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Defining Trends

U.S. Defense Spending Has Dropped Steadily Through The Past Decade
U.S. Forces Are Programmed to be About 40 Percent Smaller in FY 1999 than in FY 1990
Weapons Procurement is Not Sufficient to Maintain a Steady Pace of Modernization of the Planned Force
No More ICMB's, Ballistic Missile Carrying Submarines, or Strategic Bombers Will Be Ordered

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U.S. Defense Spending Has
Dropped Steadily Through
The Past Decade

The defense budget declined steadily after the Vietnam War until the late 1970s, when the Carter administration decided that continued growth in Soviet military capabilities required a response. This trend was accelerated during the first term of the Reagan administration, and the defense budget peaked in FY 1985 at $401 billion (in FY 1995 dollars). Pressure to reduce discretionary spending, intensified by the Gramm-Rudman-Hollings deficit reduction act, led to steady reductions in the defense budget through the remainder of the Reagan administration.

During the Bush Administration, the Conventional Forces in Europe (CFE) and START I and II agreements were concluded. The Warsaw Pact dissolved and the Soviet Union splintered into fifteen separate nations. With the Cold War over, a growing budget deficit, and a Congress and administration unwilling to make deep cuts in domestic entitlement programs, the pressure for reductions in the defense budget intensified. Even Iraq's invasion of Kuwait and the subsequent Gulf War did not ease the pressure to reduce the defense budget. In 1991, the Bush administration completed a study defining a "base force"--the prudent minimum force level below which the nation would be putting its national security at risk.

Pressure to reduce defense spending has continued into the Clinton administration. Entitlement expenditures continue to grow and the defense budget, by far the largest element of discretionary spending, is a natural target for federal budget cuts.

The administration's budget plans for the Department of Defense projected continued gradual decline in budget authority through the end of the decade. President Clinton, however, has recently announced an increase in that plan of $25 billion spread over the coming six years. The Republican Congressional leadership has indicated that it favors a larger increase. Prospects are good, therefore, that the defense budget will stabilize or even increase modestly after ten years of decline.

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U.S. Forces Are Programmed
to be About 40 Percent Smaller
in FY 1999 than in FY 1990

Reductions in defense spending since the late 1980s have led to deep decline in the size of U.S. armed forces. By the end of the 1990s, U.S. troops in combat formations will have declined by about 40 percent. Overall, active duty military personnel will have been reduced from 2.1 million to 1.45 million. This is the smallest force since the days preceding World War II.

The Bottom-up Review suggested an overall force requirement based upon analysis of three types of military operations: fighting major regional conflicts, maintaining overseas presence, and peace enforcement and humanitarian interventions. The major regional conflict is the most demanding of the three, and was therefore the primary determinant of the size of force structure requirement that emerged from the Bottom-up Review. The force is designed to fight successfully two major regional conflicts that occur nearly simultaneously. If not engaged in two major regional conflicts simultaneously, the military force recommended by the Review would be able to conduct the less-demanding missions of forward presence, peace enforcement, and intervention operations of limited scope.

A comparison of the Bottom-up Review's recommended force, the Bush administration's base force, the actual U.S. force structure of 1990, and the force deployed in the Desert Storm operation is shown in the figure opposite. This juxtaposition indicates the degree to which U.S. forces have been reduced. The active ground and air forces recommended by the Review will be only slightly larger than the forces actually deployed in Desert Storm. Working to offset this decline in sheer numbers, however, are U.S. force enhancement initiatives in the areas of strategic mobility, advanced munitions, and C3I, which will make remaining units more capable than they were in 1991. Still, while the Bottom-up Review analysis indicates that the U.S. could win a major regional conflict with less forces than were deployed in Desert Storm, Washington will have less of a margin for error in its future force deployments, should it face a comparable challenge.

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Weapons Procurement is
Not Sufficient to Maintain a
Steady Pace of Modernization
of the Planned Force

The drop in the defense budget is sharpest in the area of procurement, which has declined by 64 percent in the past decade. Moreover, the trend is toward smaller numbers of higher unit cost systems that incorporate advanced technologies such as stealth technology and advanced sensor and fire-control features. Considerable spending on procurement of weapon systems from the late 1970s through the late 1980s resulted in a wave of modernization throughout the force structure. The Army upgraded its front line forces with new Abrams tanks, Bradley fighting vehicles, and Apache attack helicopters. The Navy expanded its fleet from 12 to 15 aircraft carriers and expanded its battle forces from 479 to 574 ships. The Air Force completed modernizing its tactical fighter fleet with F-15, F-16, A-10, and F-117 aircraft. Considerable investment in intelligence and communications systems with a focus on space yielded an expanded tactical C3I network as well. Most of these systems had been procured and introduced into the force structure by 1991, when they were employed in Desert Storm.

