The National Security Council, the Secretary of the Treasury, the Director of
Defense Mobilization, the Director, Bureau of the Budget, the Chairman,
Atomic Energy Commission, and the Federal Civil Defense Administrator at the
Council meetings on April 22 and April 28, 1953, amended and adopted NSC 149/1 as indicated in NSC Action Nos. 768 and 776, including the
following understandings:
[Enclosure]
Report Approved by the National Security Council,
April 28, 1953
top secret
[Washington, April 29, 1953.]
Basic National Security Policies and
Programs in Relation to Their Costs
part i
statement of policy
General
1. A vital factor in the long-term survival of the free world is the
maintenance by the United States of a sound, strong economy. For the
United States to continue a high rate of Federal spending in excess of
Federal income, at a time of heavy taxation, will weaken and might
eventually destroy that economy. As rapidly as is consistent with
continuing our leadership in the free world, and barring basic change in
the world situation, the United States will balance its Federal
expenditures with its Federal income and will maintain over-all credit
and fiscal policies to assist in stabilizing the economy.
2. Because the United States has commitments and responsibilities which,
in the interest of the national security, must be met in the near
future, it can approach only gradually a balancing of its Federal
budget. But the Administration should frankly state at this time to the
people that it is resolved to attain this new objective and how it
expects to do so. It should also make clear the continuing nature of the
Communist threat, and the resulting fiscal situation, which confronts
us.
3. So long as there is war in Korea, the United States should not
substantially reduce the level, though it may change the form, of its
Federal taxation.
[Page 308]
4. While bringing the Federal Budget into balance, the United States will
continue to maintain over a sustained period armed forces to provide for
the security of the United States and assist in the defense of vital
areas of the free world. The national security program expenditures
outlined in Part II for FY 1954 and
FY 1955 will provide greater force
strength than we have today—in the United States, in NATO, and in the Far East. Further
continuing study will be required to relate this force strength to basic
national security objectives.
5. Subject to paragraphs 1 and 2 above, the United States will continue
to assist in building up the strength of the free world; will oppose
expansion by the Soviets and Communist China and deter the power of the
Soviets and Communist China from aggressive war; will continue to
exploit the vulnerabilities of the Soviets and their satellites; all
with a view to the ultimate retraction and reduction of the Soviet
system to a point which no longer constitutes a threat to the security
of the United States.
6. In carrying out paragraph 5 above, the U.S. should:
- a.
- Increase emphasis on
- (1)
- bringing the Korean war to a final settlement
acceptable to us;
- (2)
- aiding in the prosecution of the war in Indo-China to
a favorable conclusion, without direct intervention
except possibly in the event of Chinese Communist
aggression or of other basic change;
- (3)
- protection of the continental United States from enemy
attack, by both offensive and defensive military
measures and by non-military measures;
- (4)
- off-shore procurement of military matériel, designed
to increase the capability of our allies to support
their own defenses;
- (5)
- development and maintenance of production plant
capacity in the United States as a base for essential
wartime output, to lessen dependence on large reserve
stocks of end-items;
- (6)
- reduction of overhead and elimination of waste and
duplication;
- (7)
- lowering of trade barriers and encouragement of
reciprocal trade on a mutually favorable basis
consistent with the overall national interest.
- b.
- Decrease emphasis on
- (1)
- expansion of NATO
forces to previously projected levels by early fixed
target dates;
- (2)
- expansion of U.S. armed forces to currently authorized
force levels and of material stocks to full D-day
readiness by fixed target dates.
[Page 309]
Development of Nuclear Power
7. a. The early development of nuclear power by the United States is a
prerequisite to maintaining our lead in the atomic field. A program for
such early development should be carried forward primarily through
private, not government, financing.
b. The advantages of private financing are:
- (1)
- To tap the great scientific laboratories of private
enterprise;
- (2)
- To bring about competition between private and government
laboratories with benefit to both;
- (3)
- To provide some further dispersal of fissionable material
production capacity;
- (4)
- To create new industries, new employment, and new sources of
taxes.
c. For a practicable policy of nuclear power, industry should be
permitted (subject to appropriate security safeguards) to:
- (1)
- Own and operate nuclear power facilities;
- (2)
- Buy or lease fissionable material;
- (3)
- Use and transfer fissionable and by-product materials not
purchased by the Atomic Energy Commission; and
- (4)
- Have more liberal patent rights than presently granted.
