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2 THE FISCAL YEAR AMENDED ARMY BUDGET INTRODUCTION THE DD BUDGET The Department f Defense (DD) FY Amended Budget. 5 Understanding Budget Language Defense Budget Trends Hw the DD Budget is Allcated DD Budget Highlights Cngressinal Issues The Outlay Crunch and G-R-H THE ARMY BUDGET FY Prcess and Numbers Army Budget Trends Budget Highlights Frce Structure. Manpwer. Training Readiness Sustainment and Supprt. Frce Prjectin - Glbal Mbility. Mdernizatin... Prcurement Highlights. Research and Develpment.... Military Cnstructin and Family Husing Budget Adequacy SU Y BUDGET ANNEX i Apprpriatin Summaries... i Reprductin f this Fact Sheet, in whle r i.n part, is authrized with apprpriate acknwledgement f the surce. ASSOCIATION OF THE UNITED STATES ARMY 2425 Wilsn Bulevard, Arlingtn, Virginia (703)

3 INTRODUCTION The first defense budget f the Bush administratin is nw befre Cngress. The $305.5 billin prjected spending level fr defense in FY 1990, f which $295.6 billin applies directly t the Department f Defense, represents a $10 billin reductin frm the Reagan budget submitted t Cngress in January. The Bush plan is based n a cmprmise understanding with Cngress as t an affrdable and acceptable level f spending fr natinal defense: This cmprmise, driven mre by dllar ceilings than by an assessment f natinal security needs, cuts DD funding 1.2 percent belw FY 1989, which means the fifth decline in real terms in as many years. We are nw lking at a ttal 12 percent reductin in defense budgets, after adjusting fr inflatin, belw the FY 1985 peak. Tday we are faced with cntinuing dwnward pressures n defense spending as the result f verriding ecnmic cncerns, particularly the federal deficit. Cncurrently, wrld events are changing the strategic equatin and we are faced with a reassessment and redefinitin f the security threat as we have knwn it in the past. The present wrld situatin hwever, is murky at best. The decisin makers n ur side must mve deliberately and wisely. Nw is nt the time fr us t withdraw frward deplyed frces r t make unilateral arms cuts in anticipatin f prmises frm Mr. Grbachev r pressures frm anyne else. It is nly thrugh a psitin f recgnized strength that the U.S. can be the leader in securing meaningful agreements fr peace and in prtecting ur natinal interests and thse f ur allies. The FY 1990 defense budget is, in the main, a prduct f verall dllar decisins at the tp level. Once the varius ceilings were agreed t, sme dracnian cuts were made t accmmdate them. The FY 1990 ttal level shuld nt change much frm that submitted in April because f the mentined White Huse-Cngress cmprmise agreement. All eyes, hwever, will be turning t the FY 1991 budget, where pressures will still weigh heavily, and there will be a tendency t mve mre rapidly than is prudent t take advantage f perceived decreases in the threats t 'vrld security. While sme future changes in ur defense structure are certain, they must be well thught ut and carefully managed. The United States must cntinue t have strng security frces, capable f defending its interests and supprting thse f ur allies. Any unravelling r 'vithdrawal f frces prematurely 'vuld be a huge mistake. LTG Richard L. West, USA (Ret.) is the principal architect f this paper. He is currently the Directr f the AUSA Institute f Land Warfare. The senir editr is Cl. Thmas Byrne. JACK N. HERRITT General, USA Ret. Executive Vice President - 3 -

4 THE DD BUDGET The Department f Defense (DD FY) Amended Budget The FY DD budget was initially submitted t Cngress by President Reagan in January The January budget was predicated n tw percent real grwth fr each f its years. authrity) were: The tp line numbers (expressed in budget THE REAGAN BUDGET befense (which, in additin t DD, included $9.6 billin fr Department f Energy funding fr nuclear weapns and miscellaneus defense-related prgrams f ther agencies) DD Budget FY 1990 ($ Billin) FY 1991 ($ Billin) It was clear frm the utset that even this mdest grwth in the DD budget wuld nt sell with the Cngress. That view was the result f cmpeting nn-defense issues and the need t seriusly cnstrain utlays t hld the deficit within the Gramm-Rudman-Hllings statutry ceiling. In respnse t this, President Bush annunced his plan fr a n-grwth defense budget fr FY This plan wuld reduce the DD ttal fr FY 1990 t $299.3 billin. At the same time, discussins were initiated between the White Huse and key members f Cngress t arrive at a wrkable agreement n the entire federal budget, including defense. The gal f these talks was t find an acceptable basis fr Cngressinal budget actin that wuld als meet the minimum deficit requirements f Gramm-Rudman-Hllings. These talks culminated with a cmprmise agreement which established the FY 1990 defense budget at apprximately $10 billin belw the Reagan January budget. Defense Secretary Cheney mlded this $10 billin cut int a revised DD budget which he prvided t Cngress n April 24, Reductins t meet these new budget numbers required tugh decisins invlving bth frce structure and the slippage, reductin r eliminatin f sme weapns systems prcurement. These will be discussed in mre detail later in this paper. The FY amended DD budget was presented in a tw year frmat, althugh the secnd year prbably has little relevance at this time. The $10 billin cut drps defense spending t a level f 1.2 percent belw the FY 1989 budget in real terms, making it the fifth decline in as many years. Tp-line numbers reflecting budget authrity and estimated utlays are shwn in the fllwing chart

