CHARTS ON INVESTMENTS AND ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001002540009-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 28
• Document Creation Date: December 20, 2016
• Document Release Date: May 29, 2007
• Sequence Number: 9
• Content Type: MISC

0 Approved For Release 2007/05/3 -RDP84BOO049RO01002540009-6 0
THE OMB PROPOSAL COULD CREATE THE
WORST OF ALL WORLDS
? CAUSE US TO FALL FURTHER BEHIND THE
SOVIETS
? EXPAND WINDOW OF VULNERABILITY
? UNDERMINE FOREIGN POLICY
AND NOT SOLVE FY 84 DEFICIT PROBLEM
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I~"r:" referred ti::::?:~ ) - On file
release instructions :.7pl .
 ?
350
DOD VIEW
-
INVESTMENT G
(CONSTANT FY '82 BILLIONS OF DOLLARS)
300
250
200
150
100
RECOUPMENT
AI
AJ
LOSS
FY '50 FY '55 FY '60 FY '65 FY '70 FY 75 FY '80 FY '85
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?
FY FY
'90 '92
 Approved For Release 2007/05/30: CIA-RDP84B00049R001002540009-6
3:
W
?
Approved For Release 2007/05/30: CIA-RDP84BG0049R_0.01002540009-6
 Adak Approved For Release 2007/05/30 W-RDP84B00049RO01002540009-6
uture Goal - 1985 and Beym
weak economy, weak defense, weak nation
New policies
Sustained national economic growth and
prosperity, restoration of military power,
1. Weak National Economy
? 2.4% real growth compared to 4.6% in 1960's
? Double digit inflation, depreciating dollar and
monetary disorder
? 0.3% decline in productivity (1977-80)
compared to 3.0% growth historically
? Decline of investment, technological
momentum and international competitiveness
? Absolute fall in after-tax living standard
compared to 4.0% growth in 1960's
? Ballooning social safety net expenditures
II. Deteriorating Defense
? 5% of GNP on defense
? Loss of strategic margin of safety
? "Hollow Army," low readiness, decline in
manpower quality, training and pay
? Drastic decline in 'size and capability of Navy
? Inadequate general purpose force capacity to
fulfill foreign policy commitments and meet
global contingencies
1982-84
Reagan
economic
recovery.
program
Reagan
defense
rebuilding
program
permanent national strength
III. Strong Economy and
Permanent Prosperity
? 4-5 percent real growth each year
? Inflation less than 3 percent and stable dollar
? High rates of savings, investment, technological
advance and productivity gain
? 3-4 percent annual increase in living standard
? Shrinking social safety net
IV. Strong Sustainable
National Defense
? 7-8 percent of GNP committed through 2000
to long-haul struggle with Soviets
? Permanent strategic margin of safety
Modern, 600 ship - 3 ocean Navy
? Modem land and air general purpose forces,
multiple-theatre capability, rapidly deployable
forces
? Readiness and sustainability investment to
meet all foreign policy and global security
objectives
page.4
 FROM?AFB.J RPO1NTOOF5VI J
BOUT 94 PERCENT OF CURRENT PLANNED DOD OUTLAYS OVEAD
FY '82-86 CAN BE ACCOMMODATED WITHOUT UNACCEPTABLE DEFICIT AND
ECONOMIC RISK - BUT DEFICIT THREAT IS SO SEVERE THAT ALL AGENCIES
MUST SHARE IN THE RESTRAINT
(BILLIONS OF DOLLARS)
327.4
290.4
253.2
220.6
183.8
132.8
FY '80 FY '82 FY '83 FY '84 FY '85 FY '86
? DOD Share of Restraint
^ Current Plan Funded
Page 5
 Fli6M Abtek Q ~0,99mw
MwNwfbollvi
THE SLOWER GROWTH ALTERNATIVE PROVIDES
-- ~o REAL GROWTH ---THROU-G- H_FY '87
(BILLIONS OF DOLLARS)
297.4
266.8
7% REAL GROWTH PATH
235.0
FY '81 FY '82 FY '83 FY '84 FY '85
?
