Foreign Relations of the United States, 1977–1980, Volume IV, National Security Policy

206. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, July 24, 1980

SUBJECT

• OMB Report on FY 82 DOD Budget (U)

As background for the OMB Spring budget review you are scheduled to attend from 2–4 p.m. tomorrow, Jim McIntyre has sent you a memo reporting the status of the FY 82 defense program.² The main message in the memo is a little diffuse, but not really arguable—you are going to have to make some very hard choices in finalizing this budget in December. You clearly cannot make these choices now, but having a sense of what they are will be important in the months ahead. (U)

The basic problem is that the required force readiness and RDF capabilities that appear necessary in this new era of Soviet aggressiveness (combined with unforeseen cost increases in some defense programs and in military compensation) cost more than your current fiscal guidance for 82 can hope to support. (C)

OMB’s memo suggests too strongly that budget scrubs, particularly in non-major hardware and support equipment area, can go a long way toward solving the funding problem. I doubt it—the requirements are too large, readiness is too strongly related to many of the kinds of non-major hardware and support items OMB refers to, and the long standing funding pressures that have been felt in these accounts have been too high to leave much juice to be squeezed out now. Thus, some combination of the three alternatives given below must be adopted this fall. (S)

The real alternatives are 1) to increase the budget guidance by about $5B for 1982, and $50–75B for the 82–86 period, 2) broadly slow the rate of longer term improvements by cutting RDT&E and slowing some major procurement programs and 3) selectively slow down improvements planned for some specific mission areas or theaters, with the most obvious candidate being NATO. (S)

All three alternatives involve changes in our basic defense plans—changes that must be informed and justified with even better intelligence, analyses, and assessments than you have had for making defense budget decisions in the past:

— If we are going to cut back on our previously planned improvements for NATO, we should have identified, at least for ourselves, specific feasible adjustments our Allies can make to take up the slack. We should also carry out a careful analysis of the political effects on Europe of such cutbacks. Cutbacks that are large enough to satisfy our other defense funding requirements could sharply undercut our efforts to lead the alliance toward an improved western military posture.

— We must establish some benchmarks that will allow us to judge whether we have struck the proper balance between readiness-related short term improvements and the longer term improvements that flow from RDT&E and major procurement programs. Cutting longer term procurement in favor of higher readiness, as the services propose to do, may be a reasonable strategy. However, if we do not carefully justify this move, OMB’s fears that Congress will simply add back any procurements we cut will be realized.

— We need to reassess the assumptions OMB describes as underlying our defense plans—particularly those justifying improvement in our force posture at the current “steady pace.” We should audit our defense plans to insure that we are maintaining adequate hedges against the possibility that some of the assumptions underlying our defense planning prove wrong.

— Finally, we must insure that the adjustments we might make in overall priorities for our defense planning, as well as the overall level of defense effort we are making, are consistent with our latest and best understanding of the evolving challenges posed by the Soviet Union and other potential adversaries. Past budget reviews have concentrated too much on the details of our defense programs at the expense of providing information on how well the overall program meets the challenges we are facing. (S)

With continued effort I believe Jim, Harold and I can be ready this fall to provide much of this information to support making the hard choices you must face then. (U)

Attachment

Memorandum From the Director of the Office of Management and Budget (McIntyre) to President Carter³

Washington, July 24, 1980

SUBJECT

• Defense Program for 1982

Introduction

Upward pressures for even higher Defense spending will continue. This memo provides you an update of the Defense program status and the major fiscal and programmatic questions which you will have to address in the FY 1982 budget.

In March you approved 1981–85 Defense funding levels that provide cumulative real growth of $116B in this five year period. This is the largest peacetime commitment to Defense real growth since 1945. Defense spending will remain at just over 5% of GNP. This compares with 8–9% in the mid-1960’s.

Defense plans for the 1982–86 period call for improved capabilities of the current force structure, with some increases in aircraft, ships and theater nuclear forces. Also, military manpower will increase slightly over the same period. Sizable real growth is planned in force readiness improvements (operations, maintenance and training) and strategic force investment (principally MX) with relatively less emphasis on general purpose force modernization (development and deployment of new equipment).

The following assumptions underlie Defense 1982–86 force improvement plans:

• Improvements in U.S. force capabilities are needed because of: (a) continued growth of Soviet military power including force projection capabilities; (b) increasing problems faced by the U.S. and its Allies in maintaining secure access to oil and other resources; and (c) likely continuation of an unstable international environment with the potential for sudden crises and conflicts.

• The U.S. can proceed at a steady pace because (a) the risks associated with the current balance are tolerable; (b) the Soviets are not likely to accelerate their rate of force improvements; (c) a major conflict, either strategic or conventional NATO, is unlikely; and (d) planned force enhancements are adequate to respond to the more likely occurrence of non-NATO contingencies.

