HIGHLIGHTS OF FISCAL YEAR 1976 BUDGET FOR DEFENSE,SPACE,FEDERAL R&D, FEDERAL GRANTS AS PRESENTED TO CONGRESS ON FEBRUARY 3, 1975 BY PRESIDENT FORD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00988R000600160041-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 12, 2016
• Document Release Date: March 13, 2002
• Sequence Number: 41
• Publication Date: February 3, 1975
• Content Type: REPORT

Approved For Releele 2002/03/25 CIA-RDP85-00988R000 P160041-5
Number 566
February 3, 1975
SPECIAL SUPPLEMENT
HIGHLIGHTS OF FISCAL YEAR 1976 BUDGET FOR DEFENSE, SPACE,
FEDERAL R&D, FEDERAL GRANTS AS PRESENTED TO
CONGRESS ON FEBRUARY 3, 1975 BY PRESIDENT FORD
SPACE PROGRAM: NO "NEW STARTS, " BUT NASA
BUDGET REQUEST UP 9% OVER FY 1975
Part 2
For the first time in at least a decade the National Aeronautics and Space Administra-
tion's budget request contains no funds for the start of any new programs. But the space
agency's projected funding for fiscal 1976, at $3, 539, 000, 000 in new obligational authority,
shows a 9 percent increase over the current year, with a $345 million net increase in its re-
search and development programs.
For fiscal 1977, the projection is for slightly over $3.6 billion, including some $50
million for new starts. NASA officials indicated that their planning for new starts ,in FY 1971
was killed at the Office of Management and Budget as a result of President Ford's_iikase bar-
ring "new spending. " However, official budget projections beyond 1977 (which are usually
understated) show NASA funding declining by about 10 percent a year.
When funding elsewhere in the Government is taken into consideration, the total.for
space activities in FY 1976 comes to well over $4 billion. The Defense Department request
includes $622 million for military astronautics, up from this year's $522 million, and.the
Energy Research and Development Administration has $31 million for space nuclear R&D as
a continuation of the former Atomic Energy Commission program in this area.
NASA Administrator James C. Fletcher termed the 1976 budget "lean but manageable. "
He pointed out that while the net total is up about $300 million from this year (about 9 percent),
about $200 million of this amount "was specifically anticipated in (the 1975) budget as required
to carry forward essential commitments built into the programs presented and approved in
FY 1975."
Thus, he said, "on an overall basis, we have an effective increase of only about $100
million, or just about 3 percent. Since we have been ex eriencin i latlon rates of over..9
ercent this is a good indicator of the leanness of NASA's FY 1976 budget and the degree to
which it has been constrained . . . "
One way more money has been squeezed out for research and development has becn to
reduce the construction of facilities--construction funding is scheduled to drop from a budgeted
$142. 6 million this year to $84.6 million.
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Copyright ?1975 by THE BUREAU OF NATIONAL AFFAIRS, INC., WASHINGTON, D.C. 20037
 r' ` kLNU. J00) SPECIAL SUPPLEMENT
lar Fug" B V* #1 'd 6c:c(:P c'W Qft 10scheduled for a
ge jump Y 1976, to $1.2 billion from this year's level of $797.5 ,million. Some offset
for this increase is obtained in a $100 million decline in the category "space flight opera-
tions, ,r representing completion of funding for the joint U. S. -Soviet Apollo-Soyuz project,
There is also a decrease in funding for the Mars Viking Lander program, which
serves to provide a net decrease in the entire lunar and planetary exploration program from
this year's $366 million to $260 million.
Launch vehicle procurement goes up from $140. 5 million to $167 million. The space
applications area remains relatively stable at $175 million, with the Landsat-C (Formerly
ERTS-C) experimental resources' satellite project given approval to proceed. There had
been concern in Congress and in the scientific community that this project might be sacrificed
to the budget squeeze.
For energy technology applications--a new line item in the NASA budget--funding
goes up from $. 4 million to $5. 9 million. NASA will work closely in this area with the new
Energy Research and Development Administration.