369.4
FY '86 FY '87
Page 6
 ? Approved For Release 2007/05/3 -RDP84B00049RO01002540009-6
THE FY 81 DEFENSE BUuqm WAS INADEQUATE
BUT NOT AN ARTIFICIALLY LOW BASE - IN FACT
IT PROVIDED THE HIGHEST PEACETIME REAL FUNDING
LEVEL SINCE THE EARLY 1960's
(CONSTANT FY'82 BILLIONS OF DOLLARS)
191.6
175.0
171.9
Mn
FY '64
166.1
167.2
FY '73 FY '77
166.9
FY '78 FY '80 FY '81
Pace 7
 Approved For Release 2007/05/3 RDP84B00049R001002540009-6
THE SLOWER GROWT LTERNATIVE FUNDS
A FIVE YEAR PATH TO UNPRECEDENTED REAL
DEFENSE INVESTMENT LEVELS
(CONSTANT FY '82 BILLIONS OF DOLLARS)
Slower Growth
Alternative
Peak Korean
War Budget
Peak Pre-
Vietnam Budget
FY '51-52 FY '63 FY '68
Peak Vietnam
Budget
Outgoing Ford
Budget
Last Full
Carter Budget
FY '78 FY '80 FY '86
 SHOULD 6~`I~~eZ;~iN~~P~~-?E-~.~bNMENT+
BEGIN IN FY '82 OR FY '83
PRO
? To hold line on FY '82 deficit we must propose 10-15% cut in $134 billion of domestic
appropriated programs.
? These cuts will produce funding levels well below the authorization ceilings Congress
has already approved.
? Politically it will be difficult to cut FY '82 domestic programs for second time if no change
in defense.
? FY '82 defense request of $221.3 billion represents $79 billion or 56% increase since FY '80...can
be tapered to $66 billion or 46% increase.
? Under budget deficit and interest rate pressure and veto threat on domestic appropriations
Congress is likely to reduce FY '82 defense appropriation on its own.
? As technical matter outlay savings of $12 billion and $16 billion in FY '83 and FY '84 cannot be
achieved without severe start/stop program disruption - due to slow first year spend-out
rate of discretionary TOA.
CON
? Could provide misleading signal to allies and adversaries.
? Both Houses have passed FY '82 defense authorization bills by wide margin.
? Could encourage Congress to cut further to unacceptable levels.
? Would delay start-up or dilute some planned FY '82 initiatives.
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 Approved For Release 2007/05/3 -RDP84B00049RO01002540009-6
300
$B 250
200
ST
AND NOW FROM OMB -
DEFENSE TOA
IN CONSTANT
82 DOLLARS
82
83
SECRET
84
85
86
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 ?
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SOURCE OUTLAYS
(BILLIONS OF DOLLARS)
1983 OUTLAYS
251.7
1983 Discretionary
TOA
1983 Civilian Pay
1983 Military Pay
#t Retirement
1982 TOA
1981 & Prior TOA
221.2
81.3
(37%)
16.2 (7%)
11
11
I
II
II
H
H
H
I
II
52A
(24%
r.: ,.., 46
9 - -_ -
.
,
24.4
(11%)
1984 OUTLAYS
90.0
(36%)
173 (7%)
56.7
(22%)
E
EF
~t:
m
1
1
54.6
(22%),,
17
10.3 (4%)
1984 Discretionary
TOA
1984 Civilian Pay
1984 Military Pay
& Retirement
1983 TOA
1982 TOA
1981 Ft Prior TOA
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SLOWER GROWTH ALTERNATIVE
AS ACTUALLY PROPOSED
(CONSTANT FY '82 BILLIONS OF DOLLARS)
300
?
