129. Memorandum From the Secretary of Defense (Wilson) to the President1
SUBJECT
- Military Program for Fiscal Year 1958 and Fiscal Year 1959, Based Upon Estimated Expenditures for the Department of Defense for Military Functions of $38 Billion Annually
1. In your Budget Message to the Congress for Fiscal Year 1958,2 the new obligational authority requested for the Department of Defense was $38.5 billion, including items for later transmission. The House of Representatives considered a total of $36.128 billion and [Page 541] reduced this amount by $2.574 billion. The Senate approved a restoration of $971 million. The Senate–House Conference has not acted, and while it is difficult to appraise accurately, they may recommend a compromise figure by restoring about two-thirds of this amount.
The action in reducing the new obligational authority for military construction resulted in a further reduction of $450 million from the $2.1 billion in the original Defense Budget. From the above it now appears that the total appropriation for the Department of Defense for Fiscal Year 1958 may be approximately $36 billion. By utilizing unobligated carry-over funds, we can take care of a $38 billion program in Fiscal Year 1958. However, the Fiscal Year 1958 appropriations of $36 billion and the use of carry-over funds to maintain the program of $38 billion will require the Department of Defense to request appropriations for Fiscal Year 1959 of approximately $38 billion if the cost of the military program is to continue at this level. This will give the appearance outwardly of a step-up in our military program of approximately $2 billion which will be difficult to explain to the Congress and the country.
2. Your Budget Message contained an estimate of expenditures of $38 billion for Fiscal Year 1958 for the Department of Defense. It is my understanding that you feel the Department of Defense should operate within this amount, and the military programs for Fiscal Year 1958 should be adjusted accordingly. You have also directed that the Department of Defense should be limited to $38 billion in Fiscal Year 1959 for both new obligational authority and expenditures.
Based upon an analysis of the expenditures for the period January–June 1957, the Department of Defense is currently operating at a level of expenditures of approximately $40.250 billion. This rate, if projected on an annual basis, is as follows:
| Army: | $ 9.6 billion |
| Navy: | 11.1 billion |
| Air Force: | 18.8 billion |
| OSD: | .750 billion |
| Total: | $ 40.250 billion |
It appears desirable to make some re-distribution of expenditures for Fiscal Year 1958 between military departments: [Page 542]
| Expenditures Estimated in Budget Message (Billions of Dollars) | Tentative Re-Distribution (Billions of Dollars) | |
| OSD | .726 | .750 |
| Army | 9.750 | 8.950 |
| Navy | 10.389 | 10.400 |
| Air Force | 17.600 | 17.900 |
| Total | 38.0003 | 38.000 |
The question of expenditures is further complicated by the restrictions on our program as a result of the effect of the debt ceiling under which the Administration is operating. Since the current operations of the Department of Defense are at a rate of approximately $40.250 billion, the Department of Defense is faced with the necessity of radically reducing the rate of expenditures in the early part of Fiscal Year 1958. In addition to the reduction of the program for Fiscal Year 1958, all possible measures within the authority of the Department of Defense are being considered which will reduce the drain on the Treasury for the first half of the Fiscal Year. It will be particularly difficult to meet the expenditure limitations during the first half of Fiscal Year 1958, and some relief in this regard may be necessary.
3. A further complicating factor in the military program is the effect of increased prices, and this effect in Fiscal Years 1958 and 1959 cannot be fully estimated at this time. The recent increase in wages and prices in the steel industry is an example of the situation we face. To the degree that price increases must be absorbed within an expenditure ceiling of $38 billion, our military program would have to be correspondingly further reduced. The proposed reduction in the military program contained in this memorandum makes no allowance for further price increases.
