Foreign Relations of the United States, 1958–1960, Volume III, National Security Policy; Arms Control and Disarmament, Microfiche Supplement

110. Memorandum of Conference with the President, and Department of Defense and NSC Leaders.¹

Washington, November 28, 1958, 8:45 a.m.

OTHERS PRESENT

• Secretary McElroy
• General Twining
• Secretary Quarles
• Mr. Holaday
• Mr. Gordon Gray
• Mr. Stans
• Mr. McNeil
• Mr. Harlow
• Brig. General Carey Randall
• Brig. General Goodpaster
• Major Eisenhower

The purpose of this meeting was to brief the President on the status of the Department of Defense budget request for FY 1960. The presentation was delivered by Secretary McElroy.

I.

Secretary McElory began by giving the overall budget estimate for FY 1960 as compared to previous years. New obligational authority (NOA) for 1960 is estimated at $42.8 billion, expenditures at $41.6 billion. This cost level exceeds that of FY 1959, in which NOA is $41.8 billion and expenditures are estimated at $40.8 billion. Expenditures in FY 1958 were $39.0 billion. Mr. McElroy noted that of the increase of expenditures in FY 1959, over FY 1958, $850 million has been required by the military and civilian pay raise.

Mr. McElroy then covered what he considered his “key” decisions. These had resulted in reduction of an original estimate of $43.6 billion NOA for FY 1960 to $42.8 billion. He then ran down the individual items, largely by Service, as follows:

NIKE-ZEUS—In this program $700 million had been recommended by the Army. A scientific group in the Pentagon had revised this recommendation to include only $626 million, of which $300 million should be R&D funds. The reason for this reduction, besides economy, is uncertainty as to the efficacy of the NIKE-ZEUS. The cost of ZEUS overall would be $7.0 billion. Therefore, Mr. McElroy feels that only the $300 million R&D funds should be released for this year, and the country should be apprised of the overall cost before we go to production on this weapon.

The President then stated that we have wasted too much money by going prematurely into production on various items. In particular, he mentioned those of interceptors of interim value only.

Overseas Deployments—Mr. McElroy then mentioned the impact of cutbacks on the overseas deployments of the Army and pointed out the fact that every squeeze in manpower is difficult on the Army. He cited as an example the fact that 10,000 men are needed in 1962 for dispersion of atomic storage sites in Europe (this figure was questioned and discussed, but was used for illustrative purposes). Additionally, he mentioned the fact that the Army must expend manpower in the mission of training the National Guard. All this, he states, cuts into the Army combat forces. Therefore, in order to save as much as possible, areas other than manpower have been cut in this budget. Mr. McElroy’s concern with overseas deployments applies as of FY 1960.

REDSTONE—One of those areas is the REDSTONE, for which there will be no additional funding after FY 1959. To compensate for this cutback to some extent, Mr. McElroy plans to expedite the solid propellant PERSHING. He realizes that the cutback in REDSTONE means that some U.S. commitments in Europe will not be met.

Air Defense—One of Mr. McElroy’s key decisions is to cut back missile air defense by reducing both NIKE-HERCULES and BOMARC below NORAD-recommended levels. The Department of Defense feels that if we must be inadequate, the inadequacy should be sustained in air defense on the basis that no air defense is perfect and the best hope for protection of the U.S. is the threat of retaliation. Mr. McElroy feels that we must protect SAC bases and go beyond that only as necessary for psychological reasons.

Army Modernization—As a final item on the Army, Mr. McElroy pointed out that the Army’s programs for modernization will slip, primarily with regard to modernization of those forces which will be mobilized between M-Day and M┼6. (Note: The objectives and capabilities plans in the Pentagon are based on the assumption, for computational purposes, that D-Day will occur at M┼6 months.)

Navy Missiles—In keeping with the policy of close scrutiny of air-breathing missiles, the Department of Defense has cancelled REGULUS II, which Mr. McElroy considers the best air breather in its range. This cancellation is considered justified in view of the advent of POLARIS.

