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Dealing With the Budget Requirement for Defense
Prepared remarks by Deputy Defense Secretary John Deutch , The National Defense University, Fort Lesley J. McNair, Washington, Tuesday, January 03, 1995

Thank you very much.

... What I hope to do is to share with you for a few moments the views that [Defense Secretary] Bill Perry and I have on the future of defense programs, trying to address the question, "Do we have enough money for defense?"

I'm very pleased to have this opportunity to do that in front of such a knowledgeable and committed audience of our men and women in the armed services, and at the end of my remarks I'd be happy to take any questions you may have on any subject that I cover or anything else that may be on your minds.

The question that I want to address today is, "Are we spending enough on defense?" It is a question that we are going to hear frequently from the new Congress, and it deserves to be considered seriously.

Nothing is more important to our country, to our allies and to peace in the world than to assure that we have made adequate provision for the national defense. But are we spending enough is not the right question to ask first if we are really interested in the answer. If we are really interested in getting this right, the question should be somewhat different: "What are our defense needs? Do we have the right programs and force structure to support these needs? Do we have the right defense priorities?" And then only if we do have the right priorities, "Are we providing enough resources?"

Put another way, the question of whether we're spending enough lends itself to endless "Yes, we are; No, you're not" school of political argumentation. If, on the other hand, you ask if we're spending enough to buy what we need, then you might actually get a more informative answer. I propose to take the second approach.

First, I want to present briefly the broad outline of President [Bill] Clinton's defense policy and how we think about force posture, about readiness, modernization programs that support that policy. Then I would like to deal with the debate that has been conducted about this policy, most of it dealing with money.

The basis of this administration's defense policy is the Bottom-up Review, commissioned by former Secretary of Defense Les Aspin when he became secretary of defense at the beginning of the Clinton administration. The purpose of the Bottom-up Review was to determine how to deal with the new threat to the post-Cold War world, to determine what strategy we needed and to determine the force structure needed to support the strategy.

There are three essential elements to that post-Cold War strategy. First, the former Soviet conventional threat to Europe has disappeared. This Soviet threat was the threat that had dominated our force structure planning. It is now gone. What do we need conventional military forces for today?

There are still unstable and hostile areas in the world where vital U.S. interests could be threatened, and U.S. military involvement cannot be ruled out in these regions. The two most prominent examples are major conflicts that could occur in Southwest Asia, as we've seen in the case of Iraq, and in the Far East. These are major regional conflicts that can involve in a major way the forces of the United States, and we must have sufficient forces to deal with them.

We must have sufficient forces to deal with them almost simultaneously. Why almost simultaneously? This is necessary because we have to have residual forces to deter opportunistic launching of a second conflict when the United States and its allies are already involved in a first major regional conflict in the Middle East or in the Far East.

The second element of the strategy -- of our bottom-up defense policy strategy -- is to meet the new dangers that have emerged in the post-Cold War world. These new dangers require capabilities and outlooks possessed differently by our defense forces than were true in the Cold War era.

What are these important new dangers of the post-Cold War era? First and foremost, they are preventing the spread of nuclear weapons, weapons of mass destruction generally, as we have seen in the case of North Korea. We have been involved in various peace operations in Somalia, in Haiti and perhaps more extensively in Bosnia, and the future, I think, holds more instances where U.S. forces will be involved in peace operations throughout the world. We've been involved in operations for humanitarian assistance, as in the very successful effort to alleviate the suffering and bring some tranquillity, if only temporarily, to Rwanda. And we are asked to be involved in counterdrug activities, especially in cooperation with our neighbors in Latin America. So we also have to be prepared to deal with these new security challenges in the post-Cold War era.

Third, while the geo-military landscape has changed dramatically, there remains a formidable residual nuclear capability with four of the states of the former Soviet Union -- Russia above all, Belarus, Kazakhstan and the Ukraine. The United States has a major interest in reducing the threat posed by these nuclear weapons and in using new cooperative efforts to do so, cooperative efforts that have been made possible as a result of the end of the Cold War.

Clearly, this is an ambitious agenda, and we know intuitively that all these different elements require considerable force, but are configured and trained to deal with situations much different from stopping Soviet armor from flowing through the German border across the Fulda Gap.

To find out what we actually needed to support this new security agenda we carried out a Bottom-up Review composed of civilian specialists and military specialists of the Joint Staff, cooperatively carrying out analysis of force structure requirements. This was a thorough ongoing analysis that concluded a smaller force structure could carry out the strategy compared to the height of the Cold War. Indeed, the Department of Defense is planning for a drop of approximately 40 percent in active duty Army, a reduction of 25 percent in Air Force fighter wings and a reduction of the Navy of almost 600 ships to about 350 ships from 1989 to the end of the century, a sharp reduction in the force structure of our nation.