4. To maintain a balanced military program, it appears necessary at this time not only to reduce procurement but to also make adjustments in the personnel strengths of the military services as indicated in the following table:
| Presently Approved Personnel Strengths | Tentative Strengths End FY 1958 | Tentative Strengths End FY 1959 | |
| Army | 1,000,000 | 900,000 | 850,000 |
| Navy | 675,000 | 645,000 | 630,000 |
| Marine Corps | 200,000 | 180,000 | 170,000 |
| Air Force | 925,000 | 875,000 | 850,000 |
| Total | 2,800,000 | 2,600,000 | 2,500,000 |
In order to effect the above reductions, it will be necessary to reduce the present 1,150,000 military personnel serving overseas and afloat by approximately 100,000 in Fiscal Year 1958. It appears that these reductions can be made without major redeployment of combat units from Europe although the total personnel of 350,000 in Western Europe must be reduced by at least 35,000 during Fiscal Year 1958, principally in the Army and Air Force. Since some of the personnel in Japan will be redeployed to other areas in the Far East, a further reduction in the personnel serving in the Pacific area may be required in addition to the already-announced plans for reducing personnel in Japan by 40,000. The reduction in personnel serving afloat will require a reduction in the number of combat ships in commission by approximately 66 during Fiscal Year 1958.
Military personnel serving in U.S. territories and possessions must be reduced as a part of the overall plan. This will reduce transportation costs and reduce further construction of facilities and housing. As an example, it appears desirable to withdraw most of the combat ground forces from Hawaii which would have the additional advantage of avoiding housing costs and overinflating that area.
An overall reduction of military personnel abroad will reduce the dependents abroad, and some savings, particularly in transportation and support, will result.
The required personnel reductions abroad during Fiscal Year 1959 are difficult to determine at this time. They may require either further unit withdrawals from the Far East or reduction in combat forces in Western Europe.
The personnel reductions recommended in Fiscal Year 1958 should be made as early as possible, and since they will require the release of a large number of Reserve officers (approximately 20,000 in Fiscal Year 1958) from active duty and will also affect our draft calls for the entire year, an early announcement of these plans should be made. It will not be necessary to announce the personnel plans for Fiscal Year 1959 until they are finalized in your 1959 Budget, but their tentative approval is required at this time in order that the military services can be appropriately guided during the next six months and in order that the two programs can be consistent over the two-year period.
[Page 544]An important reduction in civilian personnel in each of the military departments will be possible with this proposed reduction in the program. Some of this reduction would involve U.S. citizen civilians abroad.
5. Under the above personnel ceilings, it is believed that the following major forces can be maintained through Fiscal Year 1959:
| Army: | 13 Divisions (5 Europe; 1–2 Korea; remainder Continental U.S.) |
| 8 Regiments and Battle Groups | |
| 100 Air Defense Battalions | |
| 40 Surface-to-Surface Missile Units | |
| Navy: | 13 Attack Carriers |
| 9 ASW Carriers | |
| 12 Cruisers | |
| 220 Destroyers | |
| 112 Submarines | |
| 15 Carrier Air Groups | |
| Marine Corps: | 3 Marine Divisions (1 Pacific; 2 U.S.) (1 reduced strength) |
| 3 Marine Air Wings (1 Pacific; 2 U.S.) (1 reduced strength) | |
| Air Force: | 105 Major Wings |
| Strategic Forces: 40 wings including 11 heavy bomb | |
| Air Defense Forces: 28 wings | |
| Tactical Forces: 25 wings | |
| Air Lift Forces: 12 wings |
For your information, the presently existing forces and those originally planned for end Fiscal Years 1958 and 1959 are attached.4 The forces listed in the above program represent a preliminary appraisal of those that can be maintained in an effective state of readiness. After a careful review, it may be found practicable to increase them slightly and they will, of course, phase down to these figures on a gradual basis over the two-year period. As unnecessary support or logistic activities are uncovered, the additional personnel will be channeled into combat units. A more precise figure for all categories will be furnished you after complete staffing following your decision on the outlined plan herein presented. It is important to note that the general view among the senior officers, both civilian and military, in the Department [Page 545] of Defense is that it is more important to modernize equipment and maintain the units at a high state of readiness than to hold the number of personnel and units at a high level.