Accordingly, immediate positive steps should be taken
for legislation along these lines.
d. No additional funds for a pilot plant (experimental sodium graphite
reactor) should be authorized at this time, other than the approximately
3 million presently included in FY 1953
and FY 1954 budgets.
e. It is expected that industry will participate with its own funds and
facilities in this program when the recommended legislation is
passed.
part ii
outline of major programs
Military Program
8. To achieve by FY 1956 or 1957 the
forces and readiness levels contemplated by NSC 114/35 would seem to require
an average annual expenditure of $45 billion for the Department of
Defense for FY 1954, FY 1955 and FY 1956, even assuming an important increase in efficiency
and effectiveness of personnel. To maintain such forces and readiness
for the years immediately following FY
1956 would also seem to require annual expenditures averaging $40
billion. All figures assume no increased inflation. Such levels of
expenditure
[Page 310]
are inconsistent
with the policies proposed in Part I, paragraphs 1 through 5.
9. Progress in bringing the military program in line with these policies
will be made as follows:
- a.
- The entire military program, including missions, forces and
readiness levels, will not be related to a “specified” date for
D–Day readiness and will be reviewed and modified from time to
time as the result of periodic recommendations from the Joint
Chiefs of Staff and in view of changing tactical, strategic, and
economic considerations throughout the world. In particular, all
missions will be carefully reviewed as rapidly as possible in
order to determine whether or not there is any overlapping which
unnecessarily commits any of the services to responsibilities
which can better be served by another service or by a
combination of services as a result of changing capabilities,
modernization or more effective planning. This military program
assumes a steady improvement in defense capabilities, with a
substantial base for full mobilization in the event of all-out
war. It is a program that should continue to be sound and
livable over a period of years.
- b.
- The guide lines with respect to force levels for the Army and
Navy will be to retain for FY
1954 substantially the combat forces presently in being, with
every effort being made to reduce overhead resulting from the
inefficient utilization of manpower and at the same time to
provide substantially increased modernization of equipment. In
the case of the Air Force, substantially increased combat
effectiveness will be achieved both through modernization of
equipment and by an important increase in the number of combat
wings. The exact number of wings to be activated and made combat
ready during this period (FY
1954–FY 1955–FY 1956) will be determined by
taking into account technical developments, the availability of
certain desirable improved aircraft, and the necessity of
maintaining a healthy base with respect to the
aircraft-manufacturing industry so that its production
capabilities are reasonably retained for a number of years.
Consistent with what has been said above, and without reducing
the number of military personnel allocated to combat units,
numbers of military personnel are to be re-phased and adjusted
to achieve, as rapidly as possible but no later than the dates
specified, a reduction for the Army of 125,000 (30 June 1954),
for the Navy and Marine Corps an aggregate of 75,000 (30 June
1954), and for the Air Force of 50,000 (30 June 1955)—a total of
250,000—from the number reported on 28 February 1953. The number
reported on 28 February 1953 was: for the Army 1,495,000,
excluding 2,244 Military Academy Cadets; for the Navy, 802,936,
excluding 6,452 Midshipmen and Naval Aviation Cadets; for the
Marine Corps, 242,300; and for the Air Force, 965,425—a total of
3,505,661, excluding Military Academy Cadets, Midshipmen, and
Naval Aviation Cadets.
- So long as the Korean hostilities continue at substantially
the current level of activity the Army and the Marine Corps may
retain, out of the reduction stated above, up to 51,000 and
5,000 military personnel, respectively, in order to provide the
personnel pipeline necessary to support the rotation
policy.
- c.
- The mobilization base will include proven and retained
capacity to produce as well as a minimum stockpile of material.