Both this strategy and the force structure have come in for some criticism. From the left we have heard that it was unnecessary to prepare for two nearly simultaneous major regional conflicts. From the right we have heard some criticism that the force structure was inadequate to execute the strategy of two major regional conflicts that we had set for ourselves.

I want to submit to you here today that these are basically settled questions. Most believe that the two major regional conflict strategy is a prudent, appropriate response to these unstable and uncertain times. There is more discussion about whether the force structure is big enough for the strategy. But here, too, I believe that most individuals think our forces are adequate if we are careful about how we use them and don't overuse them or use them too frequently.

The core debate is over whether we are spending enough for defense -- whether we have cut too much too soon, as one formulation has it. It is certainly true that the smaller force structure of the defense of this country costs less money. The budget of the department has fallen in real terms from a high in fiscal year 1985 of about $390 billion to its current level of about $250 billion.

The American taxpayer has a correct expectation that the disappearance of the Soviet threat should mean some saving in the defense budget. But the size of the defense budget is not determined solely by the size of the force structure. A major portion of the defense budget is the need to maintain the forces in a ready status.

Force structure that is not maintained at a state of readiness appropriate to its mission is ineffective. We don't buy an aircraft carrier, an Army division, an Air Force wing to put on the shelf and expect it to be ready when the fight is needed. We have to pay for training, the exercises, for fuel and ammunition, for repair and for maintenance. We must also take care of the families and provide a decent quality of life to the women and men in uniform who choose to make service to their country their career. We have to pay for a whole host of things which make up for readiness of our armed forces.

The reason that the defense budget savings are not larger today have to do with the need to preserve readiness. In all past periods of U.S. history, when militaries draw down to core, after World War I, after World War II and after the Vietnam War, the drawdown in force structure was accompanied by a reduction in the readiness of the remaining forces. In times of drawdown force structure has been protected at the expense of readiness.

President Clinton and Secretary Bill Perry have made it clear that this is not going to happen today. Why? Simply put, the security threats that confront the United States do not allow us to have unready forces, and they especially don't allow us to have unready forces at the lower active duty strength that we are now planning, at the reduced force structure levels that we have committed ourselves to.

Events have made it clear beyond question that this is the right policy. During the past year we saw the possibility of major regional conflict with Iraq and with North Korea. Significant U.S. forces have been involved in peacekeeping activities in Haiti, in Rwanda, Bosnia and Somalia. As we meet here today, approximately 50,000 U.S. forces are involved in military operations somewhere around the world. We cannot afford forces that are not ready to do their job.

Now, I believe that just about everyone agrees with this proposition. The need for readiness is not an issue. What has been an issue in the debate is whether we are maintaining readiness. Let me address that now.

First, I'd like to speak to some general propositions about readiness. It first should be said that we inherited a sound basis of readiness from our predecessors. They gave us a ready force, and we have tried to maintain it. When we took office we made readiness our No. 1 priority, as a matter of policy.

For the first time we wrote into the Department of Defense's Defense Policy Guidance that readiness comes first. When there are conflicts with other spending priorities, readiness comes first. It's down in black and white.

Secretary Perry has also created a Senior Readiness Oversight Council to keep readiness policy and long-term issues of readiness before the department's chief policy makers. I chair that council. What has resulted is a very high level of support for readiness. I would stress that on average -- on average -- we are providing more readiness dollars for active duty units than was true in the past. I say that because our force structure is declining but our spending on readiness-related operations and maintenance categories has increased.

But, of course, we don't manage readiness on the basis of averages. Some units are designated [to] deploy promptly in response to contingencies, and other units are designated to be reinforcing. We maintain a staggered system of readiness, with our first readiness priority given to the prompt-response forces. Each service manages its readiness system in a slightly different way, and the joint staff continually appraises joint readiness from the viewpoint of the CinCs [commanders in chief of unified commands].

At the same time we have to admit that even with all this attention, things can go wrong. For example, during fiscal year 1994 we did not submit and Congress did not grant a budget supplemental to cover the service operation [and] maintenance account that we had depleted by the contingency operations that occurred so late in the fiscal year -- the Haitian and Cuban migrant operations being the notable examples in fiscal 94.

