[Budget of the United States Government, Fiscal Year 1998]
[Page 123-128]

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  I want America to enter the 21st Century as the world's strongest force
  for peace, freedom and prosperity.    
                                      President Clinton                                                         
                                      October 1996                                                              

  Our defense capability sustains America's global leadership and 
provides the backbone of our national security policy, safeguarding 
America's interests, deterring conflict, and securing the peace, where 
<bullet>  When America's diplomatic leadership helped achieve the Dayton 
          Peace Accord, our military led the effort that has brought a 
          year of peace in Bosnia. With our NATO, central European, and 
          Russian partners, our military continues to secure the Bosnian 
<bullet>  America's armed forces remain in the Persian Gulf, deterring 
          war in that critical region of the world.
<bullet>  In Asia and the Pacific region, U.S. military forces provide 
          the critical foundation for peace, security, and stability, in 
          partnership with Japan and other nations.
<bullet>  In our own region, America's soldiers have supported the 
          return of democracy in Haiti and helped end the exodus of 
          refugees to our shores.
  To fulfill such missions, support our allies, and reassure our friends 
that America is prepared to use force in defense of our common 
interests, our armed forces must be highly ready and armed with the best 
equipment that technology can provide. In the 21st Century, we also must 
be prepared and trained for new post-Cold War threats to American 
security, such as ethnic and required conflicts that undermine 
stability. Some of these post-Cold War threats, such as the 
proliferation of weapons of mass destruction, terrorism, and drug 
trafficking, know no national borders and can directly threaten our free 
and open society.

Sustaining a Strong Military Capability

  The United States is the only nation with the logistics, mobility, 
intelligence, and communications capabilities required to conduct large-
scale, effective military operations on a global scale. Coupled with our 
unique position as the security partner of choice in many regions, 
America's military capability provides a foundation for regional 
stability through mutually beneficial partnerships.
  The budget continues to support the defense policy laid out by the 
Administration over the past four years--to sustain and modernize the 
world's strongest and most ready military force, a force capable of 
prevailing in two nearly simultaneous regional conflicts. It fully funds 
our commitment to maintain the highest levels of training and readiness 
for that force, and to equip our uniformed men and women with the most 
advanced technologies in the world (see Table 10-1). The Quadrennial 
Defense Review, now underway in the Department of Defense (DOD), will 
ensure that the armed forces are shaped, trained, and armed for emerging 
threats and missions, and remain capable of global military operations 
in the next century.

                   Table 10-1.  MILITARY FORCE TRENDS                   
                                  Cold War                              
                                   (1990)         1998      Force Target
  Divisions (active/National                                            
   Guard).....................        18/10      10/8 \1\      10/8 \1\ 
Air Force:                                                              
   Fighter wing (active/                                                
   reserve)...................        24/12          13/7          13/7 
   Aircraft carriers (active/                                           
   training)..................         15/1          11/1          11/1 
   Air wings (active/reserve).         13/2          10/1          10/1 
   Total battle force ships                                             
   \2\........................          546           346       330-346 
Marine Corps:                                                           
   Divisions (active/reserve).          3/1           3/1           3/1 
   Wings (active/reserve).....          3/1           3/1           3/1 
Strategic nuclear forces:                                               
   Intercontinental ballistic                                           
   missiles/warheads..........  1,000/2,450     550/2,000   500/500 \3\ 
   Ballistic missile                                                    
   submarines.................           31            18        14 \3\ 
   Sea-launched ballistic                                               
   missiles/warheads..........    568/4,864     432/3,456   336/not over
                                                              1,750 \3\ 
   Heavy bombers..............          324          87 <SUP>4        92 \4\ 
Military personnel:                                                     
   Active.....................    2,069,000     1,431,000     1,422,000 
   Selected reserve...........    1,128,000       892,000       889,000 
\1\ Plus 15 enhanced readiness brigades.                                
\2\ Includes active and reserve ships of the following types: aircraft  
  carriers, surface combatants, submarines, amphibious warfare ships,   
  mine warfare ships and combat logistics force and other support ships.
\3\ Upon entry-into-force of START II.                                  
\4\ Does not include 95 B-1 bombers dedicated to conventional missions. 


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Providing the Necessary Funding

  For the Defense Department's military functions, the budget proposes 
discretionary funding of $251.6 billion in budget authority and $248.4 
billion in outlays for 1998. Through 2002, the budget continues the 
Administration's plan of the last four years, completing the careful 
resizing of our military forces, ensuring full support for military 
readiness and quality of life programs in the near-term, and providing 
for the modernization of our forces as new technologies become available 
later in this decade and after the turn of the century.
  DOD funding keeps pace with inflation in 1999, and then increases 
slightly faster than inflation through 2002. Over this period, the 
budget reflects the impact of marginally lower estimates of inflation, 
offset by increases in procurement programs necessary to ensure the 
continued modernization of our military forces.
  The budget also proposes $2 billion in 1997 emergency supplemental 
appropriations to fund continuing operations in Bosnia and Southwest 
Asia, and a $4.8 billion rescission of 1997 defense resources to offset 
the cost of the supplemental and other funding requirements.

