1019 February 3,1995 A GAME PLAN FOR RESTORING AMERICAS DEFENSES INTRODUCTION The new majority in the House of Representatives is committed through its Contract With America to halting the ten-year-long dow nward spiral of defense spending. The portion of the Contract dealing with Americas defenses, the National Security Revitali zation Act of 1995, has been marked up by the House International Relations and Na tional Security Committees. The full House will vote on it as part of the Contract within the first 100 days of the new session. The legislation will establish a Commission on Na tional Security and Department of Defense Force Structure and Readiness Funding Short falls, which will be required, among o ther things, to accurately identify and restore the Administrations five-year defense plan and force structure funding shortfalls.

This will not be easy. The cost of establishing a solid defense program based on the Clinton Administrations five-year plan w ill be significant, for President Clintons de fense policy is flawed. Indeed, unless Congress takes steps to reverse it, Americas mili tary soon will be unable to fulfill its primary mission of protecting the nations vital inter ests. Critical decisions a r e being made at the Pentagon not based on how best to deal with existing and emerging threats to national security, but according to how much money the Administration and the Congress are willing to spend on defense So far they have not been willing to sp e nd enough. The Presidents own defense advi sors believe the Pentagon is $49 billion short of the amount needed to fund the Admini strations planned force for fiscal years 1996 to 2001 In March 1994, The Heritage Foundation concluded that the Administratio n s five-year defense plan (fiscal years 1995 to 1999) was underfunded by $100 billion. In July 1994, Congresss own General Ac 1 2 The National Security Revitalization Act, Sec. 103(1 Department of Defense, Modernization Priorities in the FY 199601 Budget, N ews Release No. 687-94, December 9, 1994.counting Office determined that the shortfall was actually $150 billion over the same five-year period? Regardless of which figure is true, there clearly is a need for additional defense spending, and the Contract With America acknowledges as much.

To restore Americas military strength and readiness, however, Congress must do more than spend more money on defense. It must force the Administration to exercise discipline in how the money is spent and to impose restrai nts on the level of military commitments the United States will assume In short, U.S. defense policy must ensure that the nation fully funds the force that is needed to fulfill the missions assigned to it. To do this, Congress and the commission to be est a blished by the National Security Revitali zation Act to review defense policy should a/ Increase military pay to keep pace with inflation. Since Clinton took office military pay has declined relative to comparable civilian pay. If this continues recruitme n t and retention will become more difficult as the military is unable to compete in labor markets a/ Stop using money programmed for operations and maintenance (O&M) to pay for contingencies like peacekeeping. The Administration has requested sufficient fu n ds for the operations and maintenance account given the size of the force but has squandered it too readily to pay for unbudgeted U.N. activities in Haiti and Somalia d Increase funding for research and development (R&D The Clinton Ad ministration is enda n gering Americas technological superiority by spending too little to maintain the pool of technologies from which the next generation of weapons, will be drawn a/ Increase the weapons procurement budget to 1.5 times the R&D budget by the end of five years. In addition to spending too little on R&D, the Pentagon has stopped buying new weapons to replace aging systems. The procurement budget has dropped by almost 66 percent since fiscal 1985 a/ Increase the conventional force structure to levels slightly high e r than those proposed by the Clinton Administration and set a realistic goal for the commitment of forces to overseas conflicts. The Administration strategy is for U.S. forces to be able to fight in two major overseas wars at the same time. Few believe th i s is possible. The new Congress should force the Admini stration to develop a strategy that sets a more realistic objective of one major conflict with enough in reserve for a smaller contingency operation. Even after scaling back the goals of the national strategy, a modest increase in force struc ture will be needed, particularly for the Navy 3 General Accounting Office, Future Years Defense Program: Optimistic Estimates Lead to Billions in Overprogramming, July 1994 2 WHATS WRONG WITH CLINTONS DEFENSE PO L ICY The shortcomings of the Clinton Administrations defense budget policy already are damaging the readiness and capabilities of the armed forces. These problems are Military pay is failing to keep pace with inflation. For fiscal year 1994, the Clinton Ad ministration proposed a pay freeze. For fiscal 1995, it proposed a 1.6 percent pay raise.