A careful balance must be worked out between (1) weapons that
are immediately required if war occurs and (2) the lead times
necessary to produce in quantity weapons of proven design from
existing or readily available capacity. Technological progress
with respect to new weapons and equipment makes this a desirable
policy rather than to risk the stockpiling of end items that
deteriorate or quickly become outmoded or obsolete. Insofar as
possible it will be the policy of the Department of Defense to
utilize commercial items and to take advantage of capacity
normally used for the production of civilian goods.
- d.
- The FY 1954
budget must be distinguished from cash expenditures in FY
1954. The FY 1954 budget
is a request that Congress appropriate new funds to be available
for commitment during FY 1954
(over and above the balance of funds appropriated in prior
fiscal years, which as of 30 June 1953 is estimated to total $62
billion and are largely already committed). On the other hand,
cash expenditures actually made in FY 1954 will come from (1) unexpended portions of
funds appropriated as above mentioned in prior fiscal years,
whether or not heretofore committed, and (2) funds newly
appropriated in FY 1954 in
response to the budget request.
- e.
- The FY 1954 budget submitted by
the prior Administration in January was for $41,286,000,000.
This figure did not include (1) an undetermined amount to be
later requested for public works as part of the 1954 program and
(2) funds to carry the Korean war through FY 1954. Without now deciding to change the
ultimate force and readiness goals approved in NSC 114/3, it should be possible to
reduce the above-mentioned FY
1954 budget request by a substantial sum, even up to $5 billion,
and still cover requirements for Korean combat at approximately
current levels as well as public works. This reduction can be
made through anticipated intelligent savings in manpower, better
stock control, reductions in inventory, and an important
reduction in the lead time required for additional commitments,
because in many cases capacity has been established and
production is flowing. Where new products are being put into
production, a careful review of engineering, tooling and
production lead time can also result in reduced commitments and
the finished products still obtained on time.
- f.
- The desirability of keeping cash expenditures in line with
cash receipts is recognized. By following the programs outlined
in paragraphs a through e above, there should result an
increasingly strong posture of defense and the cash expenditure
levels estimated below. These expenditure levels can be achieved
only by exercising better financial and administrative control,
effective balancing of all military programs, and avoidance of
any further inflation. They are in part made possible by an
estimated reduction of $1.0 billion annually through a clear
allocation of work and responsibility, avoiding duplication of
effort, and better utilization of manpower.
- g.
- By following the foregoing programs, it should be possible to
reduce the level of expenditure during FY 1954 to approximately $43.2 billion (which
includes $2 billion extra costs for continuation of the Korean
war at substantially the current level of activity
[Page 312]
through the whole
Fiscal Year and for build-up to 20 ROK divisions). It is hoped that in subsequent
fiscal years the expenditure levels can be progressively reduced
to approximately $40 billion during FY 1955 and to approximately $35 billion during
FY 1956. The level of
expenditure in FY 1956, however,
is subject to revision after a new study of force and readiness
levels, which will take into account all developments since
NSC 114/3.
Mutual Security Program
10. The proposed new mutual security program designed to implement the
policy decisions and to serve the United States objectives set forth in
Part I hereof through mutual progress in military, economic, and moral
strength among the free nations will have the following characteristics:
- a.
- The United States recognizes that it must continue to take
leadership in strengthening the free world.
- b.
- The change to the new program, while rapid, will not be
abrupt, with general adherence to the 1953 calendar year
commitments with other nations—the new course to be reached in
January 1954.
- c.
- Emphasis will be placed upon:
- (1)
- New and modern weapons.
- (2)
- Sound and stable economies in the free nations, with
increasing productivity, and substantial equitable
defense contributions by each.
- (3)
- Increased use of private capital.
- (4)
- Expanded trade and offshore procurement.
- (5)
- Longer-term programs for improved planning,
procurement, and production base.
- (6)
- Regional economic and trade arrangements in the Far
East.
- (7)
- Decrease in numbers and improvement in competence of
U.S. personnel overseas.
- d.
- NATO first-line divisions
will be brought to earlier high combat effectiveness through
being equipped in part through the use of a portion of the U.S.