The question of simultaneous R&D and production then came up. Mr. McElroy and Mr. Quarles ventured the opinion that we are currently undergoing a technical revolution which requires unusually large R&D funds. This situation, they feel, should correct itself when the transitions now under way are achieved.

With regards to POLARIS, the release of one submarine in FY 1959 brings the total at beginning FY 1960 to six, with three additional authorized by Congress but frozen by the Administration. Department of Defense, under its proposed budget, plans to release those three, bringing the total to nine, but not to request authority for any additional POLARIS from Congress during FY 1960. In addition, however, Department of Defense is including some specified long lead-time items for three more POLARIS in this FY 1960 budget. Mr. McElroy considers this a conservative approach with which the Navy and the Congress might disagree. If pressed on this issue, Mr. McElroy feels that he can request additional procurement when technical problems are solved.

Nuclear Attack Carrier (CVAN)—Mr. McElroy then stated that he proposed a second nuclear attack carrier to be built. Mr. McElroy pointed out the Navy planning now contemplates a two-year cycle in shipbuilding with a carrier program every other year for at least a couple more years, and support ships programs for the alternate year. He reminded the President that under such a program a carrier would have been included in 1959 but it was deferred. This statement caused rather considerable discussion. The arguments advanced in favor of the building of a second CVAN as set forth by General Twining were:

(a) Carriers are useful in cold war situations (General Twining discounts any great value of the CVAN in general war).

(b) If new carriers are built, in General Twining’s view, they should be nuclear. He admits, however, that in his mind this production of a second nuclear carrier is one of the more questionable items in this budget.

Mr. Gray then interposed a word at the request of Secretary Dulles, not present at this meeting. Secretary Dulles had stated to Mr. Gray on November 26 that were he present in the meeting he would make the following comment. Without wishing to pose as an expert on Defense budget matters, he nevertheless would like to point out that from the point of view of the conduct of foreign relations, the capabilities which we had recently exercised in Lebanon and the Taiwan Strait had been significant and vital. Mr. Dulles’ view is that as long as we retain our deterrent capability, the major threat in years ahead is not one of general war but of local aggression. He therefore wishes to express the hope that budget decisions not be made which would cripple our capability in this area. Mr. Gray did not go so far as to specify whether this view indicated the necessity of the building of a new atomic carrier.

In justification for a sizeable carrier fleet, Mr. McElroy pointed out that the attack carriers had been extremely useful in Lebanon and Taiwan and that we had employed four in the Lebanon situation and five in the Taiwan situation.

As regards this item, the President has several reservations. First of all, he does not visualize a battle for the surface of the sea. Further, he desires to point out that our defense depends on our fiscal system. It is not a question of either defense or fiscal solvency. You do not have defense without fiscal soundness. He stated that he did not see building a new carrier at the moment but desires to defer decision temporarily. (This matter was brought up again later, at which time the President stated that he would defer this for a year.)

Block Obsolescence—Mr. McElroy then stated that we are currently facing block obsolescence of our naval vessels. He indicated that Defense had engaged the services of people outside the government to go over the Navy problem of block obsolescence and specifically referred to the President of the Newport News Shipbuilding Company as a participant. They had felt that a “refurbishing” program was indicated and the Navy’s best judgment is that the report is sound. It involves three stages:

(a) When a ship has gone beyond repair it should be dropped off or replaced.

(b) Above that, there is proposed $2–$2.5 million per ship for piping and wiring which would extend the ship’s life for five years.

(c) With respect to ships that are still in better condition, a program of real modernization is contemplated involving $7–$10 million per ship which would extend the ship’s life eight to ten years. This total program involves $200–$250 million.

Mr. McElroy stated that the alternate to such a program is to postpone modernization but this would require an even larger program later. Mr. McElroy also stated that the Navy is reducing the number of its ships and aircraft.

THOR-JUPITER—With regard to the IRBM program, Mr. McElroy specified that only eight of the planned twelve squadrons of THOR-JUPITER will be organized. Four of these eight squadrons will go to the U.K. and one to Okinawa. The basis for this decision is that none of our allies desire IRBMs to be based on their soil. Mr. McElroy admits, however, that we must take into consideration the countries’ desire to buy IRBMs from us.

