305. Memorandum from Maj.
Smith to Bundy,
November 221
[Facsimile Page 1]
SUBJECT
You undoubtedly will get comments on specific programs from BOB and Spurgeon Keeny. The attachments hereto are an attempt to
put the budget packages I, II, and III into a somewhat broader
perspective, with specific comments directed more to suggesting a sense
of direction than to hitting hard particular programs. The attachments
discuss the Budget’s Message, DOD
Analytic Methods, and Strategic Forces.
After reviewing the DOD memoranda, I
agree with your judgment that there appear to be few burning dollar
issues to concern the President. (The attachments raise some issues of
tactics and procedures.) Ken Hansen mentioned some problems in TOA
(Total Obligational Authority). If there is such a problem, I would
think BOB would be asked to carefully
sort out TOA, NOA, and expenditures.
Only then can the dimensions of the problem be properly evaluated.
[Typeset Page 1371]
Attachment
The Budget’s Message
[Facsimile Page 2]
Assuming that this year, as in previous ones, the SecDef will use
rationale before Congress similar to that found in his draft
memoranda, and further that much of this rationale will reach the
press, the public probably will get this picture of the defense
budget:
a. An across-the-board cutback (see attachment). As compared with the
FY 62 budget, strategic offense
TOA will have decreased 42%, defense 18%, and general purpose forces
10%.2
b. The completion of a reversal in overall strategic doctrine. The
SAC sword of the 50’s will
become the shield in the late 60’s; the ground forces in Europe are
to become the sword.
c. Indecision with respect to active and passive defense of the
United States.
d. A reappraisal and downgrading of the enemy threat.
Of these four points, three of them (a, b, and d) were found in
abbreviated form in the SecDef’s Economic Club speech. That speech
created a small flurry in European newspapers; when this budget hits
the streets the reaction will almost certainly be much more
pronounced. Are we prepared diplomatically to explain our reasoning
to our allies? The December NATO
meetings become important in this connection. The Europeans may
deduce that the US is not planning either to make sufficient
resources available to make possible (even with increased European
budgets) the local defense of Europe, or to build strategic
offensive forces that would be used in the defense of Europe
(because of their inability to strike first and reduce counterdamage
sufficiently.) This realization may further accelerate the divisive
trends within NATO. Such a
development could have and—in an election year especially—probably
would have domestic implications as well. In addition, if DOD arguments lend themselves to the
criticism that this Administration is cutting back both our ability
to strike the USSR and to defend
ourselves against a Russian attack, more fuel would be available for
the domestic political fires.
What all this adds up to is that the coming year is not a good time
either at home or abroad to launch forth on educating the world in
our new military thinking, especially since most people have not yet
absorbed the materials (and different emphasis) from previous
years.
[Facsimile Page 3]
[Typeset Page 1372]
Attachment
TOA
(Billions of $)
|
FY
62
|
FY
63
|
FY
64
|
FY
65
|
Strategic Offense |
9.11 |
8.53 |
7.53 |
5.33 |
Continental Defense |
2.12 |
1.94 |
1.96 |
1.75 |
General Purpose Forces* |
7.67 |
7.63 |
7.61 |
6.90 |
* Army and Marine only.
[Facsimile Page 4]
Attachment
STRATEGIC FORCES
If there is any controversy in the budget, it probably will range
around strategic forces. Carl
Kaysen showed me his comments on the earlier DOD strategic forces draft, and seemed
to believe that 950 Minutemen could do almost the same job as 1200.
He did not press for a reduction in the force goals, however. The
DOD memorandum also is a bit
open-ended on this point.
In terms of total force objectives, a case of sorts could be made for
going above 1200, if one holds to the DOD approach of evaluating missiles in terms of
possibly saving lives. Basically, DOD is saying that the cost of additional missiles
beyond a certain point is not worth the lives they might save. How
would this look if expressed in terms of cost effectiveness?
According to TOA figures, 950 Minutemen cost $10.2 billion.
Following a US first strike such a force would insure the survival
of about 372 million US and West European citizens (derived from
table, p. 21). For about another $2.7 billion (p. 15) one could get
another 450 missiles and save 417 million people, some 45 million
more. The cost per life potentially saved is about $62. The cost
figures used, however, are total program costs through FY 69. Assuming 1967 delivery, the cost
per year for each life saved would be less than $31 through FY 69—and the cost per individual per
year would go down for some time longer. The cost per life
potentially saved going from 950 to 1200 missiles is about $57, or
less than $24 per year for the two year period.
Is it somewhat absurd to put a value on life that way, or to
determine force requirements in such a way? It seems that is where
the DOD approach must eventually
lead. As long as one holds to the marginal theory, it is not merely
enough to be in the area of diminishing marginal returns. As long as
“marginal returns” exceed marginal costs, it is still “profitable”
to build missiles.
[Typeset Page 1373]
The preceding is not designed to justify any particular number of
missiles as an objective. It should cast some doubt on the numbers
and the methods of reaching them in DOD.
In the FY 65 budget, rather than
focusing solely on 950 or 1200 for FY 69, it would seem better to analyze what we need to
attain our objectives between now and then. The DOD memorandum at present concentrates
on what the situation will be as the President probably will [Facsimile Page 5] be
leaving office, rather than on what it will be while he is there.
For example, if we adopt a Minuteman goal of 950, in 1967 we could
have 1786 ICBMs and Polaris missiles facing the East, and the USSR could have some 1980 missiles
(IR/MRBMs with soft missiles
having a reload capability; ICBMs; all medium estimates) facing the
West. Is that a satisfactory position?
With respect to the FY 65 build, I
would be inclined to make it something between the 50 recommended by
the SecDef and the 200 recommended by Secretary Zukert. My principal
reasons are:
a. In the absence of some political agreement, it is still too early
to reduce pressure on the USSR
militarily. (Nor should we now increase our pressure; we should
continue along the same lines as in the past two years.)
b. We are much more likely to reach some arms control agreements if
the Russians believe such agreements are needed to reduce pressure
on their allocation of resources. If we reduce unilaterally the
Russians get what they want with the freedom to change courses
later.
c. It is still preferable to destroy the obsolescent sooner, if
desired, than not to build the new.