Mr. Bacon: Welcome to our annual budget briefing. The Secretary will speak on the record and go through some charts, and then he'll have plenty of time to take your questions.
Secretary Perry: Thank you, Ken.
Today the President sent his budget to the Congress for approval. In the weeks to come, I will be meeting with the Congress to defend the defense portion of this budget. I would like to explain to you today how this budget meets our national security needs.
More than a year ago the Defense Department completed a very detailed study in defense strategy called the Bottom-Up Review. In this study we articulated the national security needs of the United States and related to those needs a defense strategy. So this defense strategy was derived, in the first place, in this articulation of the national security needs.
The strategy had several important components to it. First of all, it called for a force structure, it defined the force structure necessary to meet two major regional contingencies. In addition to that, [it's] maintaining an overseas presence. It called for a power projection capability so that we could project this force to places all over the globe. It called for maintaining a high readiness so that these forces could be ready on an hour's notice. And it called for maintaining a modernization program and a defense industrial base to sustain the technological edge which our military forces had.
We have a number of challenges in meeting these goals. You have all heard me talk about the -- what I call -- three challenges at various times in the past. Just to remind you of those, the first one of those is managing the use of the military force in this post Cold War era; [second] preventing the re-emergence of the nuclear threat; [third] and then managing the drawdown in the post Cold War era.
I'm going to organize my discussion today about taking each of these challenges, the challenges -- for executing this defense strategy -- and talk about how these challenges relate to the budget that's being presented to the Congress today, how the budget meets those challenges.
I'll start off, first of all, with the application of military force. This budget does sustain the force structure to support two nearly simultaneous major regional conflicts. We have tested that in various ways, but most recently the Joint Chiefs of Staff conducted an exercise which was called NIMBLE DANCER, which tested the very basic assumptions of the Bottom-Up Review in terms of meeting the two major regional conflicts by very intensive and extensive wargaming. They did validate, in that the ability of this force structure, to meet that requirement.
This budget also sustained a robust, overseas presence. Today as we sit here in this room, we have almost 300,000 personnel deployed overseas, and we anticipate continuing high levels of overseas deployment during the period of this budget.
The budget also provides the capability to mount contingency operations. I cite in this chart the two major operations which were conducted last year VIGILANT WARRIOR, where we rapidly deployed our forces to Kuwait and Saudi Arabia, and UPHOLD DEMORACY where we deployed a substantial force to Haiti. I'll be saying more about them as I proceed.
Finally, this budget will ensure the continuous readiness of the forces, and I'll have a lot more to say about that as I go on into the briefing.
I cited here the operational highlights of VIGILANT WARRIOR to point out the ability of the present force we have to react rapidly in a contingency. I'd just point some of the highlights of that. More than 100 aircraft were deployed to the theater in less than a week. We forward deployed the amphibious ready group in one day. We had a mechanized infantry brigade actually deployed in Kuwait ready for combat in just three days after the orders were sent out. This is a consequence, first of all, of having the equipment pre-positioned in Kuwait. Plus the readiness of the brigade at Fort Stewart, ready to move in on that equipment quickly. And of course, the airlift to get them over there quickly.
An Army task force was ready to join their equipment which was pre-positioned in Diego Garcia and sent there on ships. Finally, the GEORGE WASHINGTON Carrier Battle Group moved to the area in just three days. I should say that, while the carrier got there in three days, we had aircraft from the carrier there even sooner than that operating out of the land air bases.
The consequence of this rapid deployment was the deterrence of a war in that area and the achieving of our policy objective. So this capability is crucial to meeting our national objectives. The readiness, the force structure, and the power project capabilities to get our forces overseas very, very quickly.
The budget that is presented here also is relevant to preventing the reemergence of the nuclear threat. Last year we conducted the nuclear posture review -- which is the first time in 15 years that we've really had a thorough-going review of our nuclear posture. That called for a hedge strategy which had two major components to it. Maintaining the nuclear deterrence of the country, and we have more than $7 billion in this program today for the purpose of maintaining our nuclear deterrence. That is down dramatically from the days of the cold War, as it appropriately should be. But I do want to point out to you that we are still spending $7 billion a year in maintaining our nuclear deterrence forces.
In addition to that, we have two different programs underway in ballistic missile defense: a theater missile defense and a national missile defense. And I will discuss each of these in a little more detail. In order to reduce the nuclear threat to the United States, we have the Cooperative Threat Reduction Program, sometimes called the Nunn/Lugar program. That is also fully funded in this budget.