Ensuring the Nation's Security

  Expanding Arms Control.--The President is strongly committed to 
reducing the threat of weapons of mass destruction through arms control 
agreements. Over the past four years, the Administration has worked hard 
to implement the START I treaty, indefinitely and unconditionally extend 
the Nuclear Nonproliferation Treaty, obtain the signing of the 
Comprehensive Test Ban Treaty (CTBT), and 

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achieve a Conventional Forces in Europe (CFE) Flank Agreement and terms
of reference for follow-on CFE adaptation. The START II treaty, which the
Senate approved 87 to 4 on January 26, 1996, awaits approval by the
Russian Republic. Following Russian acceptance, implementing this treaty
in combination with START I will reduce the number of warheads deployed on
long-range missiles and bombers to a third of the Cold War level and will eliminate
all land-based, multiple-warhead ICBMs.
  Securing the Senate's support of the Chemical Weapons Convention (CWC) 
is one of the President's top legislative priorities for this year. It 
is vital to national security for the United States to be an original 
party to this landmark agreement, which will become effective on April 
29, 1997. The CWC will dramatically reduce the chemical threat to U.S. 
servicemembers and civilians by requiring parties to eliminate existing 
stockpiles and restricting the flow of dual-use chemicals that can be 
used to make chemical weapons. Furthermore, a global ban on the use, 
production, stockpiling, and transfer of anti-personnel landmines 
remains a Presidential priority.

   Reducing Weapons of Mass Destruction in the Former Soviet Union.--The 
Cooperative Threat Reduction program (also called the Nunn-Lugar 
program) has made a major contribution to U.S. security by ensuring a 
safe and speedy relocation and dismantling of nuclear forces in the 
former Soviet Union. The budget proposes $382 million to continue this 
important program in 1998.
   Countering Proliferation of Weapons of Mass Destruction.--The budget 
also proposes almost $600 million to develop capabilities to locate and 
neutralize weapons of mass destruction before they can be used, and to 
protect our troops against their effects. High-priority efforts include 
developing the means to identify and destroy underground storage sites, 
and methods to detect and track weapons shipments. Key efforts to 
protect troops against chemical and biological agents include developing 
advanced detection devices, vaccines, and protective clothing.
  Maintaining the Nation's Nuclear Deterrent: The budget proposes $5.1 
billion in 1998, and $20.1 billion over the next five years, for the 
Department of Energy (DOE) to ensure the safety and reliability of our 
nuclear weapons stockpile. The $20.1 billion reflects the President's 
commitment to $4 billion a year for five years. The year-to-year stream 
in the budget reflects full ``up-front funding'' for major construction 
projects, which allocates a larger share of the total cost to 1998 and 
lower costs to later years. DOE will continue building new facilities to 
ensure safety and reliability without underground testing. The President 
is committed to the CTBT, which would prohibit all nuclear testing and 
which he signed in September at the United Nations. The Administration 
plans to submit the treaty to the Senate for ratification.
   Developing and Deploying Defenses Against Tactical Ballistic 
Missiles.--With over $2 billion in proposed funding for 1998, the 
Administration's Theater Missile Defense (TMD) program will provide 
defenses against missiles that directly threaten American and allied 
ground, naval, and air forces deployed abroad. Funding for TMD supports 
initial procurement of an advanced version of the Patriot missile, as 
well as development of advanced systems to meet future threats.
   Developing Technologies to Defend Against Strategic Ballistic 
Missiles.--The budget proposes $0.5 billion in 1998 for a vigorous 
effort to develop the elements of a national missile defense system to 
protect the United States. Although we do not need such a system now, 
the development of a contingency capability will ensure that deployment 
could proceed rapidly, if a missile threat to the United States should 
emerge sooner than our intelligence community now estimates. A decision 
now to force early deployment would not only waste billions of dollars, 
it would force adoption of immature technologies that are unlikely to 
provide an effective defense.
   Ensuring Successful Contingency Operations.--U.S. forces have 
provided leadership in contingency operations that support American 
interests--from monitoring U.N. sanctions on Iraq, to permitting the 
return of democracy to Haiti, to implementing the Dayton Peace Accord in 
Bosnia. The budget funds ongoing contingency operations in Southwest 
Asia and Bosnia. Congressional approval of these funds would allow DOD 
to avoid redirecting funds 