For aeronautical research and technology the FY 1976 funding goes to $175 million
from this year's $166.4 million. Dr. Fletcher noted that"ai.rcraft energy reduction" will
continue Abe a principal focus in this effort. He reported that NASA has already "identified
tec ologies whiclahave_the potet.ti_al_in the next 10 years to reduce the ue ree uireme_nts of
commrcla~jet aircraft by 50 percent. " If achieved by 1985 and applied to the number of
U. S. commercial planes flying today, the savings in petroleum requirements would be nearly
one-third of a million barrels per day, he said.
On the Space Shuttle, he gave the current run-out cost at $6. 3 billion, compared
with the original $5.2 billion estimate. Development will proceed on the current schedule,
he said; while some adjustments have had to be made to keep within the budget, there will
not be "another disruptive slip" as was necessary under the FY 1974 and 1975 budgets.
Budget restrictions caused NASA to defer obligations ancy-wide of $72 million in
FY 1975, with the possibility of some slippage in launch schedu es and some application
programs. Small amounts were taken from a number of space applications and lunar-
plantary projects, but no projects were suspended.
But Dr. Fletcher noted that if present inflation rates increase, "we would need to
make further program adjustments as we go along. " .
Total NASA-related contractor employment in FY 19761s expected to remain at
around the 107, 000 mark, compared with the low point of about 101, 000 in June 1974. Sup-
port service contracting is expected to continue the decline of the last several years, going
from 18, 500 this year to 17, 700 by the end of the next fiscal period.
NASA budget tables appear in Section C of this Supplement. They include "transition"
funding for the three-month period July-September 1975, before the new fiscal year of
October 1 goes into effect. The "transition" funding request is approximately at an annual
rate of $3. 6 billion.
GOVT RESEARCH: 15% INCREASE IN FEDERAL R&D
LGATINS S( GHT, LED BY DEFENSE, ENERGY
The fiscal 1976 budget contains requests for research and development funding that,
Government-wide, total $21.6 billion in obligations, an increase of about 15 percent over
1975's estimated $18.8 billion. Actual spending would come t about $20.7 billion. When
construction work on R&D facilities is included, the obligations total for FY 1976 comes to
$22.6 billion.
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Copyright 01975 by THE BUREAU OF NATIONAL AFFAIRS, INC., WASHINGTON, D.C. 20037
 ri ' `ivv. goo/ SPECIAL SUPPLEMENT (FCR) 2-3-75
up from`~S3fi$' mi7lion;`p us . ml lion for related -facilities. creased emphasis is to be
placed on "socioeconomic aspects of the nation's transportation requirements, " as well as
achievement of solutions for current problems.
Environmental Protection A enc R&D obligations are scheduled to rise from.$287
million to P00 million. In the water pollution control program, increased attention will be
given to demonstration of control technologies capable of reducing the capital and operating
costs of municipal waste treatment; investigation of the health effects of land disposal of
sludge, and other pollution control areas affecting the oceans and agriculture.
Additional effort will also be given to developing more cost effective technologies
for small water supply systems.
Department of Commerce will increase its R&D obligations by $19 million, to $230
million. Increases are provided for the National Oceanic and Atmospheric Administration
as well as for the National Bureau of Standards. For the Maritime Administration, the
emphasis in 1976 will be on improvements in shipbuilding methods and equipment, and
development of shipping operations information systems.
GRANTS: AID TO STATE, LOCAL GOV'TS PUT AT
$56 BILLION; PRESIDENT CALLS FOR CHANGES
Funding for direct federal aid to State and local governments is expected to total
$56 billion in fiscal 1976, up $3 billion over the current year.. President Ford, in trans-
mitting his new budget to Congress, emphasized that the growth of domestic assistance
programs cannot continue to expand at the rates experienced. Over the past two decades,
and redoubled efforts must be made to "rationalize and streamline these programs.