Then we have another thing called for in our nuclear posture review. It's counter-proliferation. One of the major achievements last year was the framework agreement made with North Korea. I'd like to make two comments about that agreement relative to this budget.
First of all, there are no funds in this budget for the framework agreement, because the framework agreement does not call for the expenditure of any defense funds. The second point I'd make is that this budget assumes the implementation of the framework agreement. In the absence of a framework agreement, we would be back to the position we were in last June where we were planning to reinforce our forces in Korea. That would be at a considerable expense. That expense is not assumed here because we assume that the framework agreement will be successfully implemented.
This is just a little more background information about the ballistic missile defense program. We have three different theater missile defense programs underway and included in this budget. The Patriot III program which has just under $700 million budgeted; the theater high altitude air defense system, just under $600 million; and then a Navy air defense program, $250 million. Two of these programs are scheduled to go into production in the latter part of this decade-- one of them in 1998 and one of them in 1999. So we are moving towards production and deployment of not one, but actually three different theater missile defense systems.
In addition to that, we have a program in national missile defense for which there was $370 million budgeted in this year. The purpose of that program is to go, in a few years time, to the development of a system which in a few years time we will be able to deploy if we choose to do it at that time. So this is a deployment readiness or production readiness program, and it's geared to get there in a two - to three - year period of time. Incidentally, once we reach that point, the system which we have developed to that point can then go from there to deployment, in another two or three years time. The reason I'm being indefinite on the time period is we're looking at several different alternative systems. One of them has a two-year period and the other has a three-year period associated with it.
This is a program--the Nunn/Lugar program or the cooperative threat reduction program -- which has been under some criticism by some members of the Congress, and I want to specifically call it out then. The purpose of this program is to reduce the nuclear threat to the United States. This has been challenged as being a non-defense program. I refute that challenge. I call it defense, but defense by other means.
This program has funded and assisted in the dismantling of 2,000 nuclear warheads which formerly were targeted at the United States. A very significant achievement in that regard.
In addition to the dismantling of nuclear weapons, it assists in the safety factor of these weapons and also assists in our non-proliferation means by controlling -- helping the Russians control and safeguard -- both their weapons and the fissile material that's associated with those. We regard this program as a crucial program to our defense.
The last component of this program is perhaps under the most criticism. This has to do with the support of reducing the infrastructure which supports the Russian and the Ukrainian nuclear program. We believe that is equally important, and I will defend this vigorously to the Congress as being very much in the national interest of the United States and very much a defense program.
If you noticed, there was a slight decrease in funding for the Nunn/Lugar program from $400 million down to about $380, I think the number was. That does not reflect a decreased emphasis. It's just the details of the program as you go from year to year. There's different emphasis on different aspects of the program.
Now I want to go to the part of our challenge: managing the drawdown in the post-Cold War era, which affects most directly and in larger scale, our budget planning. The first is to maintain the force structure; the second, protecting readiness; the third one is ensuring the quality of life; and the fourth, the plans for recapitalization. I'm going to be talking about each of these, and each of these really represents a key challenge as we went through the budget in allocating resources to maintain each of these objectives at a reasonable level.
This is the force structure that this budget will support for '96. I compare that with the Cold War force structure, the force structure which was projected by Secretary Cheney in the base force, the goal which was called for in the Bottom-Up Review. I have several points I would like to make about this.
The first is that the drawdown that's been going on in the force is nearly complete with the '96 budget. You observed that the Army's active divisions in '96 will be down to the ten divisions which the goals call for; that the Air Force will be down to the 20 wings called for; the Navy will be down to the 11 carriers called for in the Bottom-Up Review. They will still have 19 more ships to go. Also, the Reserve component still has some brigades to go down, but essentially, the drawdown is complete in terms of force structure. It is also nearly complete in terms of personnel. That's a very important point, because it has been very difficult managing the turbulence that comes from the very large scale reductions that we've had underway, and those are nearly behind us now.
This chart represents the fact that the personnel turbulence reduction is nearly over. From FY94 to FY95, we have the following changes in personnel, and you'll see that they total 88,000 personnel -- a fairly substantial reduction. That is underway right now as we speak.
In '96, there will still be some reduction, but you can see it is less than half of the reduction in '95. So with the '96 budget [inaudible] as we see in the '96 budget-- the worst part of the drawdown will be over. I would also point out that in '96, in most of the areas, we will have completed the drawdown. The Army has 495,000 personnel by the end of '96 and that is the goal. The Air Force has 388,000 -- very, very close to their goal. The Marine Corps, right on their goal. The Navy still has a few percent more to be reduced. So the active duty drawdown is essentially winding up in FY96.