250
N~ OHO o of ,' .' ,' , 000 ?
J`I~~ G v, / 19a~
0000
ER~'MEO-I
TU &L l2?
I A%,
cpy(TER
200
0 FY '82 FY '83 FY X84 FY '85 FY '85
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 ?
+79.1 (+55.6%)
THE DEFENSE TOA SURGE 1980-1982
(CURRENT DOLLARS)
176.2
Reagan
Amendment
Congress
Add-on
208.1
221.3
1980 1981 1981 1982 1982
Actual Carter/ Reagan SGA DOD
Congress Plan
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+65.9 (+46.3%)
+34.0 (+23.9%)
-- 171.2
 0 Approved For Release 2007/05/300-RDP84B00049R001002540009-6 .
THE DEFENSE TOA SURGE 1980-1982
(CONSTANT 1982 DOLLARS IN BILLIONS)
+49.4 0-28.7%)
+36.2 (+21.1%)
+19.7 (+11.5%)
--------------
186.1 1
Congress
Add-on
171.9
166.9
wvl
191.6
Reagan
Amendment
208.1
221.3
1978
1981
1981
1982
1982
Actual
Actual
Carter/
Congress
Reagan
SGA
DOD
Plan
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 0 SGA AAYV"i!%-it"WfRtZdI~ikAitISONS 40
TOA DOLLARS (BILLIONS)
SGA
CARTER LAMEDUCK REQUEST
CARTER ACTUAL FY '78-'81 POLICY
208.1
FY '82
235.0
FY '83
FY '84
297.4
FY '85
328.5
FY '86
Pace 15
 Approved For Release 2007/05/30 -RDP84B00049RO01002540009-6
ADERNIZATION, FORCE UCTURE AND READIN
- In a quarter trillion budget there is more than one way to shave 7% from growth path.
- A slower growth path does not require sacrificing key modernization programs.
FY '83-87 Quantities Funded
Item
Current Slower Growth Slower Growth
Defense Alternative Alternative
Plan (OMB (Military Service
Proposal) Proposals)
Land Forces
M-1 Tanks
5,270
5,270
3,693
Naval Forces
General Purpose Ships
138
115
101
P-3 ASW Aircraft
58
58
0
AV-8B Marine Attack Aircraft
228
198
0
Tactical Air Forces
Air Force Fighter/Attack Aircraft
1,192
948
844
F-16
(720)
(720)
(456)
RDF Mobility
RDF Prepositioning Ships
5
5
0
KC-10
8
8
0
Commercial Aircraft Conversions (CRAF)
19
55
0
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 Approved For Release 2007/0513 -R DP84B00049R001002540009-6
? Nor does it require sacrificing key eleme f the existing force structure and plann
readiness program.
Item
Current Slower Growth Slower Growth
Defense Alternative Alternative
Plan (OMB (Military Service
Proposal) Proposals)
1984 Force Structure
Active Army Divisions
16
16
15
Total Navy ships
614
613
596
Active Air Force fighter wings
26
26
24
B-52D bombers
80,
80
0
Titan II Missiles
53
53
0
RDF Capacity
Army brigades to Southwest Asia in
30 days (1984)
10
Pre-positioned equipment on ships
(1987)
3
Plan
ned pre-positioned Army Divisions
(Eur
ope)
6
6
Rea
diness Indicators Aircraft
Air Force mission capable rates
Navy mission capable rates
Army Ammunition Stocks (FY '87)
66% 66% 56%
61% 61% 53%
60-75 days 52-65 days 45-55 days
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 ?