The President asked why we spent billions on these systems which are to be deployed among our allies and then and only then ascertain from them whether the systems are acceptable. The real question is whether we are doing our homework ahead of time. Mr. Quarles then commented that when the ICBM programs were given the highest priority, the State Department asked for a high priority also for the IRBM. Mr. Quarles stated that State still feels that it is valid to have the IRBM and is not happy about the reduction to eight squadrons, wishing to have ten squadrons to meet the Norstad commitment. He pointed out that the remaining two squadrons can be taken care of through MAP procurement if the countries involved desire the weapons.

In this connection, Mr. McElroy stated that the development of the GOOSE, a long-range decoy, is being dropped, as is SNARK.

TITAN-ATLAS—The Department of Defense plans to retain TITAN in the ICBM program since the scientific community considers it superior to the ATLAS despite the fact that it comes in a year later than ATLAS, and like ATLAS is a liquid-propelled missile. The time in which MINUTEMAN can take over is unknown. Currently, the Department of Defense plans to program eleven squadrons of TITAN and nine squadrons of ATLAS.

Manned Bombers—In the manned bomber field, production of the B–52G is being stepped up to five or six planes per month. This is being done because “the B–47 is undergoing fatigue.” One squadron of B–52s replaces two squadrons of B–47s.

Mr. McElroy went on to say that the Department of Defense considered cutting back B–58s and actually is planning to buy only three a month. Some procurement of this aircraft is considered justified since its speed of mach 2 will be a great advantage, and a limited number of these going in against Soviet defenders can open the way for the B–47s and B–52s.

Here the President interposed the question of why we produce B–58s along with more B–52s. He concurs with the policy of introducing a few new high performance aircraft for psychological purposes, but he questions the retention of TITAN, ATLAS, B–52s and B–58s. He voiced the question, “How many times do we have to destroy Russia?” This question, though rhetorical, was partially answered by General Twining when he stated that the total wings in the active Air Force go down. He further specified that the B–58 may be able to replace the F–108.

Interceptors—Secretary McElroy specified that in line with the calculated rise of favoring nuclear retaliation over air defense, no programs for interceptors are being initiated in FY 1960.

MACE—This missile, although an air breather, has not been dropped from the FY 1960 program because of its contributions to NATO. It has a good tactical range and carries a large warhead. Furthermore, it provides the only all-weather capability in NATO against airfields.

Mr. Quarles then made a brief reference to the relationships between the Department of Defense (ARPA) and the National Aeronautics and Space Administration (NASA). In particular, he pointed out that the two agencies had joint research programs in solid propellants and in space activities.

Finally, Mr. McElroy expressed his concern with the unemployment effects of program elimination. He pointed out, as an example, that the TITAN cancellation would have involved some 25, 000 people.

II.

At this point Mr. Stans began his discussion of the budget as presented by the Department of Defense. He began first by review of the general situation. He pointed out that in the original budget estimate the defense proportion of total national budget (of $85 billion) was $43/$85. However, the civilian budget has since been reduced from $42.0 billion to $36.5 billion under a condition of extremely tight guidelines, in which all low priority items have been eliminated. Mr. Stans emphasized that the most optimistic revenue picture would indicate an income of $76.0 billion; therefore, any failure to stay within this limit would result in a deficit. Accordingly, in the view of the Director of the Budget, the Department of Defense expenditures should be limited to $40.0 billion with $39.0 billion NOA. He desired, however, to congratulate the Department of Defense on the substantial reductions which had already been effected.

At this point the President interposed the idea that NOA should be reduced to the level of expenditures for the reason that NOA in excess of expenditures inevitably results in a raising of the expenditure level when the obligations become due.