On the other hand, the civilian drawdown will continue. You'll see that in FY96 we're planning a reduction of 38,000 personnel. That continues. We will have a total of 829,000 personnel. We still have to get down to 728,000.
To summarize the personnel situation, we are decreasing about 32 percent for both active duty and civilian. We started the active duty drawdown earlier and it is nearly complete now. The civilian drawdown started later. We accelerated that in this Administration, but even with that acceleration, it will have to go on for another few years beyond that before the civilian drawdown is completed.
This is a very important charge which has to do with our current readiness. This has been, as you know, a subject of debate and controversy. I'm going to make two major points on readiness. The first is that our current readiness is in good condition; and second, I will talk to you about what our budget is doing to sustain those high levels of readiness.
Why do I believe that the current readiness is high? First of all, and I list here the factors I have to guide me on that. First is a report from the Commanders in Chief. I get every quarter a very detailed report from all of our CINCs in the field. This is one of the important ways of monitoring readiness. It ignores the statistics and gets down to the commander's judgment about the readiness of his forces to perform his mission.
I met last week with each of the Commanders in Chief, and [of] each one of them we asked the question. " What is your readiness to perform your mission?" Each one of them reported to me they are ready to perform their mission. That is the bottom line and the most important bottom line in the whole picture.
I might say that they have demonstrated that readiness in the deployments to Haiti, the deployments to Iraq, and the deployments to Rwanda last year. Anyone that looks in detail at the skill -- the professional skill with which those deployments were executed -- would agree that the CINCs were right when they said they had the readiness to conduct their mission.
We have, also, voluminous statistical reporting on readiness. We could bring in stacks of data to show you on this. Some of those are very revealing, some of them sort of obscure the issue. But if you aggregate them, what they show is that the early deploying units -- the units that we have either in the field in a forward deployment area, or we have in the continental United States alerted to go on early deployment, all of those are not only at high states of readiness,[but] that high state of readiness is essentially constant over the last decade. So the statistical reporting backs this up.
I would make one other point about this current readiness: that the area of problem which I reported last fall, namely in three Army divisions being at a lower state of readiness, these were, first of all, not the forward units not the high ready units -- they were the late deploying units. Nevertheless, that problem will be fixed by April or May of this year, based on the application of the supplemental which we got last October, but based on the application of the training program for these divisions.
Now I want to project forward to future readiness. This budget does protect that readiness. The reason it does is in the guidance which I gave to the services when they prepared the budget : I stated clearly and explicitly on the first page of the guidance to the services, [that] maintaining the readiness of the force is your first priority, and you may trade off any other objective which I give you in order to achieve that readiness. That was a very clear and unambiguous direction. The services followed that direction.
On top of that, the President added $25 billion, at our request, late last year to enhance readiness and to enhance quality of life, about which I will say more later.
When I reviewed this '96 budget with the Service Chiefs, I asked each of them the question, "Does this budget, as you have submitted it and as we are approving it, sustain your readiness?" The answer from each of them was, " yes, but..." And I'll get to the "but" in a minute.
In particular, they confirmed that they had fully funded all of their requirements for operational training and had fully funded the depot maintenance that was required to maintain two major regional conflicts simultaneously.
The "but" that they gave me was that the funds were there in the budget to do that, but if there were contingency operations during the year which diverted those funds, then that would obviously upset those plans. So therefore, we need not only to have the funds in the budget, but we have to have a way of dealing with the historical diversion of funds for unplanned contingencies.
I want to remind you that our budget trains and sustains the forces. We have nothing in the budget for using the forces, for sending them out into an operation, for a contingency operation. So any time we go into contingency operations we have to seek supplemental funds for that.
We are dealing with that problem this year -- so we will not repeat the problems we had last year -- in two different ways. First of all, by requesting an emergency supplemental of $2.6 billion. That $2.6 billion is sufficient to fund all of the contingency operations which are already underway and which we project will be in operation through FY95. Therefore, if that supplemental is granted, we do not anticipate any diversion of funds from the '95 budget which would cause these readiness problems to recur.