While Congress voted to provide increases of 2.2 percent in 1994 and 2.6 percent in 1995, the.inflation rate was estimated at 2.7 percent in 1994 and is projected to be 3.2 percent in 19

95. The Contract With America acknowledges that military pay is ap proximately 12 percent below comparable civilian levels and notes that the Depart ment of Defense will soon begin providing supplementary food benefits to an esti mat ed 1 1,000 military dependents assigned over~eas The U.S. military is now an all-volunteer force. This means it must compete against the civilian sector in the labor market. If Congress does not make a specific commit ment to protect military pay against i nflation, the quality of personnel in the force will decline. In fact, a decline in the quality of recruits already has begun to surface. In 1992, for example, 74 percent of military recruits were placed in the High Quality category based on test scores, education levels, and other measurements. By 1994, the percentage of High Quality recruits had fallen to 68.

Moreover, as real salaries decline, it will be harder to retain experienced veterans.

Good people will start to leave the service. Potential reten tion problems at present are being masked by massive reductions, but the gap between military pay and civilian pay will reach 20 percent by 1998.5 If this pay problem is ignored for too long, the very notion of an all-volunteer force will be threatened.

N ear-term readiness is collapsing. On November 15, Secretary of Defense Perry an nounced that almost half (five of twelve) Army divisions are down from the highest state of readiness as measured on a monthly basis. This is a shocking revelation, par ticula r ly because the Administration has cut the near-term readiness accounts by far less than the modernization accounts. The near-term readiness accounts-operations and maintenance (O&M) and personnel-have been reduced by a little less than 18 percent in real terms since 19

85. This compares with the much greater reduction of 53 percent in the modernization accounts-research and development (R&D) and pro curement-over the same period. In the Clinton defense budgets, near-term readiness accounts have not been st arved of funds. Rather, the problem is how the Pentagon is spending the funds for readiness. Instead of using the money for training, spare parts and the other purposes for which it has been authorized, the Pentagon has been forced 6 4 5 6 The National Se curity Act of 1995, Sec. 2(b)(7).

Senator John McCain, Going Hollow: The Warnings of the Chiefs of Staff (An Update September 1994, p. 8.

Secretary Perry acknowledged the readiness problem in the Army in a November 15 letter to the then-Chairman of the House Armed Services Committee, Democrat Ron Dellums of California. For a description of the readiness problem revealed in the November 15 l e tter, see Bradley Graham and John F. Harris, Armys Combat Readiness Overstated. Perry Admits, The Washingto,i Post, November 16, 1994, p. Al 3 to pick up the costof the Clinton Administra tions support of United Nations peacekeeping and other activities i n Haiti, Somalia, and Rwanda.

For the past the two years, the Clinton Ad ministration has as sumed obligations for these missions, which it calls Operations Other Than War OOTW It has asked for about 2 billion per year in sup plemental appropria Chart I Op erations and Maintenance Spending Per Soldier Has Held Steady Since 1985 40.000 35m 30CQO 25m 20,000 I5m I om 5.m 1985 1986 1987 1988 1989 1990 1991. 1992 1993 1994 Firul Year Rellecrs the con of opvdtion Derert storm tions to cover the costs of such oper ations during fiscal years 1994 and 19

95. Limiting OOTW, which could be done either by narrowing the range of circumstances under the which the Admini stration would be allowed to assume such an obligation or by imposing a cap on spend ing for such operat ions, could save perhaps 10 billion over the five-year period. This assumes the Administration will participate in OOTW activities, which it has not an ticipated, at the same 2 billion-per-year rate. These savings should be kept in the de fense budget and used to fund near-term readiness programs in the operations and maintenance budget Purchases of new weapons are being abandoned. Funds used to ensure a modem mili tary force-procurement and R&D accounts in the defense budget-have fallen by 53 percent (adj usted for inflation) since defense spending peaked in 19

85. Of these reduc tions in modernization funding, the vast majority have come from the procurement ac count. The funding level for this account, which is used to buy new weapons systems has dropped by almost 66 percent in real terms, while the smaller research and develop ment accounts funding has dropped by 17 percent. The impact of these cuts on new weapons purchases has been dramatic. For example, the Navy will procure only six new ships in 1995, whereas it purchased 20 in 1990 and 29 in 19857 The Army will buy no new tanks in 1995; it bought 448 in 1990 and 720 in 1985 All the services combined will purchase just 127 tactical aircraft in 1995, compared with 51 1 such air craft in 1990 and 943 in 19859 The effect of such reductions is an aging force structure that costs more to maintain.