5 THE BUSH BUDGET DD Amended Budget Revised Request ($ Billin) Budget Authrity Outlays FY FY Understanding Budget Language Last year the AUSA Fact Sheet n the budget cntained an explanatin f the terms used in budget displays. This is again included as essential t prper understanding f the relatinship f the numbers, and t explain why they differ in sme cases. The Budget figures are expressed in terms f budget authrity (BA), ttal bligatinal authrity (TOA), and utlays. They are all related but are nt identical. If yu lk at the fiscal tables published fr the Department f Defense, yu will see all three categries laid ut carefully by fiscal year. When yu see numbers quted in varius written materials, yu must ften interpret fr yurself. Budget authrity, r BA, refers t funds which may be bligated t let cntracts and purchase gds and services. BA represents the ttal f the funds prvided by law, ffset by any expected incme (such as ffsetting receipts). BA is the nrmal language f the Federal Budget. Clsely related t budget authrity is the te1 ttal bligatinal authrity r TOA. TOA has the same basic significance as BA except that it includes the ttal value f the direct prgram regardless f the methd f financing. The levels f BA and TOA will nrmally differ very little in the aggregate, but they are nt precisely the same. The military services budgets are nrmally expressed in terms f TOA. Fr that reasn, this paper uses TOA in discussing the Army Budget. Outlays are crucial, because it is utlays, nt BA r TOA, that are part f the deficit equatin. Outlays represent expenditures. They are payments actually made fr gds and services during a particular fiscal year, and are nt synnymus with bligatins. The annual federal deficit is the gap between ttal federal utlays and ttal revenues in a fiscal year. The ttal federal deficit is the cumulative sum f deficits ver time. Gramm-Rudman-Hllings, r G-R-H, has nw becme a part f the budget lexicn. It is a public law aimed at putting a lid n annual federal deficits and is intended t eventually wrk them dwn t zer. As such, G-R-H wields a big stick. The deficit ceiling was $136 billin fr FY 1989, drpping t $100 billin in FY 1990 and $74 billin in FY With G-R-H, the fcus is directly n utlays. Remember, BA and utlays d nt represent the same kit f things in any particular year. When mnies are apprpriated, sme will spend ut (becme - 6 -

6 utlays) during the first year, but a significant amunt will actually be paid ut during subsequent years. Different categries spend at different rates: BA fr persnnel will spend abut 98 percent the first year, but fr prcurement will spend nly abut 10 t 12 percent the first year and spread the ttal payut t five years r mre (10 years fr shipbuilding). Fr example, during FY 1990, abut 38 percent f defens e utlays will cme frm prir year bligatins. When yu cnsider cmmitted wages f persnnel (military and civilian), yu then understand why abut 85 percent f the utlays fr FY 1990 are lcked in place befre the year starts. Budget management nw requires cntrl f tw elements expressed in dllar terms: budget authrity and utlays. There is little dubt that the budget agreement reached in April 1989 fr FY 1990 was heavily utlay driven. Defense Budget Trends Over time the defense budget has been ne f the mst erratic f the federal accunts with its cyclic ups and dwns. It is nw in a dwn cycle after enj ying a psitive surge frm FY 1980 thrugh FY Since FY 1985, defense figures ha ve shwn successive real declines f -4. 4, -3. 7, -2. 0, percent, with -1.2 percent prjected fr FY a ttal f ver 12 percent real decline when adjusted fr inflatin. Except fr the surges which accmpanied Krea and Vietnam and ther cyclic upswings, the trend f def ense utlays since the early 1950s has been dwn ver time with respect t bth the grss natinal prduct and ttal federal exp enditures. This is displayed graphically in the fllwing charts: DEFENSE OUTL AYS AS A SHARE OF GROSS NATIONAL PRODUCT z 10 (!) c: Cl> ()... 6 Cl> Fiscal Year The GNP is a cmmn base fr measuring the allcatin f ur natin' s wealth. During the height f the Vietnam War, DD utlays were ver eight percent f GNP, fell t abut five percent in the early 1970s, and after a high f

7 ::::1 percent in FY 1986, has mved steadily dwnward t an estimated 5.3 percent fr FY DD OUTLAYS AS A SHARE OF FEDERAL FUNDING - Q) C) "C c -as.. Q) "C Q) u. -as c: Q) Q) 0.. Nn-DD Percent f the Federal Budget DD Percent f the Federal Budget Fiscal Year 1991 Hw the DD Budget is Allcated fllws: The DD FY budget is allcated by apprpriatin titles as Military Persnnel Operatins and Maintenance Prcurement Research, Develpment Test and Evaluatin Military Cnstructin Family Husing Other Ttal FY 1990 Amunt Percent ($ Billins) FY 1991 Amunt Percent ($ Billins) (Figures may nt add due t runding) In the January t April budget review prcess, the FY 1990 prcurement accunt tk anther hit f $5.4 billin t cntinue a dwnward trend. nw tw percent less f the ttal DD budget than in FY 1988 and ver seven percent less than in FY The Military persnnel and peratins and It is maintenance accunts have bth increased smewhat as a percentage f the ttal DD budget ver the past few years. RDT&E has held a pretty steady share f the DD budget ver time, supprted by heavy R&D cmmitments t the Strategic Defense Initiative (SDI). in FY 1990 frm FY 1989). Military cnstructin tk a drubbing (-18 percent - 8 -

8 The prpsed allcatin f resurces fr FY 1991 appears t be an imprvement with sme real grwth built int the budget. But, this matter has yet t receive any kind f White Huse/Cngressinal agreement and it will undubtedly be revised as the result f subsequent events and decisins. Any detailed analysis f the budget fr FY 1991 has limited significance at this time. DD Budget Highlights Even if Cngress prvides the full $295.6 billin fr DD in FY 1990, it is still a year in which frce structure will be reduced and imprtant prgrams will be cancelled r curtailed. This trend started with the FY 1989 budget decisins and is even mre apparent in the FY 1990 budget. Budget highlights, therefre, are essentially the stry f what is t be cut, reduced r delayed. Secretary Cheney has stated a number f pririties which are reflected in his recent budget decisins. At the tp f the list were quality peple, training and readiness -- items which have been largely prtected in the new budget. He urged cntinued strng supprt fr mdernizatin f the strategic frces and declined t even cnsider the withdrawal f frward deplyed frces at this time. Cheney's prpsed reductins were largely in the nature f, (1) frce structure adjustments with their related persnnel cuts, and (2) acquisitin prgram changes invlving terminatins, reductins and deferrals. Sme specific prgram highlights include: Persnnel Changes frm the Reagan FY 1990 budget include the reductin f 16,700 active military spaces (-7,900 Army, -5,600 Navy, and -3,200 Air Frce) Only mdest changes were made in Reserve r civilian persnnel authrizatins. Still in prgress is a Defense Management Review which will be required t make reductins f $286 millin fr FY 1990 and $434 millin fr FY 1991 based n assumed persnnel savings. These funds have already been remved frm the budget. The FY 1990 budget prvides fr a 3.6 percent military pay raise effective January 1, 1990, and a tw percent civilian pay raise. Frce Structure Changes The Army will inactivate a brigade in the 4th Mechanized Divisin, cancel the planned activatin f certain ther selected units and restructure sme Army attack helicpter units. The Navy will retire an aircraft carrier, the USS Cral Sea, accelerate the retirement f sme destryers, deactivate 73 P-3A/B aircraft, and transfer 10 frigates frm the active frce t the Reserves. The Air Frce will deactivate WC-130 Hurricane recnnaissance aircraft and restructure the TR-1 prgram. Prgram Terminatins The Army will terminate the AH64 Attack Helicpter (after FY 1991), the AHIP Scut Helicpter and the M88A2 Tank Recvery Vehicle

