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Unless otherwise noted, all costs in this memorandum are expressed in constant 1995 dollars of budget authority and include funding for both the Navy and the Marine Corps. |
This memorandum on the long-term costs of naval forces was prepared by the Congressional Budget Office in response to a request from the Chairman of the House Committee on Armed Services, The memorandum is an update of a similar analysis completed in December 1991.
Ivan Eland prepared this memorandum under the general supervision of
Neil Singer and R. William Thomas. Lane V. Pierrot reviewed parts of the
paper covering tactical aviation. William P. Myers provided data on the
costs of aircraft carriers and air wings. Victoria Fraider reviewed the
Navy's estimates of aircraft unit costs. Shaun Black provided data on the
aging of Navy aircraft. Sherwood Kohn edited and Christian Spoor proofread
the manuscript. Judith Cromwell prepared it for publication.
INTRODUCTION AND SUMMARY
THE NAVY'S PLAN FOR A 330-SHIP FLEET
LONG TERM COST OF THE NAVY'S PLAN
COMPARISON WITH TOE NAVY'S 1991 PLAN
CAN THE NAVY AFFORD THE 330-SHIP PLAN?
RESOLVING PROBLEMS OF AFFORDABILITY
APPENDIX: COSTING METHODS AND SUPPLEMENTARY DATA
| TABLES | |
| 1. | Number of Ships That the Navy Would Purchase in the 2000-2010 Period Under the Plan for a 330-Ship Fleet |
| 2. | Number of Aircraft That the Navy Expects to Purchase During the 2000-2010 Period |
| 3. | Procurement of Selected Weapon Systems, 2000-2010 |
| A-1. | Unit Procurement Costs for Ships |
| A-2. | Unit Procurement Costs for Aircraft |
| FIGURES | |
| 1. | Navy Funding Requirements Compared with Clinton Navy Budget for 1999 |
| 2. | Navy Funding Requirements Compared with Potential Budgets |
INTRODUCTION AND SUMMARY
In response to threats posed by the former Soviet Union, the Reagan Administration advocated building a 600-ship navy. But the Navy never achieved that level. In fact, the fleet never exceeded 570 ships.
As the Soviet threat declined, the Bush Administration proposed a fleet of 450 ships, including 13 aircraft carriