Pentagon budget - the hunt for savings

Faced with federal deficits nearing 12 digits and the largest peacetimE defense buildup in United States history, Congress has voiced in loud and clear bipartisan tones its desire to cut President Reagan's proposed $258 billion Pentagon budget authorization for fiscal 1983.

The knottier questions now are ''where'' and ''how much.''

Administration officials insist that their spending plans are tight and well thought out, with no room for ''easy cuts.'' Other defense analysts are not so sure.

One analyst who has worked on defense spending plans for three administrations (including Mr. Reagan's) says there is $8 billion to $10 billion in ''cut insurance'' built into this budget, a sum that has been added since the White House first drafted spending plans for 1983 last fall.

''They've added tons of money to what the President approved in September,'' this source says. ''I have a feeling they'll take the $8 billion to $10 billion in cuts - everybody will scream, 'national security, national security' - and they'll come out roughly where Reagan was in September.''

The President's Council of Economic Advisers and a joint economic subcommittee in Congress have reported that the proposed defense buildup could have adverse economic effects.

The Heritage Foundation, a conservative and very prodefense group, reports that ''as much as $10 billion annually could be saved if (Defense Department) operations were streamlined to reduce waste and inefficiency.''

Since Reagan's proposed budget was released Feb. 6, there has been no lack of serious suggestions on how defense spending could reasonably be reduced.

''Many people, conservatives and liberals, Republicans and Democrats, are convinced that reductions can be made without jeopardizing our security or surrendering our commitment to increased defense efforts,'' says Sen. David Durenberger (R) of Minnesota. ''And there is a widespread belief that every possible reduction that can safely be made must be made, given the perilous state of our economy.''

Senator Durenberger has outlined Pentagon cuts of $26 billion to $53 billion over the next five years.

Rep. Les Aspin (D) of Wisconsin, a former Pentagon analyst, has detailed more than $10 billion in savings that could be made in 1983 alone.

The bipartisan Congressional Budget Office, in its annual report to Congress, recently outlined possible defense savings of $14 billion in 1983 budget authority that would total some $64 billion through 1987.

Pentagon officials argue that cutting out ''big ticket'' items, such as aircraft carriers and other expensive new hardware, would have little effect on the 1983 deficit because most of the money authorized is spent in later years. Representative Aspin agrees, noting that 12 percent of the money for new weapons is spent the first year (only 2.4 percent for ships), compared with 83 percent for operations and maintenance.

Faced with this situation, Congress has historically aimed its cuts at these latter categories, which affect readiness and sustainability. This might be the case again this year if the projected federal deficit were a one-year problem.

But MIT economist William Kaufmann notes that by the administration's own estimate deficits are expected to remain high for at least three or four more years. Mr. Kaufmann, who has worked on Pentagon budgets and posture statements for five previous administrations, says this justifies reducing these ''big ticket'' items, if only for economic reasons.

But he adds that it would also help the defense budget process immensely if the President were to begin a smaller but more evenly paced buildup rather than the 13 percent in increased spending authority sought by the Reagan administration for the coming year.

''It's a very long-term problem,'' says Kaufmann. ''We force ourselves into doing things in fits and starts. We just don't pace things very well. Wall Street needs to be given a sense that not only is a cutback being made in the deficit for '83, but that this is part of a trend over whatever period it takes.

''Seen from this viewpoint, cuts in major defense hardware become much more attractive. Kaufmann says $150 billion can be reduced in defense budget authority over the next five years in ways that would maintain adequate national security and stable defense growth.

The following is a compilation of suggested defense cuts from Durenberger, Aspin, Kaufmann, the CBO, and the Pentagon itself:

* Cancel the B-1B bomber and ''leapfrog'' to accelerated development of the Advanced Technology (''Stealth'') Bomber. Meanwhile, increase the number of B-52 s on alert and proceed with cruise missile conversion of this workhorse aircraft. The CBO figures this would save about $24 billion in budget authority over five years. The Air Force says the upgraded B-52s could continue as a conventional bomber and cruise missile carrier until the year 2000.

* Reexamine plans for five new F-15 fighter squadrons and six AWACS aircraft assigned to strategic air defense. Most Soviet nuclear warheads are in land-based ICBMs and submarines, and the Soviet bomber force is relatively small. Proposed spending here, including a civil-defense buildup, is $23 billion over six years.

* The administration wants to spend more than $4 billion on the MX missile in 1983, but has changed its mind several times on where the new strategic missile should be housed. ''It makes no sense to push ahead with funding for a missile without a home,'' says Aspin, who suggests cutting 1983 MX outlays by just under

* Slow Navy shipbuilding, especially the two new nuclear aircraft carrier battle groups. The two carriers will cost about $7 billion, but when aircraft and support ships are added, the cost more than doubles. Building conventional rather than nuclear carriers would save about $1 billion, says Durenberger. The Congressional Budget Office says $37 billion could eventually be saved by centering the new battle groups on four reactivated battleships, which would give the US a larger presence on the seas sooner, as well as cost less.

* The Navy could build some diesel-electric submarines rather than all nuclear subs (which cost four times as much). Swapping 20 diesel-electric subs for 10 of their nuclear counterparts would offer some tactical advantages and save more than $4 billion, the CBO estimates.

* Increases in military pay and allowances have totaled about 30 percent over the last two years. The Reagan budget includes another 8 percent raise. Holding this to the government-wide rate of 5 percent and canceling subsidies to commissaries and PXs would save nearly $2 billion in 1983. Longer-range savings could be realized if cost-of-living raises for military retirees were limited.

* The Reagan plan includes sharp increases for building up the war reserve of sophisticated (and in some cases controversial) conventional weapons. Kaufmann says a rush to build expensive new munitions could result in early obsolescence and a continuation of the ''boom-bust'' cycle that troubles defense contractors. Other likely conventional weapons targets are the M-1 tank, AH-64 Apache helicopter (with its ''Hellfire'' laser-guided missile), and F/A-18 jet aircraft , all of which have suffered large cost overruns.

* The Defense Department says its budget includes $1 billion in 1983 savings ($31 billion for 1981-87) from cuts in internal operations costs. These include travel, consultants, audio-visual equipment, and converting 6,000 civilian Pentagon jobs to private contract. Congress no doubt will push for more ''odds-and-ends'' savings of this type, as well as more ''acquisition reforms'' that the Pentagon claims will save nearly $14 billion through 1987.

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