For example, the average age of the Armys M- 1 Abrums tanks will almost triple dur 7 8 Ibid 9 Ibid Department of Defense, FY 1995 Defense Budget, News Release No. 043-94, February 7, 1994, along with supporting materials 4 ing the 1990s. Further, todays neglect will lead to a need for a dramatic increase in procurement spending in the future. The seriices face the dire need to replace several major weapons all at o n ce when it is determined that existing systems no longer can continue in service either because the cost of maintenance is too high or because they are technologically inferior. sures brought about by reductions in the research and development budget also are be comjng apparent. Secretary Perry on December 9 announced a decision to abandon or scale back six major programs now in research and development. The programs af fected are: 1) the Advanced Amphibious Assault Vehicle, 2) the Comanche helicopter 3) t h e F-22 fighter aircraft, 4) the new attack submarine, 5 theTri-Service Stand-off Attack Missile, and 6) the V-22 Osprey transport aircraft. The impact of this deci sion, however, pales in comparison to that of the September 1993 decision to reduce the com m itment to development of ballistic missile defenses by more than 50 percent Combined with the reductions in procurement, the future impact of this failure to modernize the force could be tremendous. During Operation Desert Storm, for exam ple, victory wit h so few casualties was due in large part to the tremendous technologi cal advantage the U.S.-led coalition enjoyed over the Iraqi military. The effects of the Reagan build-up and modernization were obvious. In a future conflict, that edge will have been g r eatly reduced by the Clinton Administrations failure to modernize. The Comanche helicopter, for example, was to be the Armys quarterback in the conduct of land warfare. It was to help scout the battlefield for enemy forces and direct other Army forces on how to engage the enemy with less risk to themselves.

The conventional force structure is too small to meet its assigned mission.The Clinton Administration has argued that the military force it proposed for the United States in 1993s Bottom-Up Review of de fense policy is adequate to handle two major re gional contingencies, roughly similar to Operation Desert S torm, nearly simultane ously. This force, which includes the equivalent of between 15 and 16 Army divi sions, 20 Air Force tactical fighter wings, up to 184 bombers, 1 1 active aircraft carriers plus one reserve/training carrier and 174,000 active-duty Marine Corps troops, is too small to meet this commitment.

While the Administrations desire to meet two regional contingencies nearly simul taneously is understandable, it is a goal that cannot be achieved without a significant expansion of the force and a substantial increase in defense spending well beyond the 100 billion-$150 billion shortfall that already exists. Indeed, few believe the Admini stra t ions two-war scenario is feasible. Even Secretary of Defense William Perry has conceded it will be at least several years before this is possible. Moreover, the Admini strations penchant for United Nations peacekeeping Operations Other Than War The develo p ment of future-generation weapons programs is being curtailed. Pres tl 1 10 A program now in procurement, the DDG-5 1 destroyer, also was scaled back by this decision 11 For a detailed criticism of the findings of the Bottom-Up Review, see LawrenceT. Di R ita et al Thumbs Down to the Bottom-Up Review, Heritage Foundation Buckgrounder No. 957, September 22, 19

93. For a comparison of the Clinton force versus two Desert Storms, see LawrenceT. Di Rita and Baker Spring, The Decline of U.S. Military Strength Sin ce the Gulf War, Heritage Foundation F.Y.I. No. 42, October 17, 1994 5 puts additional strain on the already shrinking U.S. military and calls into question the entire National Security Strategy, which is built around the two-war concept.12 There is too m uch pork in the Pentagon budget. Funds in the Defeixe Departments budget allocated to non-defense spending have risen by over 300 percent from 1990 through 19

