President Reagan is using the nation's stockpile of critical materials to reduce the budget deficit instead of building it up in case of emergency as he promised, the General Accounting Office says in a report soon to be made public.
The watchdog agency's report was requested by Sen. Carl Levin (D-Mich.), a member of the Senate Armed Services Committee, who is expected to demand an investigation of Reagan's management of the National Defense Stockpile.
The stockpile of scarce materials--including chrome, nickel and titanium needed to manufacture missiles, jet airplanes and other weaponry--is intended to prevent the United States from being caught short in wartime.
On March 13, 1981, Reagan said he was making the first "overdue addition" to the defense stockpile and would make more. He reaffirmed this pledge to Congress on April 5, 1982, declaring that his additions to the stockpile demonstrated a "serious commitment to enhance significantly the national security."
But the GAO reports that Reagan has allowed money gained from selling excess metals in the stockpile to pile up in the federal treasury, where it helps lower the government's deficit, rather than use it to buy materials still needed in the stockpile.
"It appears that the administration has given priority to budgetary considerations over national defense-related needs," the GAO states in its seven-page report on the recent handling of the stockpile. "We found no apparent attempt within the administration to correlate the budget with either the president's March 13, 1981, statement or the April 5, 1982, program plan."
Reagan said in the March statement, "I am today directing the Federal Emergency Management Agency to begin the first purchase program for the National Defense Stockpile of strategic and critical materials in over 20 years. These purchases of strategic materials, estimated initially at $100 million, are a step to restructure the existing $15 billion stockpile in critical areas of deficiency. . . . It is expected that larger purchases will be made as funds from sales of excess materials build up in the stockpile fund."
The GAO says Reagan's management of the stockpile also is at odds with past congressional instructions. It notes that the House Armed Services Committee report accompanying the 1981 budget reconciliation act said that no more than $500 million from stockpile sales should be accumulated by the Treasury Department. The committee said that the stockpile was "to serve the interest of the national defense only and is not to be used for economic and budgetary purposes."
If money continues to accumulate in the stockpile's Transaction Fund at current rates, the Treasury Department will have more than $500 million by the end of fiscal 1983, the GAO said, and the fund would have $1.8 billion by 1987, or $1.3 billion above the congressionally imposed limit.
GAO says that White House budget officials have directed the Federal Emergency Management Agency (FEMA) to make its blueprint of purchases and sales of war material conform to the president's budget, not to the master plan for improving the defense stockpile.
White House Office of Management and Budget officials told GAO investigators that they opposed the $500 million ceiling mandated by Congress and probably would seek to have it lifted as part of the fiscal 1984 budget process.
Although the GAO report contains no responses from the administration, the agency says an OMB official at the General Services Administration, which does the buying and selling for the stockpile, said the White House did not earmark more than $120 million in fiscal 1983 to for stockpile purchases because the items still under established goals for supply are " 'low priority.' "
GAO terms that explanation "questionable." The agency says it and FEMA believe that the United States "appears vulnerable to supply disruptions or sharp price increases" of these metals and minerals still at inadequate levels in the stockpile: bauxite, chromite and chromium metal, columbium concentrates, nickel, platinum and titanium.
"Over $450 million is needed to meet the Jamaican grade bauxite goal alone," GAO said.
The management, practicality and future of the defense stockpile have been a thorny issue for years. Its commercial market value is about $12.56 billion, not counting the opium contained in it for medicinal use.
Some critics believe it is high time to sell off more of the stockpile and contend the real purpose of holding some of the metals is to support declining mineral prices. Other critics question whether a mountain of war goods can be accumulated and maintained efficiently.
Last year Reagan announced that silver would be sold from the stockpile. The silver sale was expected to bring in $500 million, and the proceeds were to be used to buy more critically needed materials, starting with $100 million worth of cobalt.
Silver-mining firms, however, opposed dumping the projected 140 million ounces of stockpile silver on the market, fearing a precipitous drop in silver prices. The Reagan administration was scheduled to announce July 1 whether it would go ahead with the silver sale but did not do so, and a study of ways to dispose of the silver is still pending.