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from operations and maintenance programs to these operations, thereby 
maintaining our force's high level of readiness.
   Though Congress provided funding for contingency operations in 1997, 
unfunded 1997 costs (mainly for Bosnia) total about $2 billion. To fund 
them, the budget proposes a 1997 emergency supplemental appropriation. 
The budget also proposes $2.2 billion for the cost of contingency 
operations in 1998. Of the $2.2 billion, $0.7 billion is included in the 
Services' operation and maintenance accounts for ongoing operations in 
Southwest Asia, and the remaining $1.5 billion is included in the 
Overseas Contingency Operations Transfer Account for operations in 

   Providing Humanitarian and Disaster Assistance.--The unique 
capabilities and global presence of U.S. forces often dictate that DOD 
respond to international disasters and human tragedies. Such responses 
may occur at the direction of U.S. commanders who have the only assets 
in place to respond quickly to a regional problem, or at the President's 
direction when he determines that DOD is the appropriate agency to 
provide U.S. support. The proposed $80 million for the Overseas 
Humanitarian, Disaster, and Civic Aid account would allow DOD to provide 
support without diverting readiness-related resources from their 
intended use.
   Establishing Information Dominance.--Our preeminence in information 
technology has helped us field the world's strongest military force. The 
Administration seeks to preserve information dominance in order to 
support our military operations and national security strategy.
   Intelligence is critical to information dominance, and it continues 
to play a large role in both military operations and national security 
decision-making. This year's intelligence budget is guided by explicit 
intelligence priorities that the President established for the post-Cold 
War era.
  A new intelligence initiative exemplifies the Administration's 
efforts. The National Reconnaissance Office will develop a new 
generation of smaller intelligence satellites that will increase 
coverage and permit greater operational flexibility. Also, this budget 
is the first to provide funds for the newly established National Imagery 
and Mapping Agency (NIMA), which will consolidate disparate imagery 
processing and mapping activities throughout DOD and the Central 
Intelligence Agency. NIMA will more efficiently use imagery resources 
and ensure that imagery products are more responsive to military 
commanders and civilian decision-makers.

 Maintaining Military Readiness

  Ensuring Adequate Resources for Readiness.--Maintaining the readiness 
and sustainability of U.S. military forces remains the Administration's 
top defense priority. The budget provides full funding for operations 
and support programs critical to sustaining the military's current high 
readiness levels. These programs include unit training activities, 
recruiting and retention programs, joint exercises, and equipment 
   DOD continues to improve its capacity to assess current and future 
military readiness, particularly through the Senior Readiness Oversight 
Council and the Joint Monthly Readiness Review process. These efforts 
enhance DOD's ability to ensure that critical readiness programs receive 
sufficient resources and that our forces remain prepared to accomplish 
their missions.

   Enhancing Quality of Life of Military Personnel.--The Administration 
strongly supports quality of life programs that help attract and retain 
motivated and enthusiastic high-quality personnel. The budget continues 
this commitment by providing a 2.8 percent military pay raise, effective 
January 1998, and substantial funding to continue upgrading and 
improving barracks and family housing.
   Protecting our Forces and Combating Terrorism.--The protection of 
U.S. service members, whether deployed or at home, against the threat of 
terrorism is a fundamental task of our defense planning. The terrorist 
attack against U.S. forces at Khobar Towers in Saudi Arabia reminded all 
Americans of the increasing terrorist threat that we face--at home and 
abroad. In light of the threat, the Administration amended the 1997 
budget to propose $1 billion for anti-terrorism programs across the 
Federal Government, which Con-

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gress approved. The DOD portion, $350 million, consisted of specific Persian Gulf 
security measures; general overseas facilities and force protection upgrades;
and training, awareness, and other programs designed to combat terrorism.
   The budget fully funds DOD's anti-terrorism/force protection program 
at $4.5 billion. The funds are designed to improve our preparedness to 
respond to a terrorist attack that employs weapons of mass destruction, 
and they will enable DOD to initiate a sweeping vulnerability assessment 
program to identify and respond to force protection needs beyond those 
already identified and funded.