Fewer systems were included in the reduced procurement budgets of the late 1980s and early 1990s, and this has resulted in a sharp drop in the number of weapon systems coming into the force structure in recent years, a trend that will continue in the immediate future. Inevitably, the military's inventory of equipment is beginning to age. The rate at which new weapon systems are being procured is in most cases well below the replacement rate. In about ten years, the services will be facing widespread obsolescence of a number of traditional military equipment items--notably attack helicopters, bombers, airlift aircraft, and submarines. This trend will be further exacerbated if the services are forced by lack of funds to delay or cancel major weapons purchases, as recent guidance from the Office of the Secretary of Defense has suggested. For example, delay or cancellation of procurement of the Comanche armed reconnaissance helicopter would lead to a serious aging of that fleet in the coming decade as well.

Spending on operations and maintenance, on the other hand, has stabilized, following a steady but modest drop after Desert Storm. In the FY 1995 defense budget, the allocation on operations and maintenance actually increases slightly. Coupled with the continued drawdown of active force structure, this will result in an increase of about 10 percent in spending over FY 1994 on operations and maintenance per active duty unit. This increase, coupled with the decrease in the rate of introduction of new weapon systems into the active forces, has led to enhanced readiness of some units. However, working against this trend is the increasing number of limited operations in which U.S. forces have been engaging. Operations such as those in northern Iraq, Macedonia, Haiti, and Rwanda are not separately budgeted, and come directly from the operations and maintenance accounts--and have cut into funds intended to maintain forces in a high state of readiness.

As the force structure gets smaller, the infrastructure (bases and overhead operations) needed to support it decreases as well. DOD is working to reduce the size of its base infrastructure through the Base Realignment and Closure (BRAC) process. A BRAC commission is working to identify bases that can be closed or consolidated. It is a slow process. Domestic military bases are almost always a key element of the local economy in the area where they are located. Members of Congress therefore tend to fight hard against base closings in their own districts or states. To overcome this political obstacle, the BRAC commission suggests a list of bases for closure and realignment that can only be voted for en bloc, which provides a measure of political cover for Congress. Still, the results have been limited. Despite the overall reduction of some 40 percent in the defense budget in the past decade, reduction in spending on base infrastructure has decreased by only about 15 percent. The bulk of this decrease has come from closing overseas bases, most notably in Europe and the Philippines--which is far more palatable to the domestic electorate. Meaningful additional savings will have to come from the more painful process of closing and consolidating bases in the U.S., with the loss of employment and the dislocation that this entails.

A commission on Roles and Missions has been established to examine more efficient and effective organization and support for the armed forces. While its charter does not focus exclusively on cost savings, it too is investigating ways of minimizing the overhead costs of maintaining the projected force structure.

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No More ICBMs, Ballistic
Missile Carrying Submarines,
or Strategic Bombers Will Be

By the late 1970s, the U.S. and USSR had built up their arsenals of deliverable strategic nuclear warheads to over 10,000 each. In the 1980s, both sides modernized the arsenals. The core of the Soviet forces were land-based ICBMs carrying multiple warheads (MIRVs), while the U.S. force was more balanced between land-based ICBMs, submarine launched ballistic missiles (SLBMs), and strategic bombers, with the largest number of warheads carried on the SLBMs. Either side was capable of launching thousands of warheads in a single salvo to strike the homeland of the other. In turn, either side would have had ample force remaining to retaliate with a devastating strike on the attacker.

The most destabilizing of the systems were the highly MIRVed, land-based, fixed ICBMs. They could be launched quickly, with little or no warning to the other side. Moreover, because the loss of a single silo meant the loss of up to ten warheads, there was a strong motivation to launch on warning, before a full appraisal of an attack could be made.

With the eased relations between Washington and Moscow, the START I and II agreements were concluded. Two key provisions of the latter are a limit of 3,000 to 3,500 warheads on either side, and a limit of one warhead on any land-based ICBM.

The treaty calls for reaching these ceilings by 2003. The U.S. is now in the process of implementing the treaty, largely eliminating older, obsolescent delivery systems. Other strategic nuclear delivery systems will either be retired or, in the case of the B-1 bomber, configured to deliver conventional weapons. Washington has no plans to procure any delivery systems beyond those already programmed. Spending for strategic nuclear forces has fallen from $47 billion in FY 1985 (12 percent of the DOD budget) to $12 billion in FY 1995 (5 percent of the DOD budget).

Strategic nuclear forces were not part of the primary focus of the Bottom-up Review. A separate study, the Nuclear Posture Review was commissioned to perform a separate in-depth analysis of strategic nuclear forces. This review, completed in September 1994, recommended a force structure described in Chapter 9, that maintains the triad--a mix of land, air, and sea based strategic nuclear delivery systems--while reducing the number of warheads to bring the U.S. into compliance with the START II provisions.

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