The Reagan administration abruptly announced yesterday that its defense program will cost $2.1 billion less next year than estimated before. The surprise reestimate enabled the Senate Armed Services Committee to stick close to congressional spending targets without cutting out some B1 bomber funds, as it had planned.
To comply with the just-passed congressional budget resolution the committee had been expected to deny the president authority for multiyear procurement of the B1.
But just hours before the scheduled vote, Chairman John G. Tower (R-Tex.) came up with a letter from Office of Management and Budget Director David A. Stockman saying new inflation estimates had cut next year's estimated defense costs by $2.1 billion.
Tower quickly moved to accept the reestimates, then to earmark $888.7 million of the dividend to finance several years of B1 production in advance. "They clearly didn't have the votes for multiyear procurement of the B1," an angry Sen. Edward M. Kennedy (D-Mass.), a new member of the committee, said last night of Tower and his allies.
"I am appalled by this flimflam. The defense authorization bill as it now stands is the product of shameless budgetary manipulation."
Kennedy and several other members, including some Republicans, protested heatedly behind closed doors, participants said, that allowing last-minute OMB reestimates to wipe out program reductions carefully crafted by subcommittees would undercut the whole committee process.
"What did you know and when did you know it?" was a question which ricocheted around the committee room, sources said, at times giving what some called a Watergate atmosphere to the markup of the Pentagon's fiscal 1984 authorization bill. These are usually gentlemanly affairs.
The Pentagon had earlier said there would be some savings this year from lower inflation, particularly in fuel costs. Stockman's new letter, dated Monday, said the OMB now is anticipating a further $2.1 billion reduction in costs as inflation recedes.
He attributed $600 million of this to a new inflation estimate on major weapons systems--6.1 percent instead of January's 6.9--and $1.5 billion from a reestimate of inflation on other items from 5.3 to 4.7 percent. Those savings were expressed in budget authority--money authorized in one year but often spent over several. The predicted reductions in actual spending were $200 million on the major items and $800 million for the rest.
Stockman did not appear before the committee. Sent to explain the revised estimates instead were John W. Beach and Clyde O. Glaister of the Pentagon's controller's office and Alton G. Keel Jr. from OMB. "Those guys really took a beating," said one participant in the stormy session.
After voting the $888.7 million for the B1, the committee proceeded to make additions to the authorization bill to use up most of the rest of the $2.1 billion.
These included $600 million for a 4 percent pay raise for military people, effective Jan. 1; $77.1 million for an electronic warfare version of the Lockheed P3 airplane; $59.4 million for multiyear procurement of the Boeing-Vertol CH47 helicopter; $41.8 million to increase General Dynamics' production of the Army's M1 tank; $9.9 million to develop a deep penetration battlefield missile.
These additions will cause the procurement bill to exceed the recommended budget ceilings, according to preliminary calculations, but not by much. Tower and his allies were said yesterday to be holding some of the $2.1 billion in reserve for fear the Congressional Budget Office or Council of Economic Advisers may dispute the lowered inflation projections of the OMB.
The budget resolution called for a 5 percent increase in defense spending next year over this after inflation. Reagan asked for 10 percent, and the Pentagon has refused to suggest how that figure might be reduced.
Kennedy was so angry over Tower's surprise that he went to the Senate floor and on parliamentary grounds kept the committee from continuing its markup while the Senate remained in session. This forced the committee to resume its work last night. Ultimately it did report out a bill with an estimated price tag of $185 billion.
"I thought that the hurried, last-minute, now-we've-got-the-money approach was theatrics and reduced the credibility of the Department of Defense and the Office of Management and Budget," Sen. J. James Exon (D-Neb.) said last night.
"It is strange that at the 11th hour they managed to come up with it," said Sen. Dan Quayle (R-Ind.) of the revised inflation estimates. He said Tower had been pressing for them for weeks.
Sen. Carl Levin (D-Mich.) agreed that it was not Tower who had done the manipulating, but, if anybody, the OMB and Pentagon. "The whole thing is very, very murky," he said. "Either the OMB and Department of Defense are incompetent managers or political manipulators."
"I find it hard to believe that Mr. Stockman could find money on the last day of markup for the B1 bomber when this administration hasn't been able to find any more money for inoculating children against disease," Sen. Gary Hart (D-Colo.) said. "I voted against accepting these phony funds."
"It makes it difficult, obviously, to plan intelligently what your priorities ought to be when you really don't know what the total figures are as you're going through the process," Sen. Jeff Bingaman (D-N.M.) said.
He added that the B1 was "not worth the money"--it will cost $28 billion for 100 planes--and said jumping to multiyear procurement "leads us to a higher production rate than makes sense at this time."
"I was surprised that there were additional funds, and generally wondered why we had been going to such great lengths to mark to a different figure earlier," Bingaman said.
The Air Force, which has already received authorization to buy eight B1s, wants to buy 10 in fiscal 1984, 34 in fiscal 1985 and 48 in fiscal 1986 under multiyear contracts.