 Modernizing Our Military Forces

   Modernizing Equipment.--As the armed forces prepare to enter the 21st 
Century, modernizing U.S. military hardware is a central goal of our 
defense budget planning. The next generation of military equipment 
promises to provide greater combat capabilities, and enhance the 
readiness of our forces. Most important, the marked technological 
advantage of the next generation will mean fewer casualties and a 
quicker resolution of conflict.
   Providing Adequate Modernization Funding.--The budget proposes that 
procurement funding grow, in real terms, by over 40 percent from 1998 to 
2002. Critical modernization programs that are now in production would 
continue--including DDG-51 guided-missile destroyers and precision 
munitions such as the Joint Standoff Weapon. Low-rate production of 
Marine Corps V-22 aircraft and the Navy's multi-role F/A-18E/F fighter 
would continue in 1998. Initial procurement of the Navy's New Attack 
Submarine would begin in 1998, and low-rate production of the Air 
Force's F-22 Advanced Tactical Fighter would begin in 1999. Full-rate 
production of the V-22, F/A-18E/F, and the F-22 would start at, or near, 
the turn of the century. DOD would modernize and improve U.S. mobility 
forces through continued acquisition of large, medium speed roll-on/
roll-off sealift ships and the highly capable C-17 strategic airlift 
   Providing Modernization for the Long-Term.--The budget proposes major 
investments in research and development for advanced systems that would 
enter production in the middle of the next decade. The Air Force, Navy, 
and Marine Corps are developing a Joint Strike Fighter as a cost-
effective replacement for today's tactical fighter and attack aircraft. 
Other major weapons in development include the Army's Comanche 
helicopter, a new surface ship for the Navy, and an advanced amphibious-
assault vehicle for the Marine Corps.

 Managing Our Defense Resources More Efficiently

   As we shape U.S. defense strategy for managing conflict and ensuring 
peace in the post-Cold War era, the Nation also must develop new, 
innovative approaches to managing our defense program. DOD is launching 
various efforts to meet this challenge, which would help ensure that we 
can afford our defense program.

   Redesigning Military Strategy.--As the 1997 Defense Authorization Act 
requires, the Quadrennial Defense Review will reassess current defense 
strategy and the defense program in light of U.S. interests, fiscal 
constraints, and emerging new technologies. Areas that it will review 
include force structure, readiness, modernization, and infrastructure. 
The law requires that DOD report the results of this review by May 15, 
   Implementing the Information Technology Management Reform Act 
(ITMRA).--By implementing ITMRA, DOD will bring modern command, control, 
communications, and computing systems into operational use. DOD is 
restructuring work processes and applying modern technology to improve 
performance and cut costs. In addition, DOD's new Chief Information 
Officer is establishing information technology investment criteria and 
performance measures to ensure that DOD's $10 billion investment in 
information technology and processes produces measurable results and a 
significant return on investment. For example, DOD's Office of Health 
Affairs and the Defense Logistics Agency have used information 
technology to enable them to work with commercial suppliers to 
significantly reduce supply delivery times and on-hand DOD stocks, thus 
greatly cutting costs.

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   Implementing Base Closure and Realignment.--Since 1988, four Base 
Closure and Realignment Commissions have approved the elimination of 
about 20 percent of our defense infrastructure (recommending the closure 
of 97 out of 495 major military installations and over 200 smaller 
installations). The $5.6 billion in projected annual savings (after all 
closure activities are completed by 2001) would help fund the 
modernization of our military forces. To achieve these savings, the 
budget fully funds the implementation of the final recommendations of 
the 1995 Base Closure and Realignment Commission.
   Improving Financial Management.--The Administration remains committed 
to reforming DOD's financial management activities and systems. DOD must 
overcome major impediments to create an effective agency-wide accounting 
system structure and to produce auditable financial statements. It has, 
however, taken steps to improve its financial management in such areas 
as problem disbursements, contractor overpayments, fraud detection and 
controls, and standardized accounting systems. For example, DOD has cut 
the category known as problem disbursements from a total of $51.2 
billion in June 1993 to $18.1 billion in June 1996.
   Streamlining the Civilian Work Force.--DOD will continue to 
streamline its civilian work force while maintaining its quality. The 
budget reflects a cut of almost 218,000, or about 25 percent, in DOD 
civilian positions from 1993 to 1999. Consistent with the principles of 
the Vice President's National Performance Review, DOD is reducing 
headquarters, procurement, finance, and administrative staffs.
   Implementing the Government Performance and Results Act (GPRA).--DOD 
continues to incorporate performance evaluation into its decision-making 
for such broad-based programs as weapons purchases, transportation 
methods, and inventory control. It has designated seven programs as 
demonstration projects to provide a blueprint for full GPRA 
   Using the Private Sector for Support Functions.--To cut costs and 
make operations more efficient, the Commission on Roles and Missions of 
the Armed Forces recommended that DOD increase its use of the private 
sector to provide support functions. In August 1995, the Deputy 
Secretary of Defense established an Integrated Product Team for 
Privatization, which now includes senior representatives from the 
military departments, defense agencies, OMB, and the Secretary's staff. 
Also, DOD and OMB are working together to develop competition, 
outsourcing, and other privatization initiatives by forming an inter-
agency Senior Policy Group for Privatization.