9 The Navy will terminate the V-22 Osprey Aircraft (primarily fr Marine Crps use), new F-14D Aircraft prcurement, the Phenix Missile, and ne SSN-688 Submarine. The Air Frce will terminate th& F-15 Aircraft (after FY 1991) and the related LANTIRN Pd. Prgrams Rescheduled (Deferred r Reduced) Army: ADATS Missile, ATACMS Missile, and the UH60 Helicpter (-11 per year). Navy: SF-60F Helicpter, T-45TS Aircraft, F/A-18 Aircraft, and tw castal minehunters. Air Frce: Aerspace Plane. B-2 Bmber (slippage), TACIT RAINBOW Missile and Natinal Defense Agencies: SDI reductin. NOTE: The big mney savers in the abve are the B-2 Bmber with cuts f $855 millin in 1990 and $3.2 billin in FY 1991, and SDI which will be reduced by $991 millin in FY 1990 and $1.3 billin in FY Prgrams Cntinued at Originally Planned Rates Army: M-1 Abrams Tank, Bradley Fighting Vehicle, and Patrit Missiles. Navy: Trident submarine, Trident II missiles and AV-8B attack aircraft (fr the Marine Crps). Air Frce: F-16 fighter aircraft and C-17 airlift aircraft. Strategic Prgrams Prpses t cnvert 50 MX Peacekeeper Missiles frm sils t a rail mbile mde; als, t resume develpment f the small mbile missile (Midgetman). items. These are cntrversial Cngressinal high-interest Supprts a new Trident submarine in FY 1990 as well as 63 Trident II missiles. Cntinues with the B-2 bmber prgram, but at a reduced rate with reductins as already nted fr FY 1990 and FY Cntinues with a restructured Strategic Defense Initiative pursuing bth space- and grund-based defenses, but with reduced funding fr bth FY 1990 and FY It fcuses n a new apprach which wuld emply thusands f small independently-cntrlled, space-based interceptrs (Brilliant Pebbles) rbiting the earth which culd attack enemy ICBMs after launch

10 Readiness and Supprt The budget prvides fr training readiness by cntinuing the present perating temp (OPTEMPO) f frces. The Army cntinues with 800 miles -per-year fr its tracked vehicles and 15 aviatin flying-hursper mnth fr aircraft in tactical units. Ship steaming days fr th e Navy remain at 50.5 days-per-quarter fr deplyed fleets and 29 days-per-quarter fr nn-deplyed. The Air Frce prgram supprts 19.5 flight-hurs-per-mnth fr tactical pilts. Several aspects f supprt will be degraded by th e amended budget. Planned imprvements in lgistical supprt prgrams were deferred, thus an increase in the backlg f dept and real prperty maintenance will ccur. Base perating supprt services will generally be curtailed acrss th e bard. Cngressinal Issues Outlay Estimates : While the amended budget cuts cmplied with the April agreement in terms f budget authrity, there are challenges frm bth the Huse and Senate th at the estimates f utlays in the DD budget are t lw by sme $3.8 billin based n Cngressinal Budget Office calculatins. If s, Defense may be required t give up even mre prgrams t meet utlay targets. This will be an n-ging issue. MX and Midgetman : Defense wants t g ahead with rail-basing f the 50 MX missiles nw in sils and terminate the Midgetman. Because f strng Cngressinal supprt, the Midgetman has been kept alive by minimum develpment funding ($100 millin in FY 1990 and $200 millin in FY 1991). Fielding bth systems is nt affrdable at current and prjected funding levels. Big mney is invlved. V-22 (Osprey) Tilt Rtr Aircraft: The V-22 was terminated in th e budget slely n the basis f affrdability. It had been the Marines' highes t pririty aircraft fr ship-t-shre mvement f trps. It is anticipated that there will be a maj r effrt t restre th is prgram during Cngress inal hearings. Strategic Defense Initiative: SDI as an established R&D prgram is n lnger in jepardy, but its verall scpe and level f funding cntinue t be challenged. Despite the reductin f almst $1 billin in the amended budget, the remaining $4.6 billin will be viewed by sme in Cngress as a gd surce fr additinal cuts t cver ther favred prgrams -- perhaps the Minuteman r the V-22 Osprey. B-2 Stealth Bmber: The B-2 was deferred t save mney in bth FY 1990 and FY 1991, but it cntinues t be a strngly supprted prgram. At ver $500 millin a cpy and a ttal fleet cs t prbably in excess f $65 billin, it lms as a very expensive system. Its affrdability is at issue. On this basis alne, it has already drawn fire and will cntinue t be challenged during Cngressinal review

