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This memorandum was prepared by the Congressional Budget Office (CBO) in response to a request from the Chairman of the House Committee on Armed Services. It is one of a series of memorandums requested by the Chairman that analyze future costs of the Administration's plans for defense forces. In keeping with CBO's mandate to provide objective and nonpartisan analyses, the memorandum makes no recommendations.

Lane Pierrot, William P. Myers, David E. Mosher, and Rachel Schmidt performed the analysis, with assistance from Geoff Cohen, Shaun C. Black, and Deborah Clay-Mendez. Neil M. Singer and R. William Thomas provided general supervision. Sherwood Kohn edited the manuscript. Judith Cromwell prepared it for publication.
 
 

SUMMARY AND INTRODUCTION

THE ADMINISTRATION'S PLAN

• Strategic Forces
• Tactical Fighter Forces
• Airlift and Tanker Forces

PROJECTED OPERATING FUNDING

• Military Personnel Appropriations
• Operation and Maintenance
• Total Operating Funds

PROCUREMENT FUNDING

• Major Weapons
• Uncertainty About Aircraft Procurement
• Nonmajor Procurement
• RDT&E, Military Construction, and Family Housing

TOTAL BUDGET

• Changes from Earlier CBO Estimates
• Shares Suggest Further Budgetary Pressure
• Decline in Total DoD Budget

SUMMARY AND INTRODUCTION

The Reagan Administration planned to have more than 40 Air Force tactical fighter wings to fight the former Soviet Union, although the service never managed to field more than 37. The Bush Administration's base force would have contained 26 wings to fight the smaller and more diffuse threats of the post-Cold War world. The Clinton Administration's Bottom-Up Review--a statement of the Administration's defense policy, released in 1993--asserts that 20 wings, about half the Reagan goal, should provide enough combat punch to fight two regional wars.

Goals for fielding strategic bombers have also undergone downsizing, reflecting the deemphasis of the strategic mission, though the cuts are smaller than the reductions in fighter fleets. Fleets of strategic bombers, pegged at about 300 planes in Cold War plans, would have shrunk to 210 under President Bush. The Clinton Administration expects to reduce the number of bombers set under the Bush plan by about 10 percent. Inventories of intercontinental ballistic missiles have suffered similar fates.

One major element of the Air Force, however, is not declining. The Air Force expects to preserve the capabilities of its airlift fleets at current levels, since the capacity to move troops and equipment early in a conflict may be particularly important in a world where conflict could take place in unexpected locations.

Under the Administration's current plan, Air Force budgets will also decrease between 1990 and 1999, but by lower percentages than decreases in combat forces. The Air Force budget in 1995--about $75 billion--will be approximately 30 percent lower than the service's 1990 funding. The budget would decline further to about $70 billion in 1997 and remain at roughly that level through 1999 (see Figure 1).

The Administration has not published its plans for the years after 1999. Based on the Administration's statements and goals, however, the Congressional Budget Office (CBO) estimates that the Air Force would only need about $67 billion in the year 2000 under Estimate A, an assessment that assumes only limited growth in the future cost of weapons. Beyond the year 2000, CBO projects that Air Force budgets could remain at approximately that level, averaging $68 billion in the first decade of the new century, if weapons costs do not grow. The reason: the costs of new weapon systems--including the F-22 tactical fighter and whatever aircraft emerges from the Joint Advanced Strike Technology (JAST) program to replace the F-16--would be offset by completing acquisition of the C-17 airlifter. But a somewhat more pessimistic outlook suggests tighter Air Force budgets. CBO made a second assessment, Estimate B, that projects Air Force budgets averaging about $74 billion during the 2000-2010 period, or about $4 billion more than the Air Force's 1999 funding level.

CBO's analysis assumes enactment and execution of the plans set forth in the Administration's Future Years Defense Program (FYDP) for fiscal years 1995 through 1999. If that program changes, perhaps because projected savings are not realized, costs prove higher than anticipated, forces are cut further, or planned procurement programs are canceled, this analysis of the period after the FYDP would also change.

The range of costs in CBO's long-run estimates reflects differing assumptions about the cost of new weapons. The $68 billion estimate assumes that prices of weapons bought in the future would not grow above current estimates. It also assumes that spending in funding categories for which detailed plans are not available, such as research and development and nonmajor procurement--procurement of a variety of items, including spare parts, tactical missiles, and satellites, for which the Administration's replacement goals are less clear--would remain at previous levels, adjusted for changes in forces. The higher cost estimates, which are more consistent with past experience, assume that there would be growth in the unit costs of major weapons that program planners do not anticipate. They also assume that spending for activities such as research and nonmajor procurement would grow along with increases in other types of funding. Because so few major weapons would be bought, these differences in assumptions produce a fairly narrow range in the estimates.

The Administration plans an increase in Air Force procurement funding over the next five years. CBO estimates that under the assumptions of Estimate A funding would remain near the planned 1999 level for most of the 2000-2010 period. Thus, if the Air Force can hold down costs in ways assumed under Estimate A, the service could afford to buy relatively small numbers of new weapons, including the F-22 aircraft and the F-16 replacement, without real increases in its budget.

If experience is a guide, however, and the higher cost estimates prove more realistic, the Air Force budget would have to increase in the next decade to finance this new family of weapons. Average annual funding during the 2000-2010 period would need to be about 6 percent higher than the planned 1999 level.

Although such increases are modest, they will probably be difficult to achieve. Air Force programs will face considerable competition from Army, Navy, and new theater missile defense programs. Under the Administration's plan, all these programs, particularly those in the Navy, will probably demand substantial increases in finding during the next decade, which could reduce the Air Force's share of the total defense budget. Furthermore, in the face of conflicting domestic demands, the total defense budget may fall below the Administration's planned level. For example, the budget resolution for fiscal year 1995 allocated less to defense than the Administration had requested. Additional cuts in defense funding could prevent the Air Force from carrying out the Administration's plan even if its share of total funding is not reduced.

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