6. The greatest immediate impact of the $38 billion expenditure plan will occur in the procurement field, particularly in aircraft and related procurement in the Air Force, aircraft and ship building in the Navy, and the procurement of missiles of all types in all services. Some important reductions in employment and activity will occur in some segments of the aircraft and electronic industries.
Also substantial cancellations are indicated in the missile field, some of which will affect employment and will have to be made prior to complete testing of the missiles concerned. The magnitude of the program as originally contemplated and its increasing cost due both to technical difficulties and basic cost increases is just too big.
Even with the adjustment in our military programs, the money available for expenditures for modernization is in the opinion of the military and civilians in the Defense Department a minimum. While we undoubtedly have a powerful military organization, it is also considered to be an absolute minimum in the absence of a real improvement in the international situation.
7. As you know, in addition to the funds budgeted for research and development, substantial funds are devoted to development from the procurement and production accounts. It is anticipated that all funds currently in the 1958 budget for research and development as finally approved by the Congress will be expended for this purpose and that any net reduction in the level of research and development will be effected by savings in the procurement and production accounts with corresponding increases in procurement for service use.
8. The final action in reducing the new obligational authority requested of Congress for military construction to $1.650 billion will delay important activities in this field. It is expected that it will have a substantial effect upon the operational readiness dates of the early warning system, the Continental Air Defense system, and the dispersal of the Strategic Air Forces. Action on this request is still pending in the Congress. We hope it will not be further reduced.
9. Some reduction in the level of support given to the Reserve Forces in all services will have to be considered in order that any savings resulting in these accounts may be applied to other more urgent needs. The greatest difficulty expected in this area is the adverse public and political reaction should these forces be reduced materially below those presently programmed. However, in view of the presently approved strategic concepts, the reduction in the Reserve Forces appears to be indicated in the order of 15% by the end of Fiscal Year 1959. Only those forces can be justified that can be brought into operation in the early stages of an emergency.
[Page 546]10. Summary Recommendations. If the above program and general outline meets with your approval, it will require considerable detailed work in the process of finalization. The problems outlined above have been discussed in general terms with the Secretaries of the Military Departments and the Joint Chiefs of Staff. I have asked them to be prepared to meet with you to discuss this revised military program.
The views of the Joint Chiefs of Staff in regard to the Joint Strategic Objectives Plan for Fiscal Year 19615 have not been formally submitted, but I have studied their individual proposals. They were prepared on a basis of expenditures for the Department of Defense of $39.0 billion rather than $38.0 billion. Since their views are in substantial disagreement, there seems to be no reason to ask them to re-work their submissions at this time until they are given further guidance.
From my personal study of the matter, the effects of the reductions discussed above are deserving of the most serious consideration. However, if no additional funds can be made available, they appear to be mandatory.
It we are to meet the $38 billion expenditure for Fiscal Year 1958, prompt action must be taken or we will be forced into more drastic actions later in this Fiscal Year. Should this occur, the effect upon our Fiscal Year 1959 and subsequent programs would be most disruptive and uneconomical.
I recommend that you discuss the above program with the Service Secretaries and the Joint Chiefs of Staff collectively and that we have your decision as soon as practicable. I feel very strongly that the Fiscal Year 1958 revised program should be discussed with Congressional leaders before being made public, particularly the changes in personnel strengths for Fiscal Year 1958. Following such a meeting I would recommend that you issue a public statement in this regard.
- Source: Eisenhower Library, Whitman File. Top Secret.↩
- For text of Eisenhower’s budget message, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1957, pp. 38–59.↩
- Includes $115 million not distributed. [Footnote in the source text.]↩
- Not printed.↩
- Not found in the Eisenhower Library or Department of State files.↩