Federal aid will finance about 22 percent of all. State and local government expendi -
tures in 1976, according to an analysis by the Office of Management and Budget (Special
Analysis 0), and will represent 16 percent of total Federal Government outlays. In 1965,
grants were only 9 percent of the budget and 15 percent of Stuate and local expenditures.
The President declared that continued growth at the present rate would put federal
spending for domestic assistance programs at more than half the national output. He also
observed that these programs have grown "in a largely unplanned, piecemeal fashion, " and
that "rationalizing and streamlining" them will mean "working toward a stable and integrated
system of programs that reflects the conscience of a compassionate society but avoids a
growing preponderance of the public sector over the private."
It also means, he said, decentralizing Government operations and developing a
closer partnership among the Federal Government, State and local governments, and the
individual private citizen.
The Department of Health, Education, and Welfare will continue in fiscal 1976 to
be far and away the largest dispenser of federal aid, but the upward growth trend is halted
in the Administration's estimate for the coming year, at $20.2 billion, down $300 million.
The largest increase is exhibited by the Department of Housing and Urban Development, to
$4.6 billion from this year's $3.3 billion. Environmental Protection Agency expenditures
stand about level at $2.4 billion, while Department of Transportation goes from $5. 9 billion
to $6. 2 billion.
Expenditures by agency are as follows: (Text)
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Copyright ? 1975 by THE BUREAU OF NATIONAL AFFAIRS, INC., WASHINGTON, D.C. 20037
 (No. 566) A -
Approved -Fo ale se 2UO2TO 25--- fA-RDP-&5=i $$FZ000OGfg0041-5
Table O-I. ERAL-AID EXPENDITURES BY AGFJ C'l millions of dollars)
I974
1975
1976
actual
estimate
estimate
Department of Arriculture--------- __________.__.._-_-_
5, 112
6,279
5,874
Department of Commerce__________________________________
260
277
263
Department of Defense--Military--__.-.._---__-____-__..__-_--
64
73
83
Department of f 3kalth, Education. and Welfare _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
19,138
20,579
20,259
Department of Housing and Urban Development.. _ _ _ _ _ _ _ _ _ _ _ _ _ _
3,147
3,372
4,678
Department of tf a Interior_ ___________________. -__..-_
.452
540
605
Department of J'utstice---------- ----- _______________________
637
698
754
Department of La,bor----------------_-_-__-__________--__
2,651
4,117
4,161
Department of Transportation_______________________________
5,108
5,592
6,239
Department of the Treasury ___.___________---------- ________
6,302
6,505
6,637
Environmental Pfrotection Agency___________ ----------------
1'.623
2,429
2,478
Veterans Administtration------------------ ___._______-_______
26
53
66.
Community Serviices Administration _______________________.-_
639
462
347
District of Colurnibia_________________________________________
187
230
254
Legal Services Coirporation___________________________-____---
42
65
Washington Metropolitan Area Transit Authority --------------
170
185
182
Other --------- ..----------.--------------------------------
Energytaxequaliiationpayments____________________________
522
717
687
Total expeasdituresfor Federal grants ----------- .__--___
46,040
52,649
55,632,
(End of Text)
Major new highway grant legislation will be proposed by the Administration, focusing
on completion of key segments of the Interstate system. Other major capital expenditure .
programs include the new federal support for mass transit under the National Mass Trans-
portation Assistance Act of 1974. Highway spending under federal grants to urban areas is
estimated at $2.7 billion in. FY 1976; urban mass transport, $994 million; HUD community
development grants, $1.3 billion. General Revenue Sharing will account for about $6.2 bil-
lion in distributions by the Treasury Department.
Details of the proposed federal aid program will appear in a special report in the
next issue of FCR.
DEFENSE PROGRAM: RECORD "LONG HAUL" BUDGET CALLS FOR
$106.7 BILLION BUDGET AUTHORITY, SPENDING UP $8 BILLION
The record Defense Department budget submission for fiscal 1976, described by
Defense Secretary James Schlesinger as a "substantial one" and a "long haul budget, " calls
for budget authority of $106,340, 000, 000--up nearly $16 billion from fiscal 1975--with
outlays of $92. 8 billion, up from FY 1975's $84.8 billion.