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REDUCTION PROPOSED IN SLOWER
GROWTH ALTERNATIVE
(TOA Billions of Dollars)
1982
1983
1984
1. Government-wide
Pay, employment and retirement reductions
.8
2.4
3.2
II. Eliminate or Reduce Marginal Systems
5.6
7.3
7.6
Substitute lower cost armored troop carrier
.8
.7
.8
Cancel F-18
2.1
1.3
1.5
Cancel Roland air defense missile
.5
.5
.4
Cancel LAMPS MK III helicopter
.9
.8
.5
Shipbuilding
--
2.3
2.5
Other
1.3
1.7
1.9
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 ? Approved For Release 2007/05/30-RDP84BOO049RO01002540009-6 ?
1982 1983 1984
III. Other Reductions 6.8 9.0 10.4
Rapid but sustainable growth in:
- Military manpower. Limit increase to 61,000 by 1986. Satisfies all approved force
structure increases.
-Construction program. Protects all strategic, space shuttle and NATO-related construction.
Maintains general purpose construction at 1981 level.
- Non-major procurement. Reduces annual real growth rate from 18% to 16%, but still
doubles the funding in the 1982-86 period. Protects 97% of aircraft spares request.
-Army ammunition. Reduces real growth in Army ammunition from 29% to 18% per year.
Procurement in 1982-86 is still twice the preceding five years.
-O&M purchases. Reduces real growth rate for O&M purchases from 9.3% to 6.9% per year.
13% increase in 1982 fully supports all combat and training needs. Purchases in 1982-86 are
40% greater than the preceding five years.
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 READMESS A*p
TOA CONSTANT 198
55
50
46
FY '79
FY '78
FY '77
FY '80
FY '81
TBPt
LLARS (BILLIONS)
FY '82
FY '83
FY '84 FY '85
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?
101
FY '86
 ?
0000
SGA'
BASELINE
driNfooondRA
(EADINESS
TOA CONSTANT 1982 DOLLARS (BILLIONS)
ff35.6=
30.2
E29.0E
26.6
41.7
E38.8E
?
45.3
:;:'? :'fl/.?:?::r:?. ~~ mo~tt!!""
FY '77 FY '78 FY '79
FY '80
FY '81
36.9
E33.6z:~
=29.0
w.w-wiww
FY '82
E29.0E
FY '83
38.9
FY '84 FY '85 FY '86
Pace 21
 ?
App?0A S2QQ7A5i - 4M0gN Qf 02540009-6
TOA CONSTANT 1982 DOLLARS (BILLIONS)
7.6
7.2
6.5
4.6
2.4
2.5
FY '77 FY '78 FY '79 FY '80 FY '81 FY '82
FY '84 FY '85 FY '86
Page 22
 Approved For Release 2007/05130 -RDP84BOOOROO? CRITICAL*
READ SS PROBLEMS
SERVICE PROBLEM
Army - Poor recruit quality
- Inadequate numbers
of experienced career
personnel
SOLUTION SGA ALTERNATIVES
Pay and benefits increase 30% Preserves these pay
in 1981-82 with pay comparability increases
maintained thereafter
- High school graduates up
from 40% to 69% so far
this year
- Lower mental groups down
from 49% to 28%
- Career force goals should
be met in FY '82
Navy - Providing adequate - Increased sea pay and a Preserves these pay
numbers of petty $200M increase in increases
officers in the high skill reenlistment bonus program
and sea-going ratings should remedy skill
imbalances ? -
- Career force goals should be
met by FY '82. Career
reenlistment rate up from 68%
to 75% so far this year
Air Force - Failure to achieve Increase funding for aircraft Funds 97% of -DOD
desired flying rates spares to $14.4B over 1982-86 plan over
due to spare parts versus $6.0B over 1977-81 ($82)
shortages Nominal increase for 1980-82
is $2.5B
Page 23
 ?
WHAT SLOWER GROWTH ALTERNATIVE
(SGA) WOULD BUY
1) Total Defense Program Resources, FY '82-86
? $1.34 trillion over five years compared to $1.45 trillion in current
DOD plan.
? $191 billion more than continuation of low-growth Carter policies
of FY '77-81.