Secondly, we are going to request the Congress for new authority. This requires a legislative change which we're calling the readiness preservation authority. The supplemental will deal with the contingencies already underway, and therefore, are predictable. We still have to contend with the possibility that we will have unexpected contingencies in the fourth quarter of the year, for example. When that happens, we're down now to almost the end of our O&M budget. We have the contingency. We have to fund it immediately; and therefore, it comes out of the only place it can come out -- which is our training accounts. At the same time, we don't have time to get a supplemental through and approved by the Congress. So we are asking the Congress for authority to divert money from other accounts to deal with a problem like that under the very special circumstances which will be defined in this Act. Namely, we have this unexpected, last-minute contingency operation [that] comes up. I hope and I believe we will get the support from the Congress for that.
These two things, then, will solve the readiness problems we've had in the past. The first is fully funding the account, and the second is providing a safeguard of protection against the diversion of those funds.
All of this that I've described, there's still a certain uncertainty and confusion about anything as complex as trying to maintain the readiness of 1.5 million personnel in the field and all the complex equipment. Therefore, we have to watch it very, very closely. We have established the Senior Readiness Oversight Council specifically for that purpose. The Deputy Secretary is the chairman of this. It meets once a month. The services and the Chiefs bring in problems. The purpose of that commission is not just to hear the problems and comment about them, but to act to fix them. We have in this committee all of the people who have the authority to act to fix the problems just as they occur.
Finally, we have something which I have called many times MBWA -- management by walking around. Going out to the bases and sitting down and talking with people and asking them about their problems. I do that every month. The Chief does it frequently. The Deputy Secretary does it. Most importantly, we have in the building our senior enlisted personnel who spend nearly all of their time out at the bases talking with people, getting an assessment of problems. I meet with them frequently to get their assessment of the problems.
These are the set of actions we have taken to give me the confidence to say we not only have high readiness today, but we're going to be able to maintain it in the future.
Let me give you this one little example of what is in the budget. I'm not talking about dollars now, I'm talking about the things funded by the budget. This budget will fund 800 annual tank miles; it will fund 14.5 flying hours per crew per month for helicopters; 24 flying hours per crew per month for the Navy; and just under 20 flying hours per crew per month for the Air Force. These are the operational training rates which each of the services believe is adequate to maintain a high rate of proficiency in their training. Every time I go out to one of our operational units -- to go to a training base -- and see these training exercises being conducted and see the skill with which our military personnel are conducting these, I am impressed that this is exactly the program we need. All we have to do then is be sure that we do not divert funds from these programs in the last quarter or so, and we will maintain a very high rate of proficiency.
All of this comes down to the fact that this budget, as we have said before, puts people as a first priority. That's not for any sentimental reason. That's because they are our most important asset in being able to carry out our national security objectives. This chart is just one way of making that point clear to you.
We talk all the time about investments. Investments in tanks, investment in ships, investment in buildings and so on. Here, this chart talks about investing in people and why it is important.
It takes 16 years to develop an aircraft maintenance supervisor. It takes 22 years to develop a battalion commander/sergeant major; 28 years to develop an armored division commander. My military assistant, General Kern, has been in the Army 27-1/2 years. His next post will probably be as an armored division commander. He has had just the right level of training to do that. The key is keeping these qualified, experienced people in and keeping them trained. That is exactly what we're trying to do with this program.
Every time I go out on trips, I not only visit our own troops but I visit other troops. And I see the comparison between the very high morale -- the very high readiness of our forces -- and compare that with the other military forces. I have met and talked with Russian forces I've met and talked with the military forces of other countries. None of them has this level of competence that we have. The biggest reason for it is they do not maintain the professional non-commissioned officers corps that we have. That takes years and years of training. It takes keeping people in and motivated, and keeping them well trained.
In short, keeping quality people -- which is the key to our success I believe-- involves first of all, that we train them realistically. Our budget has the funds, for example, for 12 brigade rotations per year at the National Training Center -- a very key part of this.
Incidentally, one of the things we lost at the end of last year when we ran out of funds at the end of the year, we had to cancel one of these rotations. That's precisely the thing we want to avoid. Nothing is better training than this similar combat training we have going on at the National Training Center for the Army, and at Nellis Air Force Base for the Air Force. That's the RED FLAG exercise, a comparable kind of training for the Air Force. These are key. Then our field exercises, the BRIGHT STAR and the ROVING SAND are just a few of the current field exercises being planned. These are key to maintaining the competence of our personnel and our units.
In addition to that, there's been some discussion that if we send people out on missions it detracts from readiness. I think that's a lot of baloney. These missions help in readiness to the very great extent.
