WASHINGTON REPORT: "On a Path Toward Transformation"

Bush Proposes $18.4 Billion Increase To FY 2000 Defense Budget

By GORDON I. PETERSON, Senior Editor

President Bush's amended Department of Defense (DOD) budget request for fiscal year 2002 calls for an increase in defense spending of $18.4 billion to his original submission to Congress in February. Secretary of Defense Donald H. Rumsfeld announced the budget-amendment details on 27 June.

The president's increase raises his proposed FY 2002 DOD budget request to $328.9 billion and represents the largest peacetime increase in defense spending since the Reagan administration. Even the sizable add-on will not, according to the Bush administration, remedy the effects of persistent shortfalls in defense spending that occurred during the past decade. Rumsfeld acknowledged that the task of rebuilding the U.S. armed forces will be more challenging than he initially foresaw.

"The U.S. armed forces have been underfunded in a number of respects over a sustained period of years," Rumsfeld told the Senate Armed Services Committee on 28 June. "We have been living off the substantial investments made in the 1970s and the 1980s. Shortfalls exist today in a number of areas--shortfalls that I must say are considerably worse than I had anticipated when I arrived."

Deputy Secretary of Defense Paul Wolfowitz delivered the same message to the House Budget Committee (HBC) on 11 July. "We allowed our military capabilities to be slowly degraded as we overused a shrinking and underfunded force," he said. "The 2002 amended budget starts us on a path toward transformation by undertaking urgently needed, immediate repairs to our existing force, and by investing now in some of the transformational technologies and R&D [research and development] that we will need for the 21st-century force."

The Bush administration's call for higher defense spending raised concerns on Capitol Hill regarding its affordability and priorities. Some HBC Democrats suggested that the defense budget amendment, when coupled with the administration's tax cuts, would cause the government to spend the Social Security and Medicare trust funds.

Committee Chairman Jim Nussle (R-Iowa) disagreed. "This Congress will protect 100 percent of the Social Security and Medicare trust funds--period--no speculation, no supposition, no question," he said. "Our budget provides for the tax relief that's already on the way and still leaves room to fund our top priorities--including the administration's new defense budget."

"A Significantly Better Situation"

Secretary of the Navy Gordon R. England told the House Armed Services Committee (HASC) on 12 July that the president's proposed increase in defense spending will help the Navy and Marine Corps in several important ways. "The FY 2002 budget amendment represents a significantly better situation for our naval services," he said. Half of the Department of the Navy's increase--$7.9 billion over the administration's baseline for defense spending--will be devoted to shore up operations and maintenance accounts, he said, and to fully fund the Flying Hour program for aviation units.

The Department of the Navy's budget request for FY 2002 now totals $99.0 billion. The increase of more than $7 billion over last year's budget principally reflects the cost growth in the personnel and O&M (operations and maintenance) accounts. The president's proposed budget defers decisions on equipment modernization and transformation programs, however, until the completion of the DOD Quadrennial Defense Review (QDR) in September.

"This is the best readiness budget that we have seen in a decade," Chief of Naval Operations Adm. Vern Clark told HASC lawmakers. Marine Corps Commandant Gen. James L. Jones voiced similar encouragement. "The FY '02 amended budget goes a long way to correcting some of our long-term problems," he said.

While commending the Department of the Navy's leadership for recognizing the need for additional funding--and characterizing the amended budget request as "a positive, strong step in the right direction"--HASC Chairman Bob Stump (R-Ariz.) told his committee on 12 July that the Navy and Marine Corps will continue to face serious readiness and modernization problems.

England, Clark, and Jones all acknowledged that, funding increases notwithstanding, next year's proposed budget would not reverse the continued downslide in investment needed for new ships, aircraft, and combat vehicles.

The proposed FY 2002 budget would provide for a force structure of 313 ships, including 12 aircraft carriers, 53 nuclear-powered attack submarines, and 108 active and eight reserve surface-combatant warships. The budget request would increase the Navy's shipbuilding account to $13.2 billion--some $908 million more than last year's level--but that funding will provide for the procurement of only six ships, an annual building rate well below the eight to 10 ships needed to maintain a fleet of approximately 316 ships.

Jones told the HASC that the Marine Corps' procurement accounts will actually be reduced by $200 million during the year ahead.

Clark: Navy Faces "Serious Risk"

Clark, testifying before the Senate and House Armed Services Committee members on 10 and 12 July, respectively, described a Navy that has seen its operational resilience continue to erode in recent years.

"Our Navy is not breaking under stress," Clark said, "but its operational elasticity has diminished significantly. We face serious fiscal challenges due to the mismatch between mission requirements and resources. For too long, we have deferred modernization and recapitalization of the force and paid for mission accomplishment by postponing maintenance and repair of our infrastructure. This trend now poses, in my opinion, a serious risk to our future."

Responding to a 9 May request from Rep. Ike Skelton (D-Mo.) to identify the Navy's priority list for unfunded programs and requirements, Clark replied on 6 July that the amended FY 2002 DOD budget request leaves an unfunded total of $12.4 billion in Navy programs. "The FY 2002 topline," Clark wrote, "is not adequate to procure the new platforms and systems that would enable us to maintain the readiness, modernization, and recapitalization that we have sought since the QDR '97-specified force structure."