? FY '86 defense budget 38 percent larger in real terms than
Carter FY '81. Defense budget grew only 9.9 percent in real terms,
FY '75-81.
? Defense budget share up from 23.7 percent in FY '81 to
33.2 percent by FY '86.
2) Strategic Modernization - Full Funding
? $154 billion over five years including new bomber, MX missile
system and Trident modernization.
? No change from current DOD guidance.
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0 3) Readiness and Sustainability - id Growth
? 43 percent increase in OFtM purchases and small procurement in
FY '82. Much of this eliminates 1-time backlogs or spares pipeline
shortages - providing additional free funds after 1982 for other
unmet needs.
? Double annual funding level - from $48 billion (FY '81) to $109
billion - by FY '86.
? 11 percent annual real growth rate compared to only 2.8 percent
during Carter period.
? 22 percent annual real growth rate for modifications, spares and
support. Mission essential needs recieve top priority; others
deferred or stretched out.
? 18 percent annual real growth rate for Army ammunition.
1982-86 program in constant dollars is more than double the
FY '77-81 actual program.
? 15 percent annual real growth rate for communications and electronics.
Is.
4) Military Pay Incentives
? Full 14.3 percent pay increase in 1981 and same as DOD guidance
thereafter.
? By FY '86 average pay after inflation would be 14 percent higher
than 1980. Real pay declined by 8 percent in 1976-1980.
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5) Army General Purpose Modernization
? 7 percent real annual growth rate for general purpose
procurement. Protects M-1 tanks, Patriot Air Defense System,
the Blackhawk medium lift helicopter, and an 18 percent
annual increase in ammunition.
? Fund 4,800 tanks over FY '82-86 compared to 1,800 in
previous five years.
6) Navy General Purpose Modernization
? 8.4 percent annual real growth rate compared to 1.6 percent
requested by Carter in FY '77-81.
? Fund 12'attack submarines in FY '82-86 compared to 9 in
previous five years.
? Fund 15 Aegis cruisers in FY '82-86 compared to 4 in
previous five years.
? Fund 3,200 harpoon and tomahawk cruise missiles and
19,500 anti-air missiles - same as current DOD guidance.
? 25 percent increase over Carter FY '82-86 ship contruction
program.
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7) Air Force General Purpose Modernization
? $25.3 billion over FY '82-86 including accelerated procurement
of F-15 and F-16 aircraft.
? 930 fighter aircraft funded in FY '82-86, 75 percent more than
the number in the Carter January budget.
? Funds 45,500 tactical air-to-air and air-to-ground missiles - a
15 percent above January budget.
8) End-Strength Turn-Around
? Increases service end-strength to over 2.1 million by FY '84 -
94,000 increase from low 1979 levels.
9) RDTE
? Provides $43.4 billion in FY '82-83 compared to $29.6 in Carter
FY '80-81 budgets - a 47 percent increase.
? Funding for FY '83-86 same as DOD guidance.
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i .
SUMMARY OF DIFFERENCES
CURRENT DOD PLAN VS. SLOWER GROWTH ALTERNATIVE
Item FY '82 FY '83 FY '84 FY '85 FY '86
Outlay Path:
1) Current DOD plan .......... 183.8 220.6 253.2 290.4 327.4
2) Slower growth alternative .... 180.0 209.2 236.9 269.8 299.3
3) Difference ................ 3.8 11.4 16.3 20.6 28.1
TOA Path:
4) Current DOD plan .......... 221.3 253.7 288.0 325.1 366.0
5) Slower growth alternative .... 208.1 235.0 266.8 297.4 328.5
6) Difference ................ 13.2 18.7 21.2 27.7 37.5
Compound
Growth From
TOA Real Growth Rates: Carter FY 181
7) Current DOD plan .......... 18.9 7.3 7.0 7.0 7.0 9.4
8) Slower growth alternative .... 11.8 5.7 7.0 5.7 5.1 7.0
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