On VIGILANT WARRIOR, we had the best exercise we could have had for that brigade at Fort Stewart: on going over there, joining up with their equipment in Kuwait, taking it down to the field. They could not have planned a better exercise than we actually did in VIGILANT WARRIOR.
UPHOLD DEMOCRACY, we have civil/military units of the special operations forces out all over Haiti conducting operations. They could not find a better training exercise than what they're doing now. At some level, after some period of time, that begins to lose its effectiveness as a training device. And therefore, we have to rotate people. That's why we rotated people in Haiti after just a few months of the operation there. We took the 10th Infantry Division out and replaced it with the 25th Infantry Division so that we would not lose the training edge by having people on deployed sites too long.
Finally, this last point here. This is just a catch phrase. We have to reenlist families. If we want to keep this highly qualified NCO corps in for 15, 20, 25 years, they have to have the incentive to reenlist. Part of that incentive comes from the pride and their professionalism that comes from this training. Part of it comes from the excitement of being on real missions. But we also have to reenlist the families -- it's not just reenlisting the person in the military service. That's why we are emphasizing this quality of life initiative. We understand that we not only have to provide good working conditions for the people in the military service; we have to provide reasonable living conditions for their families as well.
These are the three primary components of the quality of life program we have underway, and I've given you the reason why I think it is important.
Compensation. This budget, not just for FY96 but beyond FY96, fully funds the maximum legal pay raise. This is the first time, I believe, in the history of the defense budget where we have projected -- committed to that -- for full funding for the legal pay raise for a five-year period of time.
Secondly, it protects the medical benefits. These are very important to people. I could not have achieved this had I not gotten President Clinton to authorize the $25 billion increment in the future years defense program.
The community and family support programs. These were key in the quality of life initiative. These are just two examples of things that are covered by them that make a big difference. Every time I go out to bases and talk with families and find out what their issues are, these two come out very, very high on the list.
Finally, what comes out number one on everybody's list is housing. We just have inadequate housing at our bases all around the world. And that is a big problem for people, and it's one of the biggest disincentives to people staying in the services. The quality of life initiative does have a 13 percent increase in housing dollars per active duty personnel. That is not enough. We have to do something beyond that. I do not think I can solve that problem just by increasing the budget, but we are looking at a housing initiative which will have off-budget ways of getting more housing on bases as well.
All of these issues are being considered and considered in considerable detail by a new quality of life task force which was set up under the chairmanship of Jack Marsh who was formerly the Secretary of the Army, and who is going to bring some real wisdom and experience to this problem.
Now we're down to the modernization and the recapitalization program. This is important for the readiness -- not this year or next year, but five years or ten years from now.
The first point I would make about that is we have had a reprieve, in a sense, in the modernization program -- permitted because of the drawdown that was going on. Without going into a lot of detail on that, let me simply point out that if we go from 18 divisions to 10 divisions, we have correspondingly fewer tanks-- fewer armored personnel in the division. Therefore, we can decommission many of these tanks. The ones we decommission are, quite obviously, the older tanks. So the process of reducing the size of the force means we lower the average age of the equipment in the force. Therefore, the cost of recapitalizing -- the need for recapitalizing -- can be delayed for a few years because of that factor. So that is the first point to make.
When I testify to the Congress I will present the statistics to them which show that, in spite of the slowdown in modernization the last few years, the average age of the equipment in the field has not increased. In fact, in most categories it has continued to decrease.
That is, I think you will appreciate, though, a short term reprieve. We have to get on with that because the drawdown is essentially over now, so we will now have to start getting that modernization ramped up again. We will have to increase it over the longer term. I will describe to you briefly how we're going to do that. But I will point out that it will not require a one-for-one replacement. We do believe that our technology will find ways of doing things better and smarter -- not only so that we will get by in some cases with fewer equipment, but that we can sustain our equipment in the field for longer periods of time simply by upgrading or modernizing the new technology.
Some of our carriers, for example, have been in the field already more than 30 years. One of them as much as 40 years. These carriers are just as capable as the newer ones because we upgrade them with new electronics and with new weapon systems. So the question here then is, we do not have to replace every platform on a one-for-one basis, as long as we have a modernization program that keeps the electronics and the weapon systems in them modern. But we do have to make an increase in our modernization program... I'm going to describe that to you, but the basis of that increase falls in three areas. We do have an acquisition reform program which I have talked with this group about several times before. We are counting on that acquisition reform program for bringing more efficiency into our system so that we can buy our weapon systems for lower unit costs, number one; and number two, so that we can sustain them in the force at a lower cost per year. In other words, the life cycle costs will be decreased. That's the benefit we expect from the acquisition reform.