• Our allies will continue to improve their own forces but will not assume a substantially larger share of overall defense responsibilities than they now have.

• Given political and organizational constraints, large efficiencies in the management of defense programs are not likely to be realized.

You will be making budget decisions this fall that will have a major influence on our future defense capabilities. Overall budget limitations will make it difficult to increase spending beyond your current commitment of more than 4% real growth. Since March strong pressures for much larger increases than those planned have arisen:

• Higher than expected inflation in major system costs plus pay and benefit increases for military and civilian personnel.

• An increased emphasis on near-term readiness and rapid deployment force build-up.

• Unforeseen cost increases above inflation for naval, NATO and strategic force initiatives you previously approved.

Possible reductions to stay within your 1982 guidance level for real growth include:

• Slowing the pace of readiness increases.

• Slowing the rate of some modernization programs and major procurements.

• A rigorous “budget scrub” to identify programs which cannot be achieved at previously planned rates or whose benefits have not been clearly established.

Discussion

Five year planning guidance was provided to Defense in the March budget update. Secretary Brown’s senior staff have made their initial recommendations to him and his tentative decisions are now being sent to the Services. After a round of appeals, the final program decisions will be issued in August. The fall budget requests of the Services will be based on these decisions.

The essence of the budget problem is that the military departments are planning very substantial increases in funds to improve readiness, to support rapid deployment forces, and to accommodate some recognized cost increases. Given your commitments and the clear need to upgrade our capacities in these areas, it will be difficult to avoid some of these increases. In order to stay within your guidance, the Department will have to propose cuts elsewhere, probably to include deferring a number of acquisitions of large and highly visible weapons systems. Given the congressional and military service support for these systems and the large congressional defense add-ons in 1981, Congress will almost certainly provide funding in 1982 above your current program guidance levels.

Program Status

The military services provided a plan (request) that was roughly within the overall level of your guidance. After a “budget scrub,” the defense program should be at about your guidance level. However, in the course of the defense review, a number of high priority potential increases—above the service plan—have been identified.

The following table illustrates the magnitude of possible increases.

Possible above guidance increases ($ in billions)

		1982		1982–1986
	1981	Service Plan	Possible Increase	Service Plan	Possible Increase
Nuclear Forces	14.4	18.0	–	127	16
Navy Shipbuilding (GPF)	5.0	5.2	+1.8	45	7–16
Tac Air Acquisition	5.9	6.0	+.7	31	3–10
Readiness	53.4	61.8	+.3	278	1–10
RDF	1.6	2.3	+1.0	20	5
Research & Development	16.5	18.2	+.7	100	18
Intelligence (NFIP)	5.8	6.4	+.4	34	2
Total			4.5 to 5.0		52–77

Strategic and Theater Nuclear Forces. These programs increase substantially, from $14.4 billion in 1981 to $18.0 billion in 1982, mainly for MX, cruise missiles and the Pershing II and GLCM theater nuclear forces. There are firm Administration commitments to all these programs and they will all be funded within the guidance. It is unlikely that the Defense program review will make any reductions in these forces. The primary budget threat would be a congressional add-on for the B–1 derivative, which could add about $1 billion in 1982 and $16 billion through 1986.

Modernization. The current service proposals for 1982 include over $40 billion in non-strategic procurement programs. This includes all the major equipment and spare parts for our general purpose forces. About half of these acquisition funds are directed toward a variety of smaller hardware items and support equipment. In the past this area has been a primary source of “budget scrub” reductions to bring the Defense program in line with overall fiscal guidance.

The modernization programs for shipbuilding and tactical aircraft are of special concern in shaping the final budget.

• Navy Shipbuilding (GPF). Last January you approved a five year shipbuilding plan which provided for a long term force of about 550 ships by 1990. That plan went a long way toward quieting public and congressional concerns over future naval force levels. Even so, the 1981 Congressional Authorization will probably add at least 1 attack submarine, 2 frigates and reactivation of a battleship and aircraft carrier to your budget request based primarily on the perception that additional ships are needed for Indian Ocean deployments. In their effort to stay within your fiscal guidance, Defense may reduce the shipbuilding program. If they do, it will be highly visible. Defense is considering reductions to this plan now, including attack submarines, AEGIS cruisers, and frigates. Your approved plan included 9 combatant ships in 1982. The new Navy plan would reduce that to 6 by deleting 1 AEGIS cruiser and 2 frigates.

• Tactical Aircraft Acquisition. The Administration has placed continuing emphasis on modernization and expansion of the tactical air forces. The Air Force has acquired over 1300 new aircraft in the past four years to fill out its force expansion from 22 to 26 active wings. The Navy and Marines have concentrated on modernization and readiness improvements. To stay within guidance, there may be proposals to underfund both Navy and Air Force tactical aircraft procurement, which could translate into uneconomical rates of procurement and program terminations (e.g. for the Air Force A–10 and the Navy/Marine AV–8B). Like the shipbuilding reductions, these will draw fire from Congress which is likely to add more aircraft in any case, as it is now doing in the 1981 Authorization Bill (although all of the adds may not survive the appropriation process).