The inevitable result was that funds were taken from later-deploying units, and their readiness suffered. You may have read or heard that three Army divisions recently fell below peak readiness and that two wings of naval air, coming off deployment, had restricted flying hours. These were not our first-to-go forces, but even so it is not acceptable to have that kind of degradation in readiness.

Therefore, Bill Perry has directed that the Senior Readiness Oversight Council take on the added responsibility of reviewing monthly readiness indicators from the services. And I've further asked ADM Bill Owens, the vice chairman of the Joint Chiefs of Staff, to take the job of collecting this material and assessing it on an overall basis on the ability of our forces being ready to fight from the point of view of the CinCs in the various geographical regions of the world.

Each month the Senior Readiness Oversight Council will review the ... CinCs' readiness status and take appropriate action to remedy any deficiencies that are found. No system could afford to maintain or should maintain all of its systems at 100 percent ready. What is needed is a responsive system that appraises what is happening, keeps track of change and adapts quickly to necessary augmentations.

And we intend to fully fund optempo [operations tempo] and training and reduce the maintenance backlogs that exist in the defense programs. For years there's been a deterioration, or a growth in the backlog of real property maintenance; the budget that the president will submit this year takes the first step at reversing that increase in backlog and reducing real property maintenance.

In FY 95 and the future we are going to be much more aggressive about assuring that unplanned contingency costs do not adversely affect readiness. In particular, we are going to seek budget supplementals for all military and peace operations that have not been accounted for in the budget. This is necessary to assure that paying for these contingencies do not draw down funds from training and maintenance and base support that are essential for maintaining readiness.

We must resist the temptation to measure support for defense by how much money is being spent on readiness. We have a system of staggered readiness, and we have a mechanism for appraising and tracking how things change where units -- whether they're division, ships or air squadrons -- are maintained ready, according to the plan from the Joint Chiefs of Staff for deployment in time of crisis. Money need not be spent to maintain all units at equal readiness; rather units must be maintained at the level of readiness appropriate to the military missions those forces may confront.

People are essential also to an effective and ready force. Bill Clinton and Secretary Bill Perry stress this point. It leads us to place emphasis on both military pay for our men and women in uniform and for programs that contribute to the quality of life in the armed forces. Quality of life programs address housing; child care; benefits; morale, welfare and recreation; and all those efforts which contribute to making the life of those of the armed services bearable wherever they may be stationed.

All of these elements -- the strategy, the force structure, the readiness, the quality of life -- comprise the answer to the first question that we should be asking: "What do we need for our defense?"

We now can turn to the next question: "Are we providing adequate resources to pay for it? Are we spending enough?" I want to make clear that Bill Perry and I believe that the answer today is: "Yes." That has not always been true in the past, and we have candidly discussed it.

In September, for instance, I testified in the Senate that our programs were underfunded by some $40 billion over the six-year planning period. There was a number of elements contributing to this estimate of underfunding, including inflation assumptions. We have been conducting discussions within the administration about how to deal with the budget requirement for defense, and the issue was never, never how much defense can we afford, but how we pay for the defense that we need.

President Clinton gave us an answer last month. He ordered $25 billion to be added to the defense budget over six years to make sure we had a ready force, to make sure our men and women in uniform have the quality of life improvements that they need, which will assure us that we will be able to recruit and retain the best people in the future and the salary increases they deserve and to make sure that the overall program is affordable.

New economic assumptions, favorable economic assumptions about inflation reduce the gap by a roughly $12 billion addition during the six-year planning period. And Bill Perry and I also announced last month reductions in some of the lower-priority weapons system modernization programs purchased in the near term in order to provide approximately $10 billion additional support for our readiness and our force structure and our strategy. All this amounts to steps which make the defense we need affordable, and it is a strategy that puts people and readiness first, ahead of systems.

We must recognize, however, that some modernization and eventually a great deal of recapitalization for existing airplanes, ships and tanks will be necessary as these systems reach the end of their useful life. The president's $25 billion addition, which has been criticized as being fat and bloated -- that is, having most of the money come in the outyears -- indeed places money at the end of the six-year planning period and actually provides the 1 percent real growth in the defense budget at that time when modernization and recapitalization for our systems is most needed.

In sum, the president's program provides the resources required to fund the Bottom-up Review and the defense strategy it encompasses. Generally, we believe the readiness and war-fighting capability of our troops is very high today. This readiness depends crucially on the professional capability of our fighting women and men, and this is why Bill Perry has insisted on the initiatives to improve the quality of life and the military pay for our soldiers, sailors, airmen and Marines.