Secondly, we are reducing the infrastructure. The base closing is a primary example, but not the only example of that. Relative to base closing, we expect that the savings that we will generate from base closing by the end of the decade will be about $4 billion a year -- for the bases already closed, not counting the ones that are being considered in the '95 base closings. That's the good news about base closings. The bad news is, it's costing us money this year and it costs money next year. So in the '96 budget, we have a cost incurred for the '88, '91 and '93 base closings. There's nothing to do but to bear that cost until we can get the savings downstream. We are counting on the savings downstream to help us fund this increase in modernization.
Finally, we'll have a real budget growth in the out years. Let me show you... First of all, I'll make the point about the fact that our procurement is down to basically historical lows. We are only procuring seven ships, 106 aircraft, and, in the tanks, there's not even 100 new tanks. These are 100 upgrades in the tanks. So we are at a low, and that's a low from which we will be building.
Let me describe, then, the last point that I made and where we're going to get the resources for bringing the modernization up. One of them is we will have to have an increase in the defense budget. Through that increase, we'll bring this up from its low of this year. Secondly, as I said, we expect more efficiency through the acquisition reform to allow us to do better both on unit costs and on life cycle costs.
This, finally, after all the qualitative discussion, gets down to what the budget will be. We're projecting a budget of $246 billion for '96, which is a $6 billion decrease over the '95 budget. One qualifying point about all of these figures here: these are all the budgets for the fiscal year without anticipating any supplementals. The '95 figure, which is here by comparison, anticipates the $2.6 billion supplemental will be added to it. So that's what the asterisk here stands for.
This shows that we are still in the defense drawdown from a budget point of view this year, and we're projecting one more year. From that point, the budget stabilizes. This represents a real change in budgets. Then, in the last two years of the future years defense program, it actually increases.
What happens in the out years relative to modernization is we not only get the benefit of this increase for modernization, but this is also the time by which the savings from our base closings cut in and we start to gain that investment.
There's one other benefit that we get of shifting resources over to modernization. The defense drawdown of personnel is costing us money too, because we have certain expenses associated with retirement of people from the active duty forces, and those expenses will not be sustained in these out year periods.
This is a chart you've seen before, and it just shows the defense budget as a percent of the federal budget. It shows that during the Korean War it was 57 percent; during the Vietnam War, 43 percent; during the peak of the Reagan buildup it was 27 percent. This year, FY96, we're projecting it to be 15.5 percent. In the five-year plan -- the future years defense plan I showed you -- it goes as low as 13 percent of the federal budget.
This is the same as a percentage of gross domestic product. The key figure here in FY96 is 3.4 percent of the budget -- compared to the Reagan buildup era of 6.3 percent and even higher figures during the two war periods.
This is just the bottom line.
This may sound like motherhood: DoD funded: readiness is the highest priority; people come first. It is not. We based the budget on that. We acted on that judgment, and it profoundly affected the allocation of resources in this budget, and it is working. It is, we believe, the right force structure, and we believe it is the right strategy. I've described to you the recapitalization... We have a reprieve in recapitalization, but we have to have an increase in the out years and this budget does plan for that.
With that, I'll be happy to take your questions and comments.
Secretary Perry: John pointed out to me that one of our charts had a typo. I used the right word when I talked to you but the chart was wrong. It said "restores nuclear deterrence." The word I used was "retains." "Retains" is the right word. (Laughter)
Q: As you know, many Republicans in Congress are asking for higher defense spending, and you yourself in your comments cited what you call uncertainty and confusion, one assumes over everything from whether inflation will change to whether Iran will get nuclear weapons. With defense so close to the bone, what gives you the greatest cause for concern about the defense budget?
A: First of all, Charlie, I have very high confidence that this budget does maintain high readiness. I said that many times in this briefing, and I truly believe it. I am not concerned on that point. I think that is a false argument, and I would hope to, with the Congress, get that argument off the table and get down to discussing other issues which are more important. I think anybody can raise a concern as to whether we will be able to fund this modernization program in the out years. That depends on three things happening.
It depends on the out year funding being achieved. We have an increase in out-year funding. That has to be achieved. It's just projected at this stage. It depends on the savings from the base closings being achieved. We have $4 billion a year which we are projecting, which we are planning to divert into modernization from the savings from the base closings. And it also projects that we will have success in our acquisition reform. Those, I think, are all reasonable projections, but it's also reasonable for people to question whether they will happen as soon as we forecast, or to the extent that we forecast. I think those are reasonable debating points for anybody to have.