11 Withdrawal f Frces: While future agreements will undubtedly invlve r permit sme drawdwn in U.S. frward deplyed frces, premature actin wuld seriusly degrade U.S. negtiating clut. Pressures are building up in Cngress, hwever, t d smething sn. While the reasn given is reduced threat, the primary mtivatin is budget savings. Secretary f Defense Cheney has maintained the psitin f keeping frward deplyed frces in place until firm cnventinal frce agreements in Eurpe are reached. The Outlay Crunch and G-R-H While a descriptin f what the budget will buy (r nt buy) in terms f budget authrity is fine, and we can all argue abut the prper levels fr defense in terms f prgrams, the unwelcme shadw in the backgrund is utlays, r the mney actually paid ut during a particular year. Outlays are nt apprpriated by Cngress but cme frm paying fr things and services which were purchased as the result f Cngressinal apprpriatins. They may ccur frm current year r prir year apprpriatins and, therefre, cannt be cntrlled directly. But utlays must be watched because it is the excess f utlays ver revenues that create a deficit and thus add t the federal debt. Maintaining cntrl f the deficit is f verriding public cncern. must als face the enfrcer, the Gramm-Rudman-Hllings Act, which prvides fr autmatic acrss-the-bard cuts fr all prgrams, except thse exempted as Scial Security), when a designated deficit ceiling is exceeded. A prvisin f the law specifies that half f any autmatic cuts, called We (such sequestratin, must cme frm defense even thugh defense represents nly abut 27 percent f the federal spending. Fr FY 1990, the estimated deficit level t trigger sequestratin is $100 billin plus a $10 billin cushin; fr FY 1991, it is $36 billin lwer. G-R-H is a pretty awful way t d the jb. It was nt meant fr executin, but rather t frce cmpliance by ther means. Frequently referred t as "mindless," it wuld require hitting all eligible accunts (identified as prgrams, packages r activities and defined by the relevant Apprpriatins Cmmittees) withut regard t equity, pririty r secndary effects. a big trap, hwever. While the cut must be in utlays, which evlve frm There is current year activities as well as prir year bligatins, the sequestratin can nly cme frm available unbligated prgrams. nerus't defense. This is particularly Nt nly must defense absrb 50 percent f the ttal utlay cuts, a much larger value f its ttal prgram, expressed in terms f budget authrity, must be reduced t prduce the necessary utlay cuts in any particular year. ut ver several year8. This results frm the fact that many defense prgrams spend The defense rati f prgram t utlay reductin in any particular year is abut 2.3 t 1, s ver twice the value f the prgram must be remved frm the budget t meet the utlay hit. The April budget agreement between the White Huse and the Cngress fr FY 1990 established budget levels t include an utlay estimate within the G-R-H deficit target f $100 billin. This, hwever, was based n the administratin's Office f Management and Budget (OMB) ecnmic factrs which many critics, including the Cngressinal Budget Office (CBO) and nn-gvernmental ecnmic frecasters, say are t ptimistic. Fr example: The administratin estimates the ecnmy will grw by 3. 5 percent while the average f ther frecasts is belw 2.5 percent. Als, the Administratin is estimating the

12 c st f the gvernment t brrw mney in FY 1990 sme tw percent belw current rates. CBO and nn-gvernmental estimates wuld sugges t a deficit $30 t $40 billin higher than nw estimated which wuld bring G-R-H back int play. The fficial estimate must be made in mid-august based n the best factrs knwn at that time. Cngress and the Administratin will have until mid-september t make additinal adj us tments t cmply with the target. If this cannt be dne, autmatic cuts must be decreed in Octber. In all likelihd, the deficit is sufficiently within reach fr FY 1990 that accmmdatins vill be made, albeit by the "skin f the teeth," t avid a sequestratin which nbdy wants. FY 1991, hwever, may be anther stry. The G-R-H deficit target will be lwered by law anth er $36 billin. Withut a significant increase in revenues frm surces nt apparent at this time, there will have t be further cuts t meet the revised target. Public and Cngressinal pressures may be brught t bear t further depress defense spending, rather than t frce curtailment f ther favrite prgrams

13 THE ARMY BUDGET FY Prcess and Numbers The Aggregate numbers fr the Army FY Amended Budget, after revisins frm the January budget, are as fllws: FY 1990 ($ Billin) FY 1991 ($ Billin) Budget Authrity (BA) Ttal Obligatinal Authrity (TOA) Outlays The military services nrmally use TOA in displaying their service budgets, and this cnventin will be used fr the remainder f the paper. differences between TOA and BA are relatively small and have n impact n prcurement, RDT&E, r cnstructin. In FY 1990 they can be attributed t ffsets r transfers fr freign currency fluctuatins and fr ffsetting receipts which invlve transfers fr purchases with ther agencies. The During the January t April drill, the Army cut $1.7 billin frm the January budget fr FY 1990 and $2.3 billin fr FY Fr FY 1990 this will place the Army budget level 2.6 percent belw FY 1989 in real terms and will be the fifth cnsecutive annual decline. Again, the stry f the FY 1990 Army budget is essentially ne f describing and assessing the reductins which must be made. Thrughut the prcess, hwever, the Army has held firm n its stated pririties f quality persnnel and a ready, well-trained frce. In rder t prtect these pririties, the Army was frced t accept a smewhat smaller frce structure, sme degradatin f supprt capabilities and a reductin in the acquisitin f imprtant systems. Budget Breakut. The tin titles, fr bth the fllwing charts: tins is displayed in Army's budget allcatins, by apprpria Fiscal Years 1990 and 1991, are shwn n (A mre detailed break-ut by apprpriathe Annex. )


15 FUNDING PROFILE OF THE ARMY FY90 (TOA IN BILLIONS) $21.0 RESERVE INVESTMENT 27% STOCK FUND $0.1 MILCON $ $30.2 MILITARY PERSONNEL 38% IVE COMPONENT $24.7 ROTE $5.7 FAMILY HOUSING $0.1 FAMILY HOUSING $1.4 RESERVE COMPONENT PROCUREMENT $14.2 $2.7 ACTIVE COMPONENT $23.7 $27.8 OPERATION & MAINTENANCE 35'11. FUNDING PROFILE OF THE ARMY $21.g INVESTMENT 26% FY91 (TOA IN BILLIONS) RESERVE [ ---- $31.0 MILITARY PERSONNEL 38' MILCON COMPONENT $25.3 ROTE $6.0 FAMILY HOUSING $0.1 FAMILY HOUSING $1.6 PROCUREMENT $14.3 RESERVE COMPONENT $ ACTIVE COMPONENT $24.9 0PERATION & MAINTENANCE 36% Army Budget Trends As reflected n the fllwing charts, Army funding has been in a cntinuus slump starting with FY The first chart shws real grwth (r decline) fr each year with respect t the previus year and reflects the radical gyratins which have taken place. The secnd chart shws (by the sli d line) the cnstant dllar values (adjusted fr inflatin) frm FY 1984 thrugh the budgeted perid. It shws the FY 1985 peak and the dwn slpe since then. While FY 1991 allws fr sme real grwth ver FY 1990, this was nt included in the agreement with Cngress, and will undubtedly be subject t revisin

