances. For example, Secretary Perry
has ordered the greater use of reserve forces to relieve active duty units that
have excessive commitments.
RECAPITALIZATION IS BEGINNING
To ensure that U.S. weapons will remain qualitatively superior to future
adversaries, the new FYDP begins the recapitalization of America's armed
forces--an undertaking that will continue well into the next century. Real
increases in procurement funding will start in FY 1997 and continue through the
FYDP period. Adjusted for inflation, budget authority for procurement in FY
2001 is projected to be 47 percent higher than in FY 1996.
Requested budget authority for procurement in FY 1996 is $39.4 billion--which,
adjusting for inflation, is a decline of 71 percent from FY 1985 and the lowest
level since 1950. The deepest cuts in procurement have come since the fall of
the Berlin Wall in November 1989. During FY 1991-96 deep procurement cuts
could be made without endangering the superiority of U.S. forces because of the
significant modernization of them during the 1980s and the collapse of the
Soviet military threat. Additionally, as the force structure came down, the
remaining units could be equipped with modern systems already fielded.
America's armed forces must now begin a new phase of modernization. Some
systems--like C-141 aircraft--are reaching the end of their service life.
Others have not benefited from advances in electronics, lasers, materials, and
Much of DoD's recapitalization will focus on upgrading the capabilities of
some existing weapons, weapons platforms, and supporting systems. But
recapitalization also will include developing and fielding totally new systems.
The FY 1996-97 budget provides for the procurement of:
- Aircraft: Remanufactured AV-8B Harrier, C-17, F/A-18C/D, and F/A-18E/F,
plus the E-8
Joint STARS surveillance aircraft.
- Helicopters: UH-60 and Apache Longbow modifications.
- Missiles: Javelin, Hellfire, Patriot (PAC-3), Tomahawk, and Trident II
- Land systems: upgraded M1 tanks and Bradley fighting vehicles, Paladin
and new Armored Gun System.
- Ships: Aegis destroyers and the third Seawolf submarine.
Major research and development (R&D) efforts in the new budget and FYDP
include: Advanced Field Artillery System, theater ballistic missile Defense,
Comanche helicopter (prototype program), New Attack Submarine, V-22 Osprey
aircraft, F-22 Advance Tactical Fighter, MILSTAR, JAST, and various precision
The recapitalization of U.S. forces is part of a broader challenge aimed at
improving their capabilities, flexibility, and lethality. For the planned
force structure to be sufficient to support the U.S. defense strategy, a series
of critical force enhancements are necessary. These are geared especially
toward ensuring that our forces will be able to bring substantial firepower to
a regional conflict in its opening stages and quickly halt aggression. The new
budget and FYDP support enhancements to: munitions and sensors, battlefield
surveillance, long-range bombers, carrier-based air power, strategic airlift
and sealift, overseas prepositioning, and Army Reserve Component readiness.
OTHER DEFENSE BUDGET AND FYDP HIGHLIGHTS
The DoD request of $246.0 billion in FY 1996 is, in real terms, 39 percent
below FY 1985, the peak year for inflation-adjusted DoD budget authority since
the Korean War. Under the President's budget, by FY 1997 the cumulative real
decline since FY 1985 will reach 41 percent. Reflecting recapitalization
efforts, in FY 1998-99 DoD budget authority will increase about enough to keep
pace with inflation, then receive moderate real increases in FY 2000 and FY
2001, primarily because of higher funding for procurement. (See attached
chart.) DoD outlays as a share of America's Gross Domestic Product (GDP) will
fall to 3.1 percent in FY 1997, half the 6.2 percent of the mid-1980s.
Nuclear Threat Reduction and Ballistic Missile Defense
A top priority of the Clinton Administration is preventing the reemergence of
the nuclear threat that attended the Cold War. There are still about 25,000
nuclear weapons in Russia and three other Soviet republics. Today the
Department is focused on helping Ukraine, Belarus, and Kazakhstan eliminate the
Soviet nuclear weapons on their soil, and assisting Russia to reduce its
arsenal. U.S. resources and expertise are helping to dismantle weapons and
delivery systems, as well as the rest of the nuclear weapons complex.