94. This increase has been accompanied by a steady decline in overall de fense spending.13 If thi s current level of expenditures continues, the 1996-2000 five year defense plan will include as much as $61 billion for programs that have little to do with military preparedness.14 These funds should be directed to the operations and maintenance account t o fund near-term readiness. This will have no effect on the total amount spent on defense during the five-year period implement ra tional funding priorities be ous accounts such as per sonnel, opera tions and tween the vari RESOLVING THE DEFENSE BUDGET CR I SIS Table Revisions in the Defense Budget: FY 1996 to FY 2000 Billions of in Budget Authority 1996 1997 1998 1999 2000 Total Likely Clinton Request 257.3 254.0 261.7 260.1 279.6 1,320.7 New Total 275.1 203.4 294.0 307.5 32 I .O 1-48 I .O Figures do not in c lude the reallocation of funds within the defense account 12. For a full discussion, see LawrenceT. Di Rita, Clintons Bankrupt National Security Strategy, Heritage Foundation Buckgrounder No. 1000, September 27,1994 13 For a full discussion, see John F. L uddy, More Non-Defense Spending in the Defense Budget, Heritage Foundation F. Y.I.

No. 48, December 30,1994 14 Keith Berner and Stephen Daggett, Items in FY 1995 Defense LegislationThat May Not Be Directly Related toTraditiona1 Military Capabilities, Congressional Research Service, October 3 1, 19

94. For a detailed discussion of the findings of the Congressional Research Service, see Luddy, More Non-Defense Spending in the Defense Budget 15 The numbers in this table are not derived in any way from the Adm inistrations proposed defense budgets for future years below the topline. The Administration figures are classified 6 d Increase military pay to keep pace with inflation. Since Clinton took office, mili tary pay has declined relative to comparable civilia n pay. If this continues, recruit ment and retention will become more difficult as the military is unable to compete in labor markets. Increases in the military personnel account above the requested level will not be needed if the Clinton Administration in c reases military pay at the rate of inflation during the next five years. President Clinton's December 1 announcement that he will add 16 billion to the defense budget during the next five years may make this possible. l6 This principle accepts the Adminis t ration proposal that military manpower levels be reduced to somewhat more than 2.3 million active and reserve combined d Stop using money programmed for Operations and Maintenance (O&M) to pay for contingencies like peacekeeping. The Administration has re q uested suffi cient funds for the operations and maintenance account given the size of the force but has squan dered it too readily to pay for unbudgeted U.N. activities in Haiti and So malia. The amount of O&M funding per soldier has been relatively stead y since 1985 (see creases in the operations and maintenance ac count above the Clinton Ad ministration's requested level should not be necessary, as suming that the Administration maintains per Chart 1 In Tab!!e

2. Heritage Alternative Defense Budget FY 1 996 to FY 2000 billions of current dollars in budget authority Fiscal Year 1995* 1996 1997 1998 1999 2000 Military 70.5 72.4 72.7 73.9 76.3 78.7 Personnel A 2 I Procurement 43.3 48.8 54.2 59.6 65.0 70.3 9.3 9.4 9.5 9.6 9.9 10.2 DOE Defense 11.5 11.9 11.9 1 2.0 12.2 12.4 257.3 254.0 261.7 268.1 279.6 Refleas Clinton Administration reqwstgd bel for sake of comparison Anticipated Clinton request I soldier investment in the operations and maintenance account at the 1995 level about $36,000) and that all such mo ney really is directed toward combat readiness.