16 Other ntable trends in the Army budget frm FY 1985 t the present include: Army funding as a percent f GNP has decreased steadily frm 1. 8 percent in FY 1985 t an estimated 1.4 percent in FY Military persnnel csts have remaine d apprximately cnstant in real terms, but that prtin f the Army budget that is allcated t military persnnel has increased frm abut 35 percent in FY 1985 t an estimate d 38 percent in FY At the same time, the ttal Army budget has declined in real terms. Operatins and maintenance csts have steadily increased as a share f the Army budget during this perid, ranging frm abut 30 percent in FY 1985 t an estimated 35 percent in FY This reflects the peratins and supprt csts assciated with the fielding f ne w equipment and the increased emphasis n training readiness. On the ther hand, Research, Develpment and Acquisitin (Prcurement and RDT&E) shwed a significant decline, frm percent f the Army budget in FY 1985 t slightly ver 24 percent prj ected fr FY Mst f this drp was in prcurement with a direct and adverse impact n the Army mdernizatin prgram. Budget Highlights Frce Structure Army structure and related strength revisins frm the January budget, nw included in the FY amended budget, shw an Army active end strength reductin f 7,929 fr FY 1990 and 8,300 fr FY Frce structure changes assciated with this include the prpsed inactivatin f ne mechanized brigade in the 4th Infantry Divisin (Me chanized) at Frt Carsn, the inactivatin f the Pershing Missile units under the INF reductin pact, the restructuring f attack helicpter units and the cancellatin f certain ther planned activatins. The 4th Infantry Divisin is the ne heavy div isin in the cntinental U. S. which had three active cmpnent brigades. It will nw be "runded ut" with a Reserve Cmpne nt brigade. The basic Army divisin structure and statining will remain essentially the same (see chart). Of the 28 cmbat divisins, 10 are prvided by the Natinal Guard and seven f the 18 active divisins will include a Reserve Cmpnent "rundut" brigade. Abut 40 percent f the active frce is statined utside the cntinental United 20 DIVISION STATIONING TOTAL: 6 ARMORED 1 1 b YEO 6 INFANTRY 6 MECHANIZED {5 LIGHT INFANTRY 1 AIRBORNE 1 AIR ASSAULT

17 States and there is n prj ectin fr drawing dwn frward deplyed frces during the FY time frame. The Secretary f Defense has made it clear that withdrawal f U.S. frces frm NATO in the near term wuld be neither prudent nr in ur natinal interests. With prpsed strength changes, the Reserve Cmpnents (Army Reserve plus Natinal Guard) will prvide ver half the sldiers fr the Ttal Army t include 43 percent f the divis in structure, 67 percent f nn-divisin cmbat frces, 70 percent f tactical supprt frces and 30 percent f general supprt frces. FY When civilians are included, the cmpsitin f the Ttal Army fr 1990 is prtrayed n the fllwing chart. TODAV'S.TOTAL ARMY FV90 DA AC'l'lVE AC'l'IVE ACTIVE USAR 322K(l7%) ARNG 45!!K(2J. 5;:) TOTAL ARMY COMPOSITION IN THOUSANOS (END STRENGTH) COMBAT FORCES (AUTHO RIZATIONS) ARNG n% COMBAT SUPPORT/ COMBAT SERVICE SUPPORT (AUTHORIZATIONS) Manpwer With the frce changes indicated abve, the persnnel end strengths in the budget fr all cmpnents f the Ttal Army will be as fllws: Active Cmpnent Army Natinal Guard Army Reserve Civilian Persnnel FY , , , ,225 FY , , , ,

18 It is ging t be the smallest active Army frce since pre-krean War years, with ver 50 percent f the military frce nw allcated t the Reserve Cmpnents. Civilian strength, after absrbing an 18, 000 cut in FY 1989, shuld remain relatively cnstant thrughut the FY budget perid.., DIFF. IN MIL. 4 CIV. PAY 4 MILITA RY PAY GAP (%) PAY EQUITY LEVEL 2 MEASURED BY THE Quality peple remain the -10 Army's tp pririty which means bth the acquisitin and the retentin f quality peple. This demands adequate incentives and a suitable envirnment nt nly fr the sldiers as well. The same applies t quality civilians. EMPLOYMENT COST INDEX MILITARY PAY FISCAL YEAR but fr families The amended budget prvides fr military pay raises f 3.6 and 3.2 percent and civilian pay raises f 2 and 3 percent respectively fr the tw years. The prjected pay raises are imprtant. We need t preclude a further widening f the military pay gap as measured by the emplyment cst index (ECI), shwn n the abve chart. Civilian pay is als lagging badly behind the private sectr. The quality f recruits remains high, cntinuing at 90 percent (plus ) level fr high schl graduates, but recruiting is becming mre difficult. The Army must nw cmpete in a market with a decreasing yuth availability and th e lwest unemplyment rate in 14 years. Statistics fr FY 1989 have been smewhat disappinting -- fr the first three quarters, recruiting fell shrt f quality gals by tw percent and the prprtin f recruits scring in the tp three categries n qualificatin tests was 14 percent lwer than the previus year. At the same time, the resurces needed t supprt advertising, enlistment bnuses and the Army Cllege Fund have been decreasing since FY Mre flexibility in the use f the Army Cllege Fund and mre liberal reenlistment bnuses are needed t target and retain critical military specialties, including the nn-cmbat arms. The Mntgmery GI Bill and the Army Cllege Fund cmbined have becme ne f the Army's greatest incentives ever fr attracting high quality recruits. A very high percentage f new sldiers have elected t participate in these educatinal prgrams. It is essential that this nt be erded in any way. Changes in the January budget t meet amended budget levels left persnnel-related items relatively untuched except fr csts assciated directly with frce ch anges and active pers nnel strength reductins. These translated int cuts f -$248.2 millin in FY 1990 and -$325.3 millin in FY in the military persnnel apprpriatins. As prpsed in the new budget, funding shuld permit prmtins t cntinue at abut the current rate. Enlistment and re-enlistment