Continental supply of critical items, in accordance with U.S.
priorities, and future NATO
force levels will be reduced to a size attainable within the
comprehensive policy.
- e.
- The U.S. will concentrate on vital free countries—helping the
weakest to attain economic strength, and encouraging and
enlisting the strong to maximize their carrying of their share
of the over-all defense requirements.
- For example, we shall give top priority attention:
- (1)
- In Western Europe; to France, with aid, in view of its
heavy commitments in Indo-China and its key geographic
and general position in Europe; to Germany, with rapid
equipment of military units when approved, and with
enlistment for adequate defense-sharing in view of its
large capabilities.
- (2)
- In the Far East: to Indo-China as the weak point,
encouraging and supporting a sound military, political
and economic
[Page 313]
plan; to Japan, with rapid equipment of military units
when approved, and with enlistment for adequate
defense-sharing as a part of an interrelated economic
program.
- (3)
- In South Asia: to India and Pakistan, with moderate
annual aid for the next four years.
- (4)
- In the Near East: to Egypt, moderate U.S. aid to
encourage a regional defense organization; a peace
between the Arab States and Israel, and related
problems.
- (5)
- In Latin America and Africa: to greater development of
raw materials through private capital, to the economic
advance of the indigenous peoples, to technical and
educational cooperation, but with minor U.S. Government
monetary aid.
- (6)
- World-wide: to the United Kingdom, to shift and
strengthen the British internal economy, move toward
convertibility of sterling, maximize offshore
procurement of aircraft, and emphasize air
strength.
- (7)
- Among all free nations: encourage and support
multilateral organized cooperation, especially EDC, maximize combined
effectiveness, minimize disagreements, foster
unity.
- f.
- The policy and program will be administered in closest
conformity with the foreign policy responsibilities of the
Secretary of State and the military policy responsibilities of
the Secretary of Defense.
- g.
- The policy and program will be planned on the assumption that
inflation at home (whether arising from governmental deficit
financing, excessive consumer credit, etc.) will not be
permitted to destroy the effect of our policies abroad.
11. The levels of expenditure and of appropriation for the new mutual
security program implementing the policies of Part I hereof will be
reduced as follows: (All figures are for U.S. dollars exclusive of local
currency counterpart.)
- a.
- FY 1954
Expenditures
- 6.5 billion* (approximate), reduced 1.5 billion from the
January, 1953, 8 billion† estimate of
rate of expenditure.‡ The 6.5 billion expenditure will be divided
approximately 5 billion for MDAP
(military end items, etc.) and 1.5 billion for economic defense
support, aid and technical assistance.
- b.
- FY 1955
Expenditures
- 6.3 billion (approximate), reduced 1.5 billion from January, 1953,
7.8 billion† estimate of
the rate of expenditure.‡
- c.
- FY 1954
Appropriations for New Obligational Authority
- A reduction from the 7.6 billion budget of the preceding
administration of at least 1.8 billion to a maximum of 5.8 billion.
This figure will be further reduced by deducting an amount equal to
the unprogrammed and unobligated balances remaining at the end of
FY 1953 (estimated to total about
$400 million, after assuming a deduction of approximately $50
million from currently unprogrammed funds for the Berlin industrial
stockpile). The major components of the 5.8 billion will be:
- 1,000 million—Economic–Defense Support Aid—Europe Title
I.
- 625 million—Economic–Defense support, technical
aid—Balance of the World—Titles II, III, IV.
- 1,600 million—U.S. Off Shore Procurement.
- 2,325 million—U.S.—MDAP
world-wide.
- 250 million—Special new weapons—program controlled by the
President.
- 5,800 million—Total
- d.
- FY
1955–1956–1957
- Gradual reduction in spending and appropriations, with the
anticipation that unless a major favorable or
unfavorable change in the world situation occurs there will
be a continuing necessity beyond FY
1957 and for as long as major danger of war persists, to provide a
portion of the cost of replacement, spare parts, and maintenance of
a magnitude of 3 or 4 billion.
