Impact of Pentagon efforts to tighten its spending practices
Congress this week takes up the Reagan administration's $188 billion military procurement bill for 1984. Included are such controversial items as the MX strategic nuclear missile and chemical weapons.
Lawmakers aren't expected to make massive changes in the Pentagon's list of desired weaponry. Instead, they are more likely to snip around the edges so that the final tab represents 5 to 6 percent real growth, instead of the 10 percent requested by the President.
The more vital debate may be over how the Defense Department spends money and the likely impact of that spending on the United States economy. The Pentagon's procurement procedures have a direct bearing on the final cost of a weapon system. Defense purchases account for more than two-thirds of all federal buying. That portion will continue to increase: Total defense spending for the eight potential Reagan years is projected to be about $2 trillion, so the economic results could be significant.
Defense Secretary Caspar W. Weinberger told a National Press Club audience Tuesday that the Pentagon expects to save significant amounts of money by using more efficient and economical procurement procedures. Secretary Weinberger cited multimillion-dollar savings from a new crackdown on corruption, from tightening up defense contracting, and from such management reforms as multiyear procurement and more competition.
He called these ''a campaign as important to our national security as any military campaign.'' On the same day, Deputy Defense Secretary Paul Thayer announced a ''new emphasis'' on initiatives to improve defense acquisition that were begun two years ago by his predecessor, Frank Carlucci. On Monday, Mr. Carlucci, now president of Sears World Trade Inc., said Congress was responsible for some $20 billion in higher military procurement costs because of faulty budgeting. ''The key to efficient procurement is budget stability,'' he said in a speech at the Brookings Institution.
Pentagon budgeteers say program and management initiatives reflected in the 1984 budget should save taxpayers nearly $30 billion through 1988.
But according to a recent report by the General Accounting Office, such claimed savings for the current fiscal year may have been overstated. It said significant portions were questionable or not likely to be realized. This adds to doubts about future savings.
The Pentagon's case is not helped by such things as the recent Air Force acknowledgment that the cost of a single ground-launched cruise missile jumped $ 500,000 in the past 18 months, and that total program costs have doubled during the past five years. The Air Force says this is largely because of a congressional reduction in the number of missiles to be purchased, which raises the unit cost.
The projected economic impact of increased defense buying on the nation's economy is also hotly debated.
Administration officials stress that, although economic considerations are important, defense spending should be measured primarily ''against the threat.'' In congressional testimony, however, Weinberger has pointed out to critical lawmakers how many jobs would be lost in their state if, say, the B-1 bomber were ''shot down'' on Capitol Hill.
But a new two-year study by Robert W. DeGrasse Jr. of the New York-based Council on Economic Priorities concludes that ''a rapid arms increase potentially could induce serious economic distortions and long-range damage.''
Comparing 17 noncommunist nations over a 20-year period, Mr. DeGrasse found that countries devoting a larger share of output to civilian investment experienced faster economic growth and higher productivity. By contrast, countries (including the US) that had higher rates of military spending had poorer economic performance. Using US Labor Department figures, this study finds that while each billion dollars spent on military procurement creates 28,000 direct and indirect jobs, the same money would yield 57,000 new jobs if spent on personal consumption or 71,000 jobs in education.