19 incentives will be retained and weight restrictins n shipment f husehld gds t Eurpe wj_ll be eased smet.;rhat. The budget includes an added investment in direct medical care capability as part f an effrt t reduce reliance n Civilian Health and Nedical Prgram f the Unifrmed Services (CHAMPUS). It des, hwever, limit the funding fr direct medical prgrams t the FY 1988 dllar level. Training Readiness Training readiness was a tp pririty cnsideratin in the Army Amended Budget and, therefre, training was prvided fr adequately. Still, there were sme miscellaneus cuts, such as training prducts (aids, devices, simulatrs, etc. ), and reduced new equipment training based n the slwer rate f equipment fielding. There was als sme reductin in graduate pilt training based n slwer aircraft prductin. Grund perating temp (OPTEMPO) fr th e active frce remained funded fr 800 miles-per-tracked vehicle each year while aviatin OPTEMPO was funded at 15-flying hurs per aircraft-per-mnth. Grund OPTEMPO and aviatin flying hurs fr Reserve Cmpnents were funded at cmparable levels. The budget supprts effective use f the cmbat training centers which prvide superb cmbat-like training with three instrumented tactical training centers: the Natinal Training Center (NTC) at Frt Irwin, Califrnia; the Jint Readines s Training Center (JRTC) at Frt Chaffee, Arkans as ; and the Cmbat Maneuver Training Center (CMTC) at Hhenfels, Germany. Als included is the Battle Cmmand Training Prgram (BCTP) which prvides divisin and crps cmmanders and their battle staffs with realistic training in wartime duties by a specially designed cmmand pst exercise. Beginning in FY 1990, the BCTP will be able t train 16 divisins each year. I COMBAT TRAINING CENTERS NATIONAL T N G J R COMMAND POST EXERCISES NTC COMBAT MANEUVER TRAINING CENTER FIELD TRAINING EXERCISES BATTLE COMMAND TRAINING PROGRAM Ff LEAVENWORTH & HOME STATION JOINT READINESS TRAINING CENTER

20 The budget prvides fr 28 heavy and five light battalin rtatins t the Natinal Training Center each year. In additin t increases in the Battle Cmmand Training Prgram, bth CMTC and JRTC will becme increasingly active. Training Center Rtatins 60 B a t 50 t a I i 40 0 n R t 20 a t i 10 0 n s 0 Actual / '""NIC r _/ I / Cmbat Maneuver Training Center Jint Readiness Training Center Natinal Training Center Fiscal Year Prjected CMTC * * I - -- I /_/ JRTC j The FY Amended Budget reflects sme reductin in the JCS exercise prgram. The Army participates in abut 50 such exercises per year. This, hwever, shuld have minimal impact n verall Army readiness. Sustainment and Supprt While the budget pririties prvided the funding mst needed fr training, peratins and readiness, the budget prcess shaved areas relating t sustainment and supprt. Sme adverse trends which wuld, ver time, degrade the Army' s ability t sustain cmbat activity are: Funds fr war reserve ammunitin. While still significant, these have been successively reduced since FY 1988 as reflected n the fllwing chart. Dept maint enance is anther area which was curtailed fr budgetary purpses. The backlg in the verhaul, repair and mdernizatin f material fr return t the supply system is steadily increasing, ging frm $381 millin in FY 1989 t an ($ IN MILLIONS) AMMUNITION HARDWARE WAR RESERVE 1600 r----; BOO FISCAL YEAR

21 estimated $513 millin in FY 1990 and $584 millin in FY Fr bth FY 1990 and FY 1991, the budget fails t fund abut 22 percent f dept maintenance requirements. See chart. ($M) UNFUNDED BACKLOG Overhaul, Repair and Mdernizatin f Material UNFUNDED FISCAL YEAR Facilities maintenance and repair was als curtailed with an additinal $115 millin cut frm FY 1990 and $129 millin frm FY With this, real prperty maintenance was funded at apprximately 80 percent f requirements. The resulting backlg is expected t increase frm $2. 5 billin in FY 1989 t an estimated $3. 4 billin in FY 1990 and $4. 2 billin in FY an increase f ver 60 percent in nly tw years. When we add deferred maintenance fr family husing, the prjected backlg rises t $4. 3 billin in FY 1990 and $5. 3 billin in FY a big bill which must be paid in the future. Base perating supprt in general will decrease based n the budget levels prpsed fr peratins and maintenance. Frce Prjectin - Glbal Mbility The Army's ability t perfrm a variety f wrld-wide cntingency missins is dependent n its ability t get the frces there and t supprt them nce they arrive. This translates int adequate airlift and sealift and the prepsitining f large stcks f equipment. The Army relies n the Air Frce fr prgramming and budgeting airlift and the Navy fr sealift. Strategic lift tday is clearly deficient t meet many f the Army's prjected needs. Airlift, as prgrammed thrugh FY 1994, will be abut 20 percent shrt f minimum needs. This shuld be reduced materially in the future by the acquisitin f the C-17 Airlifter which will prvide utsized airlift as well as intra-theater airlift. The Air Frce budget includes funds fr six C-17 aircraft in the FY 1990 Amended Budget and 10 aircraft in FY The Army strngly supprts this prgram. Sealift is ev en mre critical since the bulk (ver 90 percent) f heavy carg, particularly lgistical supprt, must cme by sea. Current sealift capability is seriusly inadequate and is being cnstantly

22 erded by the dwnward trend in U.S. merchant ships. Available assets include ships f the Military Sealift Cmmand, the Ready Reserve Fleet, available allied ships, and the U.S. flag merchant fleet. The main cncern is the cntinued decline in U.S. Merchant Marine assets and manpwer. Beginning in FY 1989, the Maritime Administratin became respnsible fr funding and managing the sealift ships in the Ready Reserve Frce. There is a critical need fr mre fast sealift such as the Surface Effect Fast Sealift prgram, t prvide ships capable f carrying 5, 000 shrt tns f carg at speeds up t 50 knts. This wuld prvide rapid prjectin means fr grund cmbat pwer. There is little in the Amended FY budget hwever, t fix the sealift prblem. The Army is respnsible fr the Lgistics-Over-the-Shre (LOTS) prgram which prcures watercraft and ther equipment fr ver the shre peratins where cmmercial prts are unavailable. It is an nging prgram, but nly limited budget resurces are included fr FY Mdernizatin Beginning FY 1986, Research, Develpment and Acquisitin (RDA), and especially the prcurement apprpriatins, hav e taken the brunt f the budget decline. During the perid, FY 1985 t FY 1990, the share f the Army budget allcated t Research, Develpment and Acquisitin will have gne dwn a significant seven percent. This clearly has had a severe dampening effect n the pace f Army mdernizatin and is nw driving tugh decisins n weapns systems develpment. In the FY budget revisin prcess, sme majr systems remained in the prgram as laid ut in the President's budget where thers were curtailed, delayed r eliminated. A. summary f the key systems in each categry and a table shwing frce mdernizatin revisins fllw: Prgrams which were delayed r reduced as a result f funding cuts include: The Maneuver Cntrl System The All-Surce Analysis System SINCGARS radis The grund-based sensr fr the Frward Area Air Defense Cmmand & Cntrl System The UH-60A Black Hawk Air Defense Anti-tank System (ADATS) Army Tactical Missile System (ATACMS) Advanced Field Artillery Tactical Data System Lgistics Over-the-Shre Stinger missiles AH-64 Apache prcurement reduced frm 72 t 66 fr FY 1990 and FY 1991 (see Prgram Terminatins) Mbile Subscriber Equipment (MSE) reduced by tw divisin sets Prgram Terminatins:

23 -- Army Helicpter Imprvement Prgram (AHIP) Scut Helicpter -- M88A2 Recvery Vehicle -- AH-64 Apache Attack Helicpter (after FY 1991) -- Unit Level Cmputer Despite the abve, a number f key weapn systems were sustained at the same rates as cntained in the initial January budget, t include: The Bradley Fighting Vehicle (600 each year) The Abrams Tank (603 in FY 1990 and 516 in FY 1991, including Marine Crps acquisitin) The 120mm Mrtar The M mm Hwitzer Hwitzer Imprvement Prgram -- MLRS Rckets Quantities and dllars assciated with key mderni zatin revisins are reflected in the fllwing chart. FORCE MODERNIZATION REVISIONS (CURRENT$ MILLIONS) FY 1990 FY 1991 QUANTITY DOLLARS QUANTITY DOLLARS PROGRAMS CURTAILED AH-64 HELICOPTER(AFTER 1991) AHIP RECOVERY VEHICLE UNIT LEVEL COMPUTER PROGRAMS RESCHEDULED ADAT MISSILE ATACMS MISSILE UH-60 HELICOPTER M 1 MODS 0-90 MOBILE SUSCRIBER EQUIP -2 DIV SETS -227 SINCGARS STINGER

24 Prcurement Highlights Army prc urement is inc luded under five separate apprpriatins: Aircraft prc urement, missile prcurement, prc urement f weapns and tracked cmbat vehic les, prc urement f ammunit in, and ther prcurement. Requested ttals are $14.2 billin fr FY 1990 and $14.3 billin fr FY 1991 r abut 18 percent f the Army budget fr FY 1990 and abut 17.5 percent fr FY The differences f the FY amended budget frm the FY prj ected prgram level are shwn n the fllwing chart. PROCUREMENT APPROPRIATIONS $ N B I L 1 0 L I 0 5 N FY PB (Prgram Budget) FY90-91 ABS (Amended Budget Submissin) s FISCAL YEAR 6 PB FY ABS FY *ACTUAL **APPROPRIATED The revisins t the January budget have already been discussed. These changes reduced the prc urement accunt by $723 millin (-4. 9 percent) fr FY 1990 and $919 millin (-6 percent) fr FY Prg ram terminatins include the AHIP Scut Helicpter, the M88A2 Tank Recvery Vehicle, and the AH64 Attack Helicpter (after FY 1991). The severe strm damage in May 1989 t abut 40 AH-64 aircraft at Frt Hd may cause re-evaluatin f AH-64 prcurement in the future. In that disaster, estimated damage ranges frm $600 millin t $1 billin. The five biggest ticket items in the Army prc urement budget fr FY 1990 are: 1) M1 Abrams tank series : $1, millin 2) Mbile Subscriber Equipment (MSE) : $ millin

25 3) Pa trit Air Defense Missile: $ millin 4) AH-64 Attack Helicpter (Apache) : $ millin 5) Bradley Fighting Vehicle: $635.0 millin A brief f sme f the Army's majr prcurement systems fllws : Clse Cmbat Systems: M1 Abrams Tank. The Abrams is the Army's primary ma in ba ttle tank. The current Blck I (M1A1) nw in prductin was an imprvement ver the basic M1 with a 120mm cannn, imprved armr prtectin and a bilgical and ch emical ver pressure system. This is a jint Army-Marine prcurement. Fr FY 1990 the Army is requesting 448 M1A1 tanks and the Marine Crps 155. The Blck II upgrade is scheduled t start with lng lead material in FY Bradley Fighting Vehicle. The Bradley prvides mechanized infantry with a full-tracked, lightly armred vehicle and scut and armred cavalry units with a vehicle fr screening, recnnaissance and security missins. The Army budget requests 600 in bth the FY 1990 and FY New prcurement will incrprate imprvements such as added armr prtectin, fragmentatin liners and mdificatin f fuel and ammunitin strage fr be tter survivability. AH-64 Attack Helicpter (Apache ). The Apache is the Army's premier anti-armr attack helicpter. It will cntinue at the prductin rate f 66 in bth FYs 1990 and After that, it is scheduled fr prductin terminatin. Fire Supprt Systems: Multiple Launch Rcket System (MLRS). This free flight, multiple launch rcket system has primary missins f cunterfire and suppressin f enemy air defenses. It supplements cannn artillery fires by delivering large vlume f fire against critical targets. The budget requests the prcurement f 24, 000 rckets fr bth FY 1990 and FY Planned develpment fr the MLRS System includes the Terminal Guida nce Warhead (TGW), a chemical warhead, Sense and Destry Ar mr Munitin (SADARM), and the Army Tactical Missile System (ATACMS). M109 Hwitzer Imprvement Prgram (HIP). This prvides majr imprvements fr Ml09 155mm self-prpelled hwitzers which are the primary indirect fire supprt t brigades in mechanized and armred divisins. Mdificatins will ffer nbard fire cntrl and a psitining/navigatin system which will allw the guns t perate independently. The prgram started with lw rate prductin f 19 kits in FY Frty kits are prgrammed in FY 1990 and 163 kits in FY Army Tactical Missile System (ATACMS). ATACMS is a cnventinal semi-ballistic missile t be fired frm the existing RS launcher. It is designed t engage imprtant land targets at ranges beynd the capability f existing cannns, rckets r the Lance missile

