GUY G. MCCONNELL, RICHARD D. LIEBERMAN, DOUGLAS A. ALLEN, JAMES A. FELLENBAUM,

and JOEL E. BONNER (Minority)

Staff Assistants, Department of Defense Appropriations Subcommittee

DEPARTMENT OF DEFENSE APPROPRIATIONS FOR

FISCAL YEAR 1976

WEDNESDAY, FEBRUARY 12, 1975

U.S. SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C. The subcommittee met at 10 a.m., in room 1223, Everett McKinley Dirksen Office Building, Hon. John L. McClellan (chairman) presiding.

Present: Senators McClellan, Stennis, Pastore, Symington, Proxmire, Young, Hruska, Stevens, and Schweiker.

DEPARTMENT OF DEFENSE

STATEMENT OF HON. JAMES R. SCHLESINGER, SECRETARY OF

DEFENSE

ACCOMPANIED BY:

GENERAL GEORGE S. BROWN, USAF, CHAIRMAN, JOINT CHIEFS OF STAFF

HON. TERENCE E. McCLARY, ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER)

COLONEL ZANE E. FINKELSTEIN, JAGC, USA, LEGAL ADVISOR AND LEGISLATIVE ASSISTANT TO THE CHAIRMAN, JOINT CHIEFS OF STAFF

OPENING REMARKS OF CHAIRMAN M'CLELLAN

Chairman MCCLELLAN. The subcommittee will come to order. The Defense Subcommittee of the Senate Committee on Appropriations begins hearings today on the fiscal year 1976 budget of the Department of Defense. The budget to be considered by the subcommittee totals $97.8 billion.

As I noted in a speech on the floor of the Senate yesterday, it is part of a $349.4 billion budget with a $52 billion deficit. This request is shocking and sobering, not only in its proposals, but also in its projections.

This budget proposes outlays of $1 billion a day and projects a deficit that will make one day of each week in the coming fiscal year a deficit day-adding $1 billion each week to the already swollen na

tional debt.

Last year, we appropriated $82.1 billion for the Department of Defense and the corresponding outlays are estimated to be $79.2 billion. Thus, the budget considered by this subcommittee represents an increase of $15.7 billion in appropriations requested for the functions of the Department of Defense, and an increase of $7.6 billion in outlays.

This sizable increase is being proposed at a time when our economy is in disarray-when unemployment is soaring to near depression rates when our foreign trade balances are suffering from the high price of imported oil-and when the cost of living for all our citizens is still climbing, although at a reduced rate of inflation.

Under these circumstances, I believe that I speak for all members of this subcommittee when I state frankly that this year we will be scrutinizing the spending proposal of the Department of Defense with even greater care and intensity than we have given it in past years.

In dealing with the Department of Defense budget, the subcommittee cannot operate in a vacuum. In this period of economic instability, we must give the fullest and most complete consideration not only to the requirement and demands of national security, but we must also take into account other demands upon the tax dollar and other priorities.

One of the points which I am certain that the subcommittee will wish to have cleared up for the record is whether or not this budget is the least that we need to maintain our national security in an insecure world.

We will wish to know if, on the other hand, it contains funds not required to fulfill mandatory defense needs but included in this budget as a "pump priming" device-designed to help us spend our way out of the current recession.

I hope, Mr. Secretary, that you will address yourself to this issue during your testimony.

I should like to make one further point.

PATTERN OF DEFENSE COSTS MISUNDERSTOOD

There has been considerable misunderstanding not only in the Senate but among the American people as a whole over the pattern of defense costs in relation to spending for all governmental functions in recent

years.

While many Americans have been deceived by a barrage of misinformation that defense costs have swallowed up the lion's share of our resources, the facts present a completely different picture.

As I said yesterday, over the past decade, outlays for national defense have shrunk from 41.5 percent of total Federal budget outlays to 26.9 percent of the sum requested for fiscal year 1976. The defense share of the total Federal budget and the gross national product continues to decline. And defense spending has been rising far less rapidly than any other major item in the budget.

I hope that during these hearings-and when we take our completed defense appropriations bill to the floor-we will be able to continue an educational process aimed at providing the American people with facts and figures about defense spending, not propaganda. In conclusion, let me state that it is the aim of this subcommittee to provide the United States with the best and most complete system of national defense commensurate with the state of our economy and our ability to pay for it.

Let us remember that we are trying to preserve and protect freedom and democracy not only for ourselves but for people all over the world. On the surface, democracy appears to be the easiest path for man to follow, but this is not true. Democracy demands the extraordinary of

the ordinary person-and let us make certain that this generation of Americans is equal to the challenges which are facing it.

TEXT OF FLOOR SPEECH BY CHAIRMAN

At this point I shall include in the record the text of a speech which I made on February 11, 1975, on the floor of the Senate entitled "The Facts About Defense Spending" and certain supporting documents. [The speech and documents follow:]

EFFECT OF ADMINISTRATION BUDGET ON ECONOMY

Mr. President, in my more than three decades of service in this body, I can recall few documents as shocking and as sobering as the Administration's proposed budget for the 1976 fiscal year.