A related concern is the spread of nuclear, biological, chemical, and missile
capabilities, which pose a growing threat to U.S. global interests. Preventing
this proliferation is a paramount DoD objective.
America also must ensure that other nations do not mount a ballistic missile
threat against U.S. forces or those of our close allies. To that end, DoD
budget plans support the rapid development and deployment of theater missile
defenses. This focus on theater missiles addresses the immediate threat to
U.S. forces deployed throughout the world, and provides a hedge against the
emergence of a strategic ballistic missile threat to the United States. The
new budget requests $2.9 billion for the Ballistic Missile Defense program for
DoD's New Technology and Industrial Strategy
With the end of the Cold War, the resulting sharp reductions in defense
spending, and the surge of commercial technological innovation, DoD can no
longer afford to maintain defense-unique technologies, capabilities, and
industries--to ensure the superiority of U.S. forces. Many leading-edge
technologies that will be critical to success on future battlefields (e.g.,
electronics and communications) are available more cheaply and readily through
commercial firms. As a result, DoD must increasingly rely on commercial
technologies, products, and processes--which are termed "dual-use" when adapted
for defense applications. Dual-use also includes adaptation of defense
technologies into commercial products, which can create economies of scale for
both commercial and defense products.
DoD is pursuing numerous initiatives to advance this new strategy. The
Department is working to reform its acquisition system; reduce the use of
military-unique specifications; consider commercial technologies and products,
when developing new systems; seek integration of defense and commercial
production; and increase research and development (R&D) of dual-use
The cornerstone of this dual-use philosophy is the Technology Reinvestment
Program (TRP), funded at $500 million for FY 1996. TRP, along with other
dual-use technology investments, is substantially contributing to the vitally
needed integration of the military-commercial industrial base.
Streamlining infrastructure and BRAC
Streamlining the U.S. defense infrastructure (bases, facilities, and
support organizations) is a critical part of post-Cold War restructuring. It
requires major reductions to infrastructure, as well as realignments to achieve
optimum effectiveness and efficiency. As it has drawn down, DoD has
simultaneously reduced its overseas facilities. For domestic facilities, much
progress was made through the base realignment and closure (BRAC) process in
1988, 1991, and 1993. These three BRAC rounds approved the closure of 70 major
bases and are projected to save $6.6 billion during their overlapping 6-year
implementation periods (FY 1990-99). To date, 33 of these bases have been
closed. Once implementation of BRAC I through III is complete, annual savings
will be $4.5 billion.
The BRAC process for 1995 is the last one authorized under public law, and DoD
recommendations to the BRAC Commission are due by March 1.
With $5.0 billion requested for FY 1996, DoD environmental programs
support the readiness of U.S. forces by protecting military personnel and their
families from environmental, safety, and health hazards. The programs ensure
the usefulness and long-term viability of DoD lands and facilities. Major
environmental priorities include actions to achieve compliance with existing
laws and regulations, pollution prevention, and cleanup of past contamination.
NATIONAL DEFENSE TOPLINE
(Current $ Billions)
1995 1996 1997 1998 1999 2000 2001
DoD military - 051 252.6 246.0 242.8 249.7 256.3 266.2 276.6
DoE $ other 10.9 11.8 10.6 9.9 9.9 9.9 9.9
Total national 263.5 257.8 253.4 259.6 266.3 276.0 286.5
% Real change -1.9 -5.3 -4.1 -0.1 -0.2 +1.1 +1.2
1995 1996 1997 1998 1999 2000 2001
DoD military - 051 260.2 250.0 246.1 244.2 249.6 257.9 261.6
DoE & other 11.4 11.4 10.9 10.3 10.0 9.9 9.9
Total national 271.6 261.4 257.0 254.5 259.7 267.8 271.5
% Real change -5.4 -6.6 -4.4 -3.6 -0.6 +0.6 -1.2