26 system. Lw-rate initial prductin started in FY Full-rate prductin will start in FY 1990 with prgrammed prductin f 152 missiles increasing t 452 in FY Air Defense Systems: Patrit. A lng range surface-t-air missile system, the Patrit is the centerpiece f the theater air defense system. It prte cts against medium- t high-altitude threats. It has fast reactin time, multiple engagement capability and the ability t perate in a severe electrnic envirnment. The Army bud get requests 815 missiles in FY 1990 and 817 in FY Frward Are a Air Defense System (FAADS) Line f Sight-Frward-He avy (LOS-F-H). LOS-F-H is intended fr clse air defense f frward tactical frces against helicpte r and fixed wing aircraft. It is munted n a tracked vehicle t permit maneuver with frward cmbat frces and t supprt the Army 's heavy divisins. After cmpetitin, the Oerlikn/Martin Marietta Air Defense An ti-tank System (ADATS) was selected. The Army budget requests prcurement f 190 in FY 1990 and 263 in FY Nn Line-f-Sight (NLOS). Th is Fiber Optic Guided Missile (FOG-M) is an an ti-helicpter, anti-tank system des igned t defeat target s masked by terrain. See discussin under Research and Develpment. Prcurement fr 263 missiles is requested fr FY Line f Sight-Rear (LOS-R). This is a pedestal munted Stinger, which prvides a highly mbile line-f-sight system fr lw altitude defense against helicpters and fixed wing aircraf t. It uses a prven Stinger missile and has a day and night capabi lity. It is intended primarily fr the divisin rear area. The Army budget requests the prcurement f 122 units in FY and 132 units in FY Cmbat Supprt Systems: UH-60 Helicp te r (Black Hawk). Black Hawk is th e Army's primary tactical lift helicpter. Over 1000 have been delivered t the Army. A new mre pwerful engine was added starting in FY The Army has requested 61 aircraft fr bth FYs 1990 and Armred Cmbat Earthmver (ACE). The ACE is a highly mbile, armred earthmving vehicle that can dig, dze, haul and scrape. It prvides sme peratr prtectin and can perfrm these tasks with the frward cmbat elements, having the mbility t ke ep pace with ther fighting systems n the battlefield. Th e Army seeks funding fr 132 ACE vehicles in bth FYs 1990 and Cmmand and Cntrl: Mbile Subscriber Equipment (MSE). MSE is an area cmmunicatins system which will be fielded in crps and divisin areas. It prvides secure vice, data and facsimile service t enable exercise f cmmand and cntrl ver frces in a rapidly changing

27 battlefield e-nvirnment. The Army budget requests funding in the amunt f $984.7 millin in FY 1990 and $68. 6 millin in FY Selected Prcurement Items FY 1989 Actual Qty/Amt ($mill) FY 1990 Amended Budget Qty/Amt($mill) FY 1991 Amended Budget Qty/Amt ($mi ll) Aircraft AH-64 Attack Helicpter (Apache) 72/ / / Army Helicpter Imprvement Prgram L -60 Helicpter (Black Hawk) 72/ / / Missiles Nn-Line f Site Missile / Air Defense Heavy (Line f Sight-Frward) 60/ / / Ravk Missile System 358/ / 48.5 Patrit 815/ / / Stinger 6,750/ ,375/ ,203/ Line f Site-Rear Fire Unit 100/ / / Bdlfire 6,000/ ,102/ ,002/ TOW 2 12,000/ ,455/ ,284/ MLRS 48,000/ ,000/ ,000/ Army Tactical Missile System 66/ / / Weapns and Tracked Cmbat Vehicles Bradley Fighting Vehicles 581/ / / Ml Abrams Tank Series 555/1, /1, /1,179.6 Kl09 155mm Bvitzer Mdifica- tin 19 Kits/ Kits/ Kits/ Ammunit in (Ttal Apprpriatin) 2, , ,574.0 Other Prcurement High Mbility Multi Purpse Wheeled Vehicle ( HMH\/\1) 5,575/ ,517/ ,484/ Family f Medium Tactical Vehicles 786/ 78.0 Family f Heavy Tactical Vehicles 112/ / Mbile Subscriber Equipment (MSE) SINCGARS Radis H9 Armred Cmbat Earthmver (ACE) 132/ / /

28 Research and Develpment The Army RDT&E apprpriatin requests are $5. 7 billin fr FY 1990 and $6.0 billin fr FY Army RDT&E has remained relatively level since FY 1985 at a little mre than six percent f the Army budget. There has been mdest grwth starting with FY 1989 and RDT&E is nw prj ected at 7.2 percent f the Army budget fr FY It is, hwever, much smaller than the Navy, Air Frce r Defense Agencies by a factr f mre than 2 t 1. Als, ver 21 percent f Army RDT&E spending ges fr defense missin supprt t include the Kwajalein Missile Range, Army test ranges and facilities, and base peratins type supprt fr RDT&E activities. The Army recently reviewed its technlgy base in depth. As the resu lt, it pr duced a significant dcument; The Ar y Technlgy Base Master Plan, which cntains the Technical Rase Investment Strategy. Recgnizing that basic technlgy is the seed crn fr the future and that its funding level has declined v er the past 15 years, the Army established a funding flr fr basic research and explratry develpment t ensure n further degradatin in real terms. This is reflected in the am ended budget. Highlights f selected Army systems in the amended RDT&E budget include: The Army was designated as the executive agent fr the kinetic energy Anti-Satellite (ASAT) prgram and funds in the am unt f $94. 6 millin fr FY 1990 and $124.3 millin fr FY 1991 were shifted t the Army fr this purpse. Army RDT&E funding was increased during the budget revisin prcess fr FYs 1990 and 1991 t ac celerate the research and develpment n TOW-2 and additinal mney was granted in FY 1991 t fund live fire testing fr the Air Defense Anti-Tank System (ADATS). The amended budget supprts the cntinued develpment f the Light Helicpter (LHX), key t the Army Av iatin Mdernizatin Plan. This is budgeted fr $209.4 millin in FY 1990 and $406.3 millin in FY Added t tlais is engine develpment funding f $5 5.3 millin in FY 1990 and $47.6 millin in FY Engineering develpment f the Fiber Optic Guided Missile (FOG-M) as part f the nn-line-f-sight Air Defense System cntinued at the riginally requested amunt f $39.3 millin in FY 1990 and $98. 3 millin in FY This is a lng range anti-helicpter system that can defeat targets masked by terrain and beynd direct fire range. The Sens e and Destry Armr (SADARM) system was supprted fr engineering develpment t the extent f $155 millin in FY 1990 and $ millin in FY This is a sensr-fused artillery munitin designed fr emplyment agains t statinary, lightly armred vehicles. It is designed fr us e with bth 155mm artillery and MLRS. Testing is sched uled t take place during FY