Jones wrote Skelton on 6 July to advise that the administration's addition of $400 million to the Marine Corps' FY 2002 budget had reduced its unfunded requirements to approximately $1.4 billion. "I have testified," Jones said, "that the Marine Corps, under the current strategy and current structure, requires an additional $1.8 to $2.0 billion dollars per year for the next eight to 10 years to modernize our force and to recover from the funding shortfalls of the last decade."
The cost of maintaining their aging inventories of aircraft and helicopters poses a special challenge to both the Navy and the Marine Corps. The evening before Jones's 10 July testimony to the SASC, a Marine Corps CH-46 helicopter crashed during a training exercise in North Carolina, killing three Marines. Jones told Sen. John Warner (R-Va.) that the helicopter was 35 years old and nearing the end of its extended-service life at the time of the crash.
Clark told the HASC on 12 July that the cost of naval aviation is "spiraling" out of control. "There's no way out of this other than to buy new airplanes," Clark said. The demand for the spare parts needed to repair older aircraft is increasing 9 percent per year, Clark said, and the cost to make those repairs is increasing 13 percent to 15 percent per year.

Taylor: 21 Ships Per Year Needed

Rumsfeld declined to make significant changes to DOD's modernization and acquisition programs pending the completion of his several internal defense reviews and the 2001 QDR. The result is that the Bush administration's overall funding request for DOD procurement will cause a reduction of $500 million in that account in 2002.

SASC Chairman Carl Levin (D-Mich.) voiced concern that funding for DOD's missile-defense programs will increase by $3 billion under the Bush administration's proposed budget. "Earlier this year," Levin told Rumsfeld at a 28 June SASC budget hearing, "many of us in the Senate expressed our concern that the large tax cut sought by the administration would leave little room for some essential investments, including defense."

The continued inadequate funding of the Navy's shipbuilding and conversion account is an especially worrisome trend to many lawmakers. Contrary to assertions that eight to 10 ships must be built annually to maintain a fleet of approximately 300 ships, Rep. Gene Taylor (D-Miss.) reminded his HASC colleagues in June that, even if the Navy began to build 21 ships a year in 2000, the size of the fleet would still bottom out at 268 in 2005 before the "free-fall" effect of the past decade's "shipbuilding holiday" could be reversed.

During a HASC hearing on the DOD budget request, Taylor told Rumsfeld and Chairman of the Joint Chiefs of Staff Gen. Hugh Shelton that he was "underwhelmed" by their plans for shipbuilding.

Rumsfeld sought to deflect Taylor's criticism, saying he was told that the problem in allocating higher funds for shipbuilding is "a problem unique to the shipyards." Taylor later characterized Rumsfeld's rationale as "off-base," citing a statement from the American Shipbuilding Association (ASA) reaffirming that enough U.S. shipyard capacity currently exists to build "many more naval ships" than the six ships requested in the amended FY 2002 DOD budget request.

"There are no capacity restraints to preclude our industry from building 12 ships a year to meet the Navy's stated requirement of a 360-ship fleet," ASA President Cynthia L. Brown wrote Rumsfeld on 3 July.

The Bush administration is expected to clarify its position on Navy shipbuilding requirements when the QDR is finalized during the next two months. A panel led by Edward C. "Pete" Aldridge Jr., the under secretary of defense for acquisition, technology, and logistics, is conducting a force-structure review that will address shipbuilding rates, the mix of ships needed for the future, and the Navy's role in defense strategy. "We need to do that before we lay out a shipbuilding program," Aldridge told Pentagon reporters on 27 June.

For his part, Skelton, the HASC's ranking member, told England, Clark, and Jones during their budget testimony on 12 July that the building of a 400-ship Navy should be a top priority.

Skelton closed the hearing with a history lesson. Answering Clark's rhetorical question, "What does it take to win?", Skelton offered the example of his predecessors in enacting the Vinson-Trammel Act of 1934--the shipbuilding bill that authorized construction of the 102 warships that formed the basis for the two-ocean Navy that provided the margin for victory during World War II.

"Have a goal," Skelton counseled England, Clark, and Jones. "Make a recommendation to us--not one within budget constraints, but as you see it."*

Navy to Halt Training At Vieques in 2003

Secretary of the Navy Gordon R. England announced at a Pentagon press briefing on 15 June that his recommendation to discontinue training operations at Navy ranges on Vieques island, Puerto Rico, in May 2003 had been approved by President Bush. "I am directing the creation of a panel of experts to reinvigorate our efforts to find effective alternatives to Vieques for training our forces," he said.

England's decision followed continued illegal protest activities by Puerto Rican and other activists over the Department of the Navy's use of facilities on Vieques and amid signs that the Bush administration wanted to defuse what has been a growing political problem.

As part of his approach, England said he would seek legislative relief from the current requirement, formulated by the Clinton administration, to conduct a referendum on training with the residents of Vieques. England later told the House Armed Services Committee that, while the purpose of the legislation was understandable, he found it a troubling precedent for the future.

In announcing his plan, England said, "I believe that this approach best reduces what I consider to be the greatest risk to the Navy, to our Sailors and Marines, which would be to lose the ability to continue critical training on Vieques for the next two years while we seek alternatives."

Under England's plan, the Navy and Marine Corps will continue training at the ranges on Vieques, using inert ordnance only, until 2003. "There is currently no viable near-term alternative to the facilities in Vieques," England said.

England has emphasized that a one-for-one training replacement for Vieques is not what he envisions. A combination of existing facilities, he said, coupled with improved computer-simulated training, may be needed to offset the loss of what has been described as "the crown jewel" of Navy training facilities.

Note: Sea Power will publish a special report on Vieques next month.