Q: You've emphasized several times, and just now answering Charlie, the importance of savings in base closures, but you've also announced your slowing down the base closure program for the next round. You haven't announced any plans to ask for another round of BRAC. There seems to be a contradiction in the middle of your strategy. Why?
A: There's no contradiction. I said that we were projecting $4 billion a year savings from base closings. That $4 billion a year is on the '88, '91, and '93. It makes no assumptions about any closings in 1995. We will be submitting our base closing, and there will be a substantial number of bases closed. What I announced in a talk, a week or two ago, is that that list will not be as large as the '93. It will still be a significant list, it will still be painful. There still will be savings. None of those savings will be available to us in the period of this defense program. It will be mostly costs associated. I don't have the exact figures in my head, but over the period of the future years defense program, the '95 base closing will probably net out to about a net wash. It will cost in the early years, and savings only coming in the tail end. So there's nothing in the '95 base closings that will affect either negatively or positively this over the whole period. It will be a negative effect in the first few years.
Q: Do you want to ask for authority for another round of BRAC after '95?
A: I would like to have authority for another round of BRAC after '95. I'm not optimistic that I will get that authority.
Q: What, if any changes did you make in this budget in anticipation that Republicans in Congress may have different plans for the budget?
A: We considered that very carefully. The answer to your question, though, is we did not change it. What we decided, instead, was that we obviously have a very challenging job of presenting our rationale or reasons for this. What I have covered with you today will be the foundation, the basis of our rationale to the Congress. We'll obviously have to go into much more detail and cover some of the issues they're concerned about. I hope, first of all, to be able to convince them that the readiness is high and this budget funds it. That will take one of the arguments off the table.
We will have a substantial discussion, I believe, on what some of them are calling non-defense programs. I will be presenting to them that among these things they call non-defense programs, the bulk of those are programs which are very important to our defense and I call defense programs. So I will have the challenge of trying to defend the value and importance of these programs to our defense.
Another increment of them that are truly non-defense programs, are generally programs that have been added to the budget by the Congress. They're not ones we submit. There's nothing in this... We have about a billion dollars of programs in '95 that we're doing that I would call non-defense. They're good programs, they're important programs, but they're not defense. They more appropriately, perhaps, should be in other budgets than ours. But in the '96 budget, none of those programs are there.
So I'm prepared to defend programs like the Nunn/Lugar, this comprehensive threat reduction program which I believe is vital to our defense. I'm prepared to defend the technology reinvestment program which I think is vital to our defense. It probably would have been politically easier to take some of those programs off and avoid the argument. We considered that, but we decided to stick with our guns, because we think we're right.
Q: You cited the problems caused by the lack of emergency supplementals and how you plan to deal with that in the future, particularly what you call the readiness preservation authority. But many Republicans in Congress feel the problem is not the supplemental funding, but too many missions. Can you state the case, or how are you going to make the case that this preservation authority is not simply a slush fund for missions of questionable national interest, as many Republicans seem to view it?
A: We will have to, obviously, make that case to the Congress that it is not a slush fund, and I believe we will be quite capable of doing it. The program as we will be proposing it to them fully protects the constitutional prerogatives of the Congress, as well as the constitutional prerogatives of the President. It is only an emergency fund to be used in the last quarter or two of the year, and it is only to be used on certain contingency items. And we have to come in, the program requires us to come to the Congress for a supplemental, it just gives more time for us to get the supplemental, and it allows us to draw on other accounts until such time as that supplemental gets approved.
Q: How confident are you that the technology reinvestment program will survive this year?
A: I'm basically an optimist, and I think I'm right. So I will go in and make a strong case. I would point out that I think there has been misunderstanding about the program, some thought that this is some kind of a relief program for industry. It is not. It is a program which funds very high priority, very high quality technology of value to defense. It happens to also be of value in non-defense programs. It's dual use. But that should not prejudice its use in terms of defense programs.
I think it may be confused with some of the so-called earmarked programs which are earmarked for constituency interests. All of these TRP programs are competitive programs. We don't select any of them that aren't competitive, so there's a rigorous competition that goes on before these are selected. Also, all of them are 50 percent funded by industry. So it's not a grant program for industry -- they're putting up half the funding. So this program, from my point of view, is a good deal for the Defense Department, and I will defend it very enthusiastically to Congress, and I hope and I believe that I will prevail in that defense.