The bare figures speak for themselves-$349.4 billion in outlays-nearly $1 billion a day-and a $52 billion deficit. Thus one day of each week of the coming fiscal year will be a deficit day, adding $1 billion each week to the already astronomical national debt.

Storms that have been gathering by reason of deficit spending have suddenly swept over our economy with such force and velocity that they are disrupting the American way of life. This budget clearly forecasts a continuation and a growing intensity of these storms.

Inasmuch as the budget request for national defense-$94.027 billion in outlays (including $92.8 billion for the Department of Defense)-almost $9 billion in expenditures over fiscal year 1975, is the largest single item in the President's request-critics of defense spending are already mounting their usual attack upon it.

From them we hear the same old refrain: "we can't afford a defense budget of this size; defense funds should be slashed and such reduction should be used to increase appropriations for health, education, mass transit or non-military government programs." The more exuberant critics claim the defense budget is "soaring out of control."

We are told that a greedy military-industrial complex is gobbling up funds needed for under-funded social programs; that a national defense budget of this magnitude fuels an ever-spiraling arms race which may end in nuclear disaster. The facts properly interpreted, however, present quite a different picture. To be sure, $94 billion is an enormous sum, specially when compared with the $55.9 billion cost of defense only ten years ago.

But, outlays for national defense have shrunk during that ten year period from 41.5 percent of total Federal budget outlays to 26.9 percent requested for fiscal year 1976.

Since fiscal 1966, the cost of the Federal Government has gone up $214.7 billion-from $134.7 billion to $349.4 billion estimated for fiscal 1976. Of that total increase, only $38.2 billion-or 17.8 percent is attributable to national defense spending. The remaining 82.2 percent, or $176.5 billion of the $214.7 billion increase, is attributable to non-military functions and services, such as human resources and general government.

So very little blame can possibly be lodged against the Defense Department for the exorbitant increase in Federal expenditures.

Since fiscal 1966, non-defense programs including Federal outlays for human resource items--education and manpower; health, including Medicare and Medicaid; income security, including individual benefits-have increased from 58.5 percent of the budget to 73.1 percent. In dollar terms, the increase for those functions was $176.5 billion-from $78.8 billion to $255.3 billion.

Thus, while national defense costs were rising by 68 percent over the past ten years-from $55.9 billion to $94 billion, total other government expenditures were climbing by 224 percent.

And the defense share of both the total Federal budget and the Gross National Product continues to decline. In fiscal 1976, for example, proposed national defense outlays constitute only 26.9 percent of the total budget-down about 14 percent from the fiscal year 1966 level. Between 1966 and 1976, National defense outlays declined from 7.7 percent of the Gross National Product to 5.9 percent. During this same period, outlays for the non-defense portion of the budget rose from 10.9 percent to 16.0 percent of the Gross National Product.

Moreover, defense spending has been rising far less rapidly than any other major item in the budget.

For example during the past 10 years:

Federal aid to education, manpower and social services jumped 257 percent, from $4.1 billion to $14.6 billion.

Public assistance increased 440 percent, from $3.4 billion to $18.4 billion. Social Security and other retirement and disability programs increased 247 percent, from $21.4 billion to $74.3 billion.

Health services, including Medicare and Medicaid, increased by 963 percent, from $2.6 billion to $28 billion.

Interest on the national debt increased by 205 percent, from $11.3 billion to $34.4 billion.

Many other like comparisons could be cited.

So, Mr. President, contrary to the misconceptions of many well-meaning persons who demand a revision of priorities with regard to the defense budgetincluding some members of this body-the truth is that we have already revised our spending priorities on an across-the-board basis.

The truth is that we are spending far less proportionately today to maintain our national security than we are spending for human needs and non-defense programs.

Why, then, are we now being called upon to provide for expenditures of an additional $9 billion over the amount being spent on national defense in the current fiscal year.

To a great extent, the answer lies largely in the cancer of inflation, the increasing sophistication of weapons systems, the need to replace obsolescent equipment and the high cost of an all-volunteer force.

Even as I speak, the fires of inflation are consuming a significant amount of the funds Congress has made available to the Department of Defense. For example, on September 30, 1974, the Secretary of Defense sent me a report on the status of 42 selected weapons systems which showed that inflation has driven up the cost of completing these programs by a phenomenal $16 billion over estimates made only three months before. I ask unanimous consent that it be included in my remarks.

In World War II, a B-29 bomber cost $680,000. If we buy the B-1 bomber, each one will cost $76.4 million.

In World War II, a P-51 fighter aircraft cost $54,000. An F-14 of today costs $17.8 million.

In World War II, the price of an M-1 rifle was $50.22. A modern M-16 costs $137.17.

The annual pay of a recruit in 1950 was $960. Today, a recruit receives $4,130.

Only eight years ago, it cost $1.30 a day to feed a soldier. Now it costs $2.68 and as any housewife knows-the cost of food is still going up. Here is a table showing the phenomenal increases in the cost of food served in the mess halls of the Armed Forces:

Military personnel costs have in recent years also escalated as a result of inflation and the all-volunteer services concept. In fiscal 1976, personnel and related costs will account for 53 percent of the Department of Defense outlays, or $49.2