To do so, Congress must prevent the Administration from paying for Operations 0ther.Than War, the Administration's euphemism for United Nations peacekeeping 16 President Clinton announced that he was adding $ 25 billion to the defense budget, but $9 billion of this falls outside the five-year budget period 7 17 William h operations, from the O&M account. This could add as much as 10 billion to O&M funding over five years, given the $2 billion per year the Admi n istration has spent on OOTW since 1992 d Increase funding for Research and Development (R&D The Clinton Admini stration is endangering Americas technological superiority by spending too little to maintain the pool of technologies from which the next gener a tion of weapons will be drawn. Research and development budgets should be restored to $40 billion, in 1995 dollars, by the end of the 1996-2000 five-year defense plan. This level of funding for research and development approximates that which existed befo r e the Clinton Ad ministration. The programs toward which such funding should be applied include 1 ballistic missile defense, 2) an anti-satellite (ASAT) program, 3) the Warbreaker re connaissance/strike program, 4) a new family of low-yield tactical nucle a r weapons to counter regional foes possessing weapons of mass destruction, and 5) six pro grams targeted by Secretary of Defense Perry in a December 9 announcement for re duction or termination: the Advanced Amphibious Assault Vehicle, the Conzanche tack M issile (TSSAM and the V-22 Osprey transport aircraft d Restore balance between R&D and weapons procurement. In addition to spend ing too little on R&D, the Pentagon has stopped buying new weapons to replace ag ing systems. The procurement budget has dropp ed by almost 66 percent since fiscal 19

85. The procurement account should be increased to achieve a ratio relative to re search a nd development of 1.5 to 1 by the end of the five-year period and 2 to 1 by the end of ten years. A 2 to 1 ratio between Procurement and R&D matches the tradi tional relationship between these two accounts. This relationship ensures that enough procuremen t funds are available to permit R&D science projects to develop into ac tual weapons systems that increase Americas military readiness.

Significant increases in the procurement account should be applied to sealift, air lift, the B-2 bomber, a 400-ship Navy (including new DDG-5 1 Destroyers and the LPD-17 Amphibious Transport), ballistic missile defense (mostly in the later years and, also in the later years, the six programs now in research and development that have been targeted by Perry for reduction or t ermination d Increase the conventional force structure to levels slightly higher than those proposed by the Clinton Administration and set a realistic goal for the commit ment of this force to overseas conflicts. The Administrations strategy is for U.S fo r ces to be able to fight in two major overseas wars at the same time but Secretary Perry believes it will be at least several years before this is possible. The new Con gress should force the Administration to develop a strategy that sets a more realistic o bjective of one major conflict with enough in reserve for a smaller contingency op eration. Even after scaling back the goals of the national strategy, a modest increase in force structure will be needed, particularly for the Navy I helicopter, the F-22 f i ghter, the new attack submarine, the Tri-Service Standoff At- atthews. 2 Wars Now AreToo Many, Navy Times, July 25, 1994, p. 26 8 The force proposed by the Administration in the Bottom Up Review is capable of han dling one major regional con tingency and o ne minor re gional contingency simultane- ously if several adjustments are made. These adjustments include: 1)increasing the number of Navy ships to 400 including one additional ac tive aircraft carrier) from the proposed level of 346 ships 2) adding 3,00 0 active-duty Marine Corps troops to the 174,000 backed by the Ad ministration; and 3) providing for an additional Air Force tactical fighter wing above the 20 proposed by the Administration. This slightly larger force is referred to as the Heritage Floor F orce and was proposed originally by The Heritage Foundation in May of 1993 (see Table 3 for a comparison).'8 These modest increases from the Bot tom-Up Review level will mean a relatively small additional cost to the defense budget, which is provided for i n the budget proposals presented earlier and summa rized inTables 1 and 2 CONCLUSION Table 3 US Requires a Force Slightly Larger than the BottomUp Review Force BUR Fora Huiugc FY 1999 IS l6 II 21 The new majority in Congress has a mandate from the America n people to restore America's defenses. The Contract With America includes the National Security Restora tion Act of 1995 which, when passed, will require the Congress and the President to ad dress many of the issues presented here. This will be neither ea sy nor cheap. But the next overseas conflict to which U.S. troops are sent will not be any easier or any cheaper. It would be far better to make the tough choices now rather than then.

Baker Spring Senior Policy Analyst 18 For a detailed description of the Heritage Floor Force, see Kim R. Holmes, ed A Safe and Prosperous America: A U.S Foreign and Defense Policy Blueprint (Washington, D.C.: The Heritage Foundation, 1993 pp. 50-55 9 }{ \f1