Q: Mr. Secretary, you mentioned that you hoped that the supplemental request and the new authority will prevent the problems with O&M money being diverted to pay for operations late in the year. But in the last several years, individual commanders in the field have diverted money from those budgets and the base operations because those accounts weren't fully funded. What can you do to prevent that from happening, and from letting those individual units, as they did in Europe, run down?
A: Two things. First of all, and most importantly, be sure that the budget reflects the funding to do the programs they think they need to do. The reason they diverted funding was because they didn't have enough budget to begin with. Sometimes that was because there wasn't enough budgeted. Sometimes it was because it was diverted. So if we can do these two things, full funding in the first place and prevent diversion, then there will be no incentive for the commanders in the field to divert the funds that way. To anticipate your question a little bit, I do not anticipate setting up a rigorous program to check on them or to reduce their authority. I think in general their judgment will be very good on how they use these monies and I'd like to leave them in the position to exercise that judgment.
Q: You're providing the maximum allowed by law in terms of pay raises, but as I understand it, that's still less than the rise in the cost of living.
A: It is.
Q: In a budget that puts people first, did you consider trying to get the ceiling raised?
A: Yes, we considered it and rejected it for this budget submission. The difference, by the way, is one-half a percent. The law allows us to budget for inflation minus one-half percent. The law is set up to put a little bit of a dampening factor in inflation.
As a consequence of the cumulative effect of that law, the military pay has fallen farther and farther behind comparable civilian pay. Therefore, what we considered instead of approaching that law was we considered the possibility... Well, we have something called a quadrennial compensation review. It happens it's coming up this year. What it does is look at this whole comparability issue. We will get from them recommendations as to the extent to which they think it is not sufficiently comparable, and whether we should make one-time adjustments in it. The adjustments will not necessarily be in pay if they recommend it. It might be in benefits instead of in pay. They'll be looking at the whole package. So we simply deferred any action until we get the recommendations from that quadrennial group. But the actions will not necessarily be pay actions. They would be overall compensation related.
Q: Mr. Secretary, with the U.S. Army predominantly CONUS based in America, and with the difficulty of moving divisions overseas as quickly as you'd like to because of strategic lift questions now, do you really need all those National Guard brigades?
A: Yes. The National Guard brigades, particularly the 15 high readiness brigades, are a key part of all of our war plans. Every time that I review in some detail the war plan for Korea or the war plan for two MRCs, we see the Guards playing an intimate role in it, involving hundreds of thousands of Guards being called up in all of this war planning that we have. Of particular importance are these 15 high readiness brigades. They are going to be called up early on, and most of the contingencies we're looking at, the peak need for personnel is in the early months, rather than the later months.
In addition to that, we are developing more and more ways of using the Guard to relieve the too high personnel tempo in some of our deployed units. When I was in Germany I talked with many of the units over there, and selelected units are simply being deployed at much higher rates than is appropriate for good personnel policy. And we're starting to experiment now with bringing Guard units over to take over, to relieve them of some of that burden. This is a double win. It not only relieves the active duty unit of too high an operating tempo, but it's also excellent training for the Guards, much better than the simulated missions they would have gone on in the Guard training.
I have a very, very high regard for the effectiveness of our Guard units and we're making more and more use of them in our planning. The total force involves both of them.
Q: I'm wondering what you consider more likely and worrisome over the near term or the next several years. First, either that the GOP and Congress will force upon you increases which you do not feel are necessary in your bottom line; or that balanced budgets, taxes and other pressures will force drastic reductions in the defense budget?
A: I do not believe I will have the problem of having money forced on the Defense Department beyond what I've asked for. I know that's an expectation on the part of some people. I have never believed that was going to be a problem. All of the events since the Congress has started meeting now have convinced me that that judgment is right. I do not expect to have that problem.
If the balanced budget amendment becomes law, I do expect to have the problem of the iron logic of that amendment forcing the reduction in defense spending, and that that logic will dictate what the defense spending will be, rather than an objective consideration of national security needs.
I have made that point to the Congress, I've testified on that a number of times. But all one has to do is go through the calculation and the arithmetic of the levels of reduction in government spending that was required, and contemplate how much of the discretionary government spending is defense, to realize that this has to be a very substantial input in defense. I am very concerned about that.
Q: How about more B-2s? Any chance? (Laughter)
A: Thank you.