Readiness. Defense will propose large increases in readiness-related programs including operations and logistics. Since 1979 we have provided annual real growth of about $2.5 billion in readiness funding. The increases for 1982 could be as high as $5B. This is in response to widely known problems (e.g. out of service aircraft) and public perceptions of these problems. This is the first year in which Congress has been reluctant to make cuts from Administration requests for operations programs and may even add to the requests. We need to increase readiness. The question is by how much.

Rapid Deployment Forces. The Administration has emphasized the need for a rapid deployment force to counter non-Soviet threats outside NATO and Korea. The Persian Gulf region has been the principal focus of RDF planning since the Soviet invasion of Afghanistan. Initial plans are oriented toward a baseline RDF (3⅓ divisions) sized to be a trip wire rather than to counter a full Soviet attack. An RDF capable of more effectively countering a Soviet threat would require 6⅓ divisions. Under current plans support of either size force would require the drawing down of NATO support. Also, the forces required for either the baseline or expanded RDF would be drawn from the existing force structure.

Priority in 1980/81 has been given to improved mobility, especially near term sealift enhancements and long term airlift improvements, needed for any RDF deployment and to improved facilities in the Indian Ocean. Enhancements now under consideration by Defense would improve both the level of support for deployed forces (without drawing down NATO) and facility access in the Persian Gulf. Specific program details still need to be defined and priced.

Several questions need to be resolved including:

— How much effort should go toward an earlier enhancement of the early deploying and sustaining capabilities for the 6⅓ division force?

— Should NATO designated support be protected?

— Should the RDF be designed to meet Persian Gulf scenarios specifically or to address worldwide contingencies?

— Should some existing ground forces be reconfigured for the RDF to make them easier to move? Forces lighter than those we now have would be more flexible and easier to deploy and sustain, although at the expense of tactical capability.

Research and Development. There has been overall real growth of 12% in R&D from 1978 through 1981. This year’s emphasis on readiness and rapid deployment forces is squeezing the R&D budget. Currently, Defense is projecting a constant R&D program in real terms for 1982. Given the large growth in MX development, this implies a real decline for the rest of the R&D program. There will be strong arguments for some real growth.

Intelligence (NFIP). The overall program will increase, from $5.8 billion in 1981 to $6.4 billion in 1982, with increased emphasis on processing analysis, non-satellite collection and satellite developments. Congress is likely to endorse the magnitude of our 1981 request with some adjustments within the total. The 1982 level is threatened by program managers’ requests substantially over the planning ceiling.

Congressional Action

Both the House and Senate authorization committees have made large add-ons, mainly in acquisition programs, to the 1981 request. We estimate the conference action will result in about a $6 billion increase (including pay and benefits). Appropriation action, which may not be complete until after November, will probably result in a net increase of as much as $3 billion above your revised guidance. By raising the 1981 base, Congress will be under pressure to add substantially to the 1982 and subsequent budgets.

Conclusion

The following table shows the effect of recent inflation adjustments and pay increases on the 1981 budget. In addition, it shows the effect of likely congressional add-ons for 1981 and the possible Administration initiatives for 1982.

	Program ($ in billions)
	1981	1982	1983	1984	1985
March 1980 Presidential Guidance	161.8	184.1	206.8	230.5	256.1
Increased pay and inflation	6.8	6.5	7.4	8.6	9.7
Revised Presidential Guidance	168.6	190.6	214.2	239.1	265.8
Possible Administration Increases (discussed above)	—	5.0
Possible Congressional Increases	3.0	.7
Budget Threat	171.6	196.3

You will have to address a number of questions in the Defense budget review late this fall.

• Do our force improvement efforts correctly reflect our priorities among the various mission areas?

• Should some adjustments be made to existing commitments—strategic force modernization, NATO enhancement, rapid deployment forces?

• Should we proceed at a different pace in seeking to improve force readiness?

• Can substantial reductions be made in some acquisition programs?

• What steps can be taken to improve the efficiency of the Defense establishment?

• What will the inflation estimates be and what is the properly budgeted level for the real growth policy?

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Agency File, Box 7, Defense Department: 5–7/80. Secret. Sent for information. Carter initialed the upper right corner of the memorandum. Copies were sent to Brown and McIntyre.
2. According to the President’s Daily Diary, this meeting took place in the Cabinet Room from 2 to 3 p.m. on July 25. (Carter Library, Presidential Materials, President’s Daily Diary). No minutes of the meeting were found.
3. Secret. McIntyre did not initial the memorandum.