The defense budget debate is coming to a head in Congress. While the administration has requested 10 percent real growth in the defense budget, both houses of Congress have now made it clear they seek lower targets. The House has voted for a 4 percent real growth rate, while the Senate Budget Committee has now called for a 5 percent rate.
The goal of such restraint is to halt skyrocketing federal budget deficits, projected by the Congressional Budget Office to reach a total of $1.2 trillion over the next five years.
Both the House and pending Senate budget resolutions fall short of making a real contribution to the goal of deficit reduction. Five percent real growth in defense, as called for by the Senate Budget Committee, hardly lowers deficits at all. While a 4 percent growth rate makes some contribution, greater restraint is needed to tackle the problem of defense and the deficit. Neither resolution restrains the rapid growth in weapons spending, which will drive the defense budget even higher in the future.
Compared with the spending targets set in last year's congressional budget resolution, 5 percent real growth saves only $20 billion over the next five years in projected federal deficits, according to CBO. This is only one-twentieth of the minimum $400 billion deficit reduction CBO has called for. It clearly means that, on the spending side, social programs would continue to bear the lion's share of the budget-cutting burden.
A 4 percent growth rate adds another $30 billion to deficit reduction over the next five years. A 3 percent real growth rate in defense would make a substantial contribution to deficit reduction--$81 billion over the next five years, or 20 percent of the CBO's total. Cuts in domestic programs would remain deep, but, with increases in tax revenues, the pressures would be much less intense.
The more serious problem with both budget resolutions is that they do not restrain the motor that is pushing the defense budget inexorably upward--the procurement of new weapons. Procurement is by far the fastest-growing part of the defense budget. Though the administration has claimed that its defense program focuses on readiness, actual spending for operations, maintenance and personnel will decline as a proportion of total defense spending for the next three years from 64 percent to 50 percent, while procurement and research and development rise from 33 percent to 43 percent.
This uncontrolled rise bodes ill for future deficit control. If weapons spending is not reduced far below the administration's request, defense spending will grow even faster in the future than now projected. New budget authority for weapons means steep increases in weapons outlays in the next four years. Over three-quarters of the spending on a weapon occurs in the second, third and fourth years of the program, the very years for which such spending is hard to project.
In the past three months, the Heritage Foundation, the Defense Department Office of Program Analysis and Evaluation and the Air Force have all noted that weapons costs are spinning out of control. The Bradley Infantry Fighting Vehicle and the F18 fighter, for example, total $2 billion in the FY 1984 budget request. Outlays in both programs will grow rapidly in the future, and each is running more than three times the original projected costs.
A close scrutiny of the Defense Department's procurement reforms--the so- called Carlucci initiatives--shows that they will fail to control this cost problem. They have led to early increases in spending on weapons, while decentralizing program administration, reducing the visibility of cost problems. Worse, they introduce no new cost-control measures in the Pentagon. A procurement process out of control makes Pentagon spending projections for the next five years wildly unrealistic.
Large increases, moreover, will drive up the rest of the defense budget. The wide range of new systems all entering the inventory in the near future will force the Pentagon into larger requests for operations, maintenance and personnel in the future than now projected. Keeping up readiness of the new systems will require more people, spare parts and repairs.
The procurement account must be restrained if the defense budget--and the deficit--are to be controlled. Lower rates of growth--3 percent or less--are far more effective in achieving this goal. Since the House resolution would restrain all pay increases for civil servants and military personnel to zero real growth, 4 percent real growth for defense would mean that non- pay-related spending, especially procurement, would actually grow about 6 percent in real terms. Rates of 3 percent begin to constrain non-pay spending and procurement and force the Pentagon to establish cost control and real defense priorities.
Three percent may not be a perfect number, but it is far preferable to the higher numbers now under discussion. It contributes more to deficit reduction and begins the urgent process of restraining the procurement account at the heart of the defense budget.