Included within the above figures for Budget Authority (formerly referred to as new
obligational authority, the amount for which the Administration actually seeks congressional
approval) are $24.4 billion for Procurement, up nearly $8 billion; $10.2 billion for Research
Development, Test and Evaluation, up $1.6 billion; and $29.3 billion for Operation and Main-
tenance, up $3 billion.
Comparable spending figures for the DOD FY 1976 budget for the three categories, are,
respectively, $16.5 i lion, $9.6 billion, and $28.3 billion.
The Defense Secretary told newsmen at the Pentagon that, as required by recently
enacted law, DOD )o is including a five-year budget forecast. that includes an annual growtY
of about two percent in purchasing power. The b uet for the first time., provides "ade uate
otection except in the O&M account ahinst inflation, he said. Further, some of the items
containe in the new budget request "reflect tt e`lact that a decision was taken not to submit a
supplemental for '75. p,
Appro gFy90beAsp 114YA/'1:~Y1F Itl'RTrDN~4L A`FP~7FiS"lN~~CVX13R41NGTf31~1~ .G. 20037
 -.-- SPECIAL SUPPLEMENT (FCR) 2-3-75
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Among other things, thncludes a cure for the under-fundic in the procurement
account for ship construction. Thata under-funding, of course, is attributable to in-
adequate inflation estimates in prior year appropriations. "
Schlesinger observed that "the budget is a substantial increase over the eroded base
with which we emerged from the 1975 budget process, partly as a result of Congressional
reductions but in large part as a result of the ravages of inflation."
The budget submission was described officially as providing an increase in real
purchasing power "to reverse the trends which have resulted in sharp declines in recent
years. " DOD stated further that, "While the request is still below the levels contemplated
in last year's budget, it is a step in the direction which should result in significant improve-
ments in the defense resource picture in the years subsequent to FY 1976. "
The DOD budget estimates are based on a number of assumptions that are dependent
upon the will of Congress. For instance, the FY 1,76 estimates assume approval of Presi-
dent Ford's proposals to hold federal pay raises and retiree cost-of-living increases to 5 per-
cent, and enactment of Iegis anon at would produce income from sale of petroleum from the
U. S. reserves. Otherwise the budget request would go up about $2. 2 billion. FQr FY_19,77 and
later years, the estimates in current prices are even more dependent upon assumptions as to
pay raises, price increases, an congressio 1 act-tons in such areas as petroleum reserves.
The more than $15.5 billion increase in the new budget is largely_ needed to-cover pay
raises and inflation, according to DOD. ___It also includes some $2.3 billion to cover in-
crease costs o ips approved earlier by Congress in FY 1975 and earlier years, largely
due to unforeseen inflation. This involves no new program and no additional shipbuilding
for FY 1976.
It was explained that while this sort of problem has arisen in many areas, it is much
greater in shipbuilding because of the very long leadtimes involved. An underestimate of
inflation rates for ships can cause a funding problem that is many times greater than for
systems with shorter leadtimes due to the effects of compounding over many years.
According to DOD, while the FY 1976 budget is higher in current prices than last
year's projection, it is still considerably lower in terms of real buying power, which means
that the real increase will not result in a significant, improvement in the D D resource
picture until the-.years following FY 1976. DOD charts on the annual inflation rate showed
that the compound total effect of inflation on the defense budget for the years FY 1973-1976
;Will amount to about 36.3 percent.
In terms of outlays, the DOD budget calls for $92. 8 billion, compared with $84. 8
billion in the curr_ent fiscal year, and is less than 6 percent of the Gross National Product
(GNP), 16.3 percent of net public spending vs. 16. 8 percent in FY 1975.
For the period of FY 1977-1980, projected outlays come to $104.0, $119.0, $130.0,
and $140. 0 (billions), respectively.