Atomic Energy Commission
Program§
12. To carry out the statement of policy in Part I above, the following
actions will be taken with respect to the Atomic Energy Commission
Program:
- a.
- The sixth reactor at Savannah River ($170 million) and
additional weapon fabricating facilities ($10 million) will be
eliminated, and the estimated cost of the two new Hanford
reactors will be substantially reduced ($48.6 million). However,
increases will be necessary in the proposed FY 1954 Budget Expenditures in order
to construct new facilities for the production of special
materials, particularly lithium–6, required for thermonuclear
weapons. The net effect of these additions and deletions will be
to reduce previous estimated expenditures for FY 1954 by $100 million and FY 1955 by $134 million.
- b.
- As a result of more clearly defining the Atomic Energy
Commission’s basic plans for FY
1955, the previously estimated expenditure rate of $2.8 billion
for FY 1955 will be reduced by
$172 million.
- c.
- Estimated reductions of $14 million in FY 1954 and $28.7 million in FY 1955 will be effected by savings in the Atomic
Energy Commission’s security program, and by assuming a year’s
postponement of the large ship reactor program and a stretch-out
of the aircraft nuclear propulsion program.
- d.
- As a result of the decision not to construct a sodium graphite
pilot plant reactor, reductions in estimated expenditures of $3
million in FY 1954 and $4 million
in FY 1955 will be
effected.
- e.
- On the basis of a re-examination of the rate of expenditures
for all major capital projects, including those in the expansion
program, a determination has been made with respect to the
minimum rates of expenditures for FY 1954 and 1955 that would permit continuation of
the program in accordance with present schedules. Based on this
analysis, estimated expenditures for FY 1954 will be reduced by $106 million and for
FY 1955 by $57.5 million.
Because it is impossible to predict a reduction in the total
ultimate costs of these projects, the effect of this
rescheduling of expenditures is to defer the amount of the
reductions beyond FY 1955. It is
recognized that reducing the estimated expenditures to a minimum
involves a risk as to our ability to meet construction schedules
if contingencies, which may well arise, require increased rates
of expenditures in FY 1954 and
1955.
Estimated expenditure levels in millions
|
FY
1954 |
FY
1955 |
| Previously projected expenditures |
$2,700.0 |
$2,800.0 |
| Currently projected expenditures |
2,476.0 |
2,404.0 |
| Total estimated reductions |
$224.0 |
$396.0 |
part iii
summary of reductions in program
expenditures
13. The reduction in expenditures summarized below are reductions from
the projected expenditures for national security (including AEC) programs stated in the February 24,
1953 memorandum entitled “Costs of National Security Programs”:
Reduction in expenditures in billions
|
FY
1954 |
FY
1955 |
| DOD |
2.3 |
4. |
| MSA |
║.9 |
║ 1.7 |
| AEC |
.2 |
.4 |
|
3.4 |
6.1 |
| Assumed reductions proposed by the
BoB in March 5, 1953
memorandum6 |
6.8 |
14 |
[Page 316]
If the current revenue levels are maintained and if a
reduction in expenditures of one billion is assumed in each year for
non-security programs, the above reductions of 3.4 and 6.1 would result
in a budgetary position as follows:
(Billions of dollars)
|
|
Cash Basis |
Budget Basis |
|
|
1954 |
1955 |
1954 |
1955 |
| (a) Deficit as estimated in “Budget Outlook”
(assuming presently scheduled tax expirations) |
6.6 |
11.7 |
9.9 |
15.0 |
| (b) Reductions in deficit by proposed expenditure
reductions: |
|
|
|
|
|
(1) In non-security programs |
1.0 |
1.0 |
1.0 |
1.0 |
|
(2) In security programs (above) |
3.4 |
6.1 |
3.4 |
6.1 |
| (c) Deficit (assuming presently scheduled tax
expirations) |
2.2 |
4.6 |
5.5 |
7.9 |
| (d) Gain in revenues if current tax rates are
maintained |
2.1 |
8.0 |
2.1 |
8.0 |
| (e) Deficit or surplus |
—0.1 |
3.4 |
—3.4 |
0.1 |