Mr. Stans, in completing his overall view, mentioned that he had questioned some $8.0 billion worth of programs and $3 billion in expenditures in the initial Department of Defense budget, of which Department of Defense actually cut 10%. He pointed out that this effort still contains elements of a $50.0 billion budget due to the inclusion of exotic and duplicatory programs. He admitted that his own view would include some strength and structural reduction, but he feels that much room for reduction exists in construction, ARPA, maintenance and operation, installations, and proficiency flying.

There was then considerable discussion on the nuclear powered aircraft (ANP) involving $200 million, including the AEC portion of $130 million. The budget proposed the elimination of ANP, but Mr. McElroy argued for the validity of the program from the psychological point of view. The President questioned the nuclear-powered aircraft, asking if it were not slow. Mr. Quarles responded that it was up to mach 1 and that it could penetrate to enemy defenses and launch missiles. Mr. Quarles felt that it had real military use but agreed that it was premature to “barge” into the systems application at this time.

The President then questioned why the development of ANP was not given to NASA and to AEC. Mr. Quarles suggested that he get Drs. Killian and Glennan and Mr. McCone and bring the results of further study to the President. The President approved this suggestion but said he still thinks it should be out of Defense.

A discussion then followed, based on an example used by Mr. Stans, of the DYNA-SOAR. Since this program represents a space experiment, there is considerable question as to whether the program should be pursued with the Department of Defense or with NASA. The discussion of switching the program to NASA was not conclusive. However, the whole question of basic research was touched on to include the matter of reconnaissance satellites. In this connection, the President observed that he felt that satellites should be orbiting and working before Defense takes them over. Mr. McElroy defended the reconnaissance satellite but the President returned to his point, saying whenever we have the satellite we want, let us then give a defense application to it.

As a result of his studies of the practices of the Department of Defense, Mr. Stans concluded that as the President’s budget officer, he could not recommend approval of the budget as presented by the Department. His recommendation was to instruct the Defense Department to utilize the figure of $40.0 billion as a ceiling in a fresh attempt to make up a new FY 1960 budget. The President did not directly respond to Mr. Stans’ proposal.

III.

The discussion then turned to basic philosophy. The President made a pointed effort to emphasize that Defense is the key to a balanced budget. He pointed out that if the Department of Defense desires to spend the kind of money requested in this proposal, they should realize that increased taxes are necessary in order to make it possible if the budget is to be balanced. He stated that he will, of course, listen when the Department of Defense says to him that national security is imperiled; however, he wants everyone in the Department to have a complete understanding of the total problem of the interrelationship between national defense and the balanced budget, that unless the budget is balanced sooner or later, procurement of defense systems will avail nothing.

Mr. McElroy defended the Defense Department budget by pointing out the risks which he had consciously taken already in its composition. He pointed out the deliberate downgrading of the requirement for continental air defense confining our concern to the protection of our retaliatory bases. He further pointed out that this is the type of judgment which he feels qualified to make; but he emphasized that he hesitates to second-guess the scientists and those other people who are scientifically competent in judgments pertaining to their field. He concluded that there are two kinds of judgment involved and he himself is in a position to make only one kind.

As a final discussion item, the President reopened the matter of overseas deployments of Army forces. More specifically, he asked why we do not consider some redeployment from Europe. He pointed out the great savings that could be made by reduction of divisions in Europe by three. In this connection, the President drew upon his own experience as the first SACEUR. The U.S. had agreed to maintain six divisions in Europe on a temporary basis, with the concept that the ground role should be taken over by the countries on the spot.

General Twining agreed that it would be desirable to reduce forces in Europe by one division this year. All agreed, however, that the State Department should be consulted before this is pursued further.

Conclusions—The presentation and discussion being completed, it was concluded that a stag dinner scheduled for December 3 would give this group an opportunity to discuss philosophy in some detail. Based on this meeting, the Department of Defense will re-examine their budget with an effort toward further reductions for consideration at a later date.

(The NSC meeting scheduled for December 4 was deferred to December 6 to allow further study of the matter by the Defense staff.)

John S.D. Eisenhower

1. Source: Department of Defense budget issues. No classification marking. 10 pp. Eisenhower Library, Whitman File, Diary Series.