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 2?3-75 (FCR) SPECIAL SUPPLEMENT (No. 566) A - 9
Outl gRe oypgg ?Rg i %5 ~nnd ifeprq;aO OQ W~le4dfPmber 30, 1976,
to provide as required by law for the transition to the new fiscal year prescribed by the
Congressional Budget Act of 1974. This figure is estimated at $25. 4 billion.
"There is absolutely no economic stimulus in this budget, " Defense Comptroller
Terence E. McClary told newsmen at the Pentagon when he conducted his annual budget
briefing.
He produced and discussed numerous tables and charts during the course of the
briefing to demonstrate the goal of raising the military's real spending power by 17 percent
by 1980. He said that if there were no inflation that would nut-,1980 defense spending at about
$108. 5 billion; assuming a fair amount of inflation, spending would rise to about $140 billion.
The budget calls for DOD military and civilian personnel levels to drop about 38,000
by June 30, 1976. Defense related industry personnel, essentially contractor personnel,
would drop about 25, 000 from 1, 494, 000 to 1, 469, 000. This compares with the estimated
2, 280, 000 in fiscal 1964. The 1, 469, 000 represents about 4.8 percent of the total U. S.
labor force.
Adjusting for the $2. 3 billion mentioned above for the increased cost of Navy ship-
building already authorized by Congress and for inflation from FY 1975 to FY 1976, the
$24. 4 billion in budget authority (BA) requested for the Procurement category reflects a real
increase of about $2. 5 billion.
Increased investment is programmed for aircraft modifications and for procurement
of aircraft spare parts and war reserve requirements. The Trident missile procurement
funding in FY 1976 highlights the initial large investment toward production of this new
missile system. Emphasis is continued on the Army tank program with additional M60A1
tanks programmed in the new budget year. Included in the emphasis being given to the Navy
shipbuilding program is $1.5 billion for procurement of 10 patrol frigates, two destroyer tend-
ers, and two fleet oilers.
Partially compensation for the increases in the weapons system procurement are re-
duced .requirements for programs such as the Navy F-14 aircraft and the Trident submarine
programs. Details of these and other hardware procurement programs are further detailed in
Section b of this Supplement.
R&D Program: Despite the fact that about $700 million of the increase in R&D
funding sought is going for pay increases and inflation, there is estimated to be about $1
billion An constant dollar growth. This increasis realced to a number of major weapon
system programs such as the Trident missile, Air Force and Navy cruise missile programs,
and the B-1 bomber as well as continued emphasis on systems in development such as the
Air Combat Fighter,program (YF-16) which enters full scale development. Emphasis will
continue on research and exploratory development.
The overall DOD outlook on the proposed FY 1976 budget is that while it is still below
the levels contemplated in last year's budget, it is a step in the direction that should result
in significant improvements in the defense picture in the years subsequent to FY 1976.
DOIAftppmmd ~iotlf~el~a c 0~f21 135ib~1 5 1i .6Nt1@~~DQ X11-5
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 Approved For Release 2002/03/25 : CIA-RDP85-00988R000600160041-5
a
0 A 'An nNFLAm"I""M RAT-13
m
CONSUMER WHOLESALE
PRICE PRICE
GNP
INFLATION ON
DEFENSE BUDGET
INDEX
INDEX*
DEFLATOR
OUTLAYS
TOA
m
C
0
FY 1973 TO FY 1974
9.0%
16.1%
8.1%
9.4%
11.0%
n
FY 1974 TO FY 1975
11.9%
18.3%
11.3%
14.4%
13.3%
0
z
>
FY 1975 TO FY 1976
9.5%
4.7%
9.0%
9.9%
8.4%
D
COMPOUND TOTAL, FY 1973-76
33.5%
43.8%
31.2%
37.7%
36.3%
DEFENSE FORECAST, FEBRUARY 1974
23.0%
23.3%
D
T *Based on unofficial forecast after January 1975
M
i
0
$ (End of Text)
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