221. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1

    • FY 74 Defense Budget

Secretary Laird has sent you a memorandum (Tab B)2 that states he is planning the FY 74 Defense Budget at an outlay level of $84 billion. In his judgment, reducing the FY 74 budget below $84 billion would force DOD to:

  • —Make cuts in the current force structure;
  • —Reduce the readiness and capability of our forces below adequate levels;
  • —Cut back on essential modernization programs.

Secretary Laird says he recognizes that very serious fiscal problems face the federal government in FY 74 and beyond but feels Defense has contributed its prudent share to alleviating these problems, citing the sizeable manpower and procurement reductions made since 1968. He cautions against accepting some of the current simplistic panaceas being bandied about for controlling “out of control” defense budgets.

Secretary Laird points out that since 1968 real spending for defense has decreased (because of the cutbacks in our involvement in SEA). During this same period, the $74 billion increase in federal non-Defense spending has nearly equalled the total Defense budget.

He concludes that only long term curtailment of the rate of growth of non-Defense expenditures, including those for currently legislated programs, can solve the annual budget deficit problem. Continued preoccupation with the annual budget process diverts us from addressing the more fundamental problem. It also puts national security in continuous jeopardy since the DOD budget frequently becomes the prime target to achieve short term fiscal goals.

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Evaluation of Secretary Laird’s Comments

This is the opening volley in the FY 74 budget debate. As you are well aware, you face some very difficult choices if you are to submit a balanced, full employment budget for FY 74. I anticipate that OMB would like to hold the FY 74 DOD budget to $79–80 billion instead of the $84 billion proposed by Secretary Laird.

It would be a serious mistake to let OMB set a target and then force Defense to fit their program to it. The need for adequate forces to support your foreign policy and implement your Defense strategy overrides short term economic considerations, especially as Defense spending has become a decreasingly smaller part of the problem.

However, the Defense budget cannot be completely insensitive to our economic and fiscal problems. Moreover, there are areas where cuts can be made with minimal impact on essential forces and capability. Therefore, I propose that through the DPRC we examine the Defense program for possible areas that provide only marginal contributions to our Defense strategy and consider the economic and strategic implications of reductions. Our effort should not, however, only consider cuts. We should also examine our forces, readiness, and modernization programs to ensure those areas most supportive of your foreign policy are adequately funded.


I recommend you avoid giving support to a particular level for the FY 74 Defense budget at this time. Instead, I suggest you ask Secretary Laird for his whole-hearted cooperation in debating in the DPRC the economic and strategic implications of alternative programs so that you might arrive at a carefully developed defense program and budget in December.

I have enclosed a memorandum to Secretary Laird for your signature conveying these directions (Tab A).3 Ray Price4 concurs.5

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 237, Agency Files, DPRC & Defense Budget, Jan–Jul, 1972. Secret. Sent for action. The memorandum bears a stamped note indicating that the President saw it. Although no drafting information appears on the memorandum, Odeen sent a draft to Kissinger on July 20 under a covering memorandum. (Ibid.)
  2. Laird’s July 18 memorandum to Nixon is attached but not printed.
  3. Nixon sent the attached letter to Laird on August 8, stating that, while “we must have strong armed forces with which to support our foreign policy and carry out our Defense strategy,” we “must also recognize that the health of our economy is an essential element of national strength.” The President directed the Department of Defense to cooperate fully in the review of its proposed FY 1974 program “to ensure that we have adequate military capability at the lowest feasible cost.”
  4. Raymond K. Price, Jr., Special Assistant to the President.
  5. On January 29, 1973, Nixon presented his FY 1974 budget to Congress. Of $268.7 billion in total outlays and $288 billion in overall authority, the President called for a defense budget of $79 billion in spending and $85 billion in authority. (Public Papers: Nixon, 1973, pp. 32–48; New York Times, January 30, 1973, p. 19)