The best indicator of how ready our forces are and how incredibly high the readiness is was demonstrated in the performance in Haiti and the more recent deployment to Kuwait to meet Saddam Hussein's threat. We have the best military in the world, supporting the right strategy for the time we live in today. The president has demonstrated his commitment to maintain that defensive posture, and we in the Department of Defense are committed to support that view.

Thank you very much. I'll be happy to take questions on the subjects I've addressed here or any other subjects that may be on your mind, if there are any.

Q. What's the future of the third wave in warfare, or information warfare?

A. Let me just say that a very important feature of thinking about modernization and recapitalization, about what we're going to do about systems of the future, is to realize that we are not going to go out and rebuild the kind of weapons system inventory we have today.

We are going to have to rebuild systems that are much more effective and rely much more efficiently on ... dominant battlefield awareness, as some people call it. Therefore, information, both in terms of surveillance and precision targeting, the ability for forces to go where they are and where the enemy is, is absolutely critical.

That leads you right into information warfare, both offensively and defensively. I think the whole question of modernization and recapitalization has to be built on the assumption that we are going to be working on the leverage which information technology provides us today and that allows us to look towards a time when the weapons systems ... will be fewer ... and even more efficient than they are today.

Q. Could you address any kind of discussions you may have already had about how you may deal with the new Republican Congress and any kind of movement of dollars that you foresee coming?

A. I believe that the authorizing and appropriating committees in Congress for defense have been usually, typically, quite bipartisan. The questions that are raised now are issues really of degree. They are not of a completely different nature than was true in the past. So the kinds of programs that would be questioned ... were also questioned in the previous Congress. So I don't think that we're looking at a particularly new agenda of items.

Certainly there will be more attention to defense conversion, and the argument that Bill Perry and I would make, and make strongly, is that we think -- what many people refer to as defense conversion, as being defense reinvestment. They are ways of contributing to lower costs for the defense establishment by a move towards an integration of the commercial and the defense industry. The dual-use technology programs we advocate are not done for nondefense purposes. They are done to assure that we move toward a more integrated civilian defense, technology and industrial base that would allow us to get the products and services that we need much more cheaply. We cannot afford the defense unique approach that was true in the past, because the unit costs are so high.

So there is an example where I am sure there will be some attention to that, but I think that to the extent that Congress will -- I believe Congress will support the dual-use defense reinvestment approach that Bill Perry and I, and the president try to place on these programs.

Each one of them will be different, but principally I think on the main issues of the strategy, on the main issues of force structure, on the main emphasis on readiness and quality of life, there will not be any major change from this Congress to the previous one. There will be difference in emphasis and different scrutiny of programs, but that's to be expected and it's not unwelcome. We should be able to defend them.

Q. Could you comment on the role you see for international cooperation in your approach, please?

A. Well, I think that all the indications are -- on the political, on the military and on the technological aspect -- that this administration -- Bill Perry, in particular -- are extremely eager and have worked very hard to extend our cooperative international efforts. Let me just mention a few.

I think Partnership for Peace is an essential element of helping the NATO alliance deal with the questions of Eastern Europe and what will happen over time to those countries in their relationship to the European security framework.

In the case of defense weapons production and weapons development cooperation, ... we've worked very hard to cooperate with our NATO allies -- the French, the Germans, the Italians and the British, especially -- to take advantage of the development of expensive new systems together, one for the reasons of economy, another for the reasons of air operability, but third also and most importantly for assuring the fact that our industries -- our defense industries and our defense establishments -- are woven together in a way that strengthens and is mutually supportive of the alliance.

And perhaps the best, most recent example of that is the efforts we've had to undertake theater ballistic missile defense cooperation jointly, initially with the French and the Germans. Later on it was broadened to other parties in NATO and possibly also to Japan. But we are very eager to use defense weapons cooperation as a way of strengthening the political and military alliance with NATO countries and with Japan.

Q. Would you comment on U.N. peacekeeping forces and their future? Do you see them increasing or decreasing?

A. ... We currently have between 40,000 and 50,000 U.S. troops involved in operations, contingency operations throughout the world -- Iraq, in Haiti, in Macedonia. We have about 40,000 men and women involved throughout the world.

If you'd ask how many are involved in U.N. peacekeeping operations, it's actually 800. So to put a scale on it, the level of our peace operations, humanitarian operations for the U.S. military is about 40,000 -- 40,000 to 50,000. The number which actually find themselves in a U.N. peacekeeping operation is roughly about 800, about. So we are as a nation going to have to deal with the peace operations issue and the humanitarian assistance issue as we are doing in Haiti, as we did in Rwanda, without reference to a potential U.N. involvement at all. So it's important to understand as military people that we have to be in a position to plan for effective participation of military forces in peace operations and humanitarian operations.

That gives you a very much different set of requirements. In particular, we have to integrate our efforts with other government agencies, especially the State Department, Department of Justice, the Agency for International Development, with a whole set of requirements that come there for peace operations. Among them are the U.N. operations, of which there are two types.

There is a smaller type, which I just mentioned, where U.S. forces were involved. I think that is going to not grow very much for a number of reasons, including the fact that the U.N. is not interested in having it grow, their peacekeeping operations grow. And the second is the assessed operations. That is, the fact that as our share of U.N.-assessed peacekeeping operations is about 30 percent, a little in excess of that, and the question is Congress' attitude, the last Congress or the next Congress. ... The sides split on this in peculiar ways. Who should pay for that? Should the State Department budget pay for those assessed U.N. operations or should the Department of Defense?

My main point is that we as military people, the United States government, will be involved in peace operations, but they will not necessarily be or even primarily be U.N. operations, and they certainly will not necessarily imply that U.S. forces will ever serve under the military command of some other government.

So we have unquestionably as part of the new -- the new security requirements of the post Cold-War era unquestionably have the requirement about how do we use our military forces responsibly in peace operations or humanitarian operations, but that is not at all the same or identical with U.N. peacekeeping operations.

Q. Sir, what role do you see for Department of Defense in promoting democracy overseas, in Third World countries, if any?

A. Well, I think the United States' first role has got to be to make sure that people don't die needlessly and to try and play a role when they can really intervene on a humanitarian basis to stop wanton killing.

I was very impressed by the contribution that this country made, and the military made, in Rwanda. Now if you say to me, what is the role of the United States and the Department of Defense in building a new country, a new government, I think we have to ... be modest in what can be done in the circumstances which should lead us to introduce U.S. forces for that. But when there is a humanitarian basis, as there was initially in Somalia and as there was in Rwanda, I think that we really do have a role that we can play to save people's lives.

On the other hand I think we have to be careful and modest when it comes to the notion of building a new government or a new society that replaces centuries of tension within a country, although we've shown great ability, when the Defense Department doesn't do it alone but cooperates with other international and other federal agencies, at making progress in that, of which Haiti is most notably the one where we've made great progress.

But in general, where we can save people's lives, I believe we should look favorably. When we think about changing the political and social structure of a country, then we should move more prudently. And I think that's generally the view of the American people on that issue.

Q. Sir, why did North Korea take so long to return the pilot from that helicopter incident, and what does this say for our ability to work with them in the future on projects like the nuclear issue?

A. I have not the slightest idea on the first question. And I think we all recognize that it's going to be very difficult to work with them on the nuclear issue. This is a very closed society, a society that has resisted any of the introduction of economic benefits and democratization benefits which lead to prosperity and peace in a country. So I predict, and I think everyone predicts, that it will be very, very difficult to work with them on this issue.

The question is, what's the alternative? And here I must say that what I find ... most important (about the North Korean framework agreement is that it provides a period of time, a lengthy period of time, to work with that society, hope that it gets more open, more politically acceptable -- more politically accessible, that there is a greater trade, greater economic prosperity and that society opens up in time more rapidly than it otherwise would.

Q.To follow up your questions about engagement of U.S. forces for humanitarian assistance, where [do] you draw the line ... ?

A. Good question. ... It's a balance -- it's a very serious balancing act. I mean one of the things that one cannot do is allow one's participation in ... peacemaking or humanitarian operations to erode the readiness so that you couldn't carry out the essential, vital defense of U.S. interests, which we summarize in the force projections or two almost simultaneous major regional conflicts. So you have to be very sure that if we commit U.S. forces ... we don't do it in a way that impairs our ability to carry out two major regional conflicts.

There's certainly times in which I have differed with others about when was the right time to commit forces and when wasn't. There's also another responsibility that we have, which I take very seriously, is that if the president of the United States decides to do so, we do it with a minimum, minimum casualties to our own folk and with a very clear set of criteria about when we get out. So it's not only the Department of Defense that makes that decision, but it is up to us to know that we can execute that without loss of life or minimum loss of life and know for sure that we have set exit criteria so we don't stay too long.

Published for internal information use by the American Forces Information Service, a field activity of the Office of the Assistant to the Secretary of Defense (Public Affairs), Washington, D.C. Parenthetical entries are speaker/author notes; bracketed entries are editorial notes. This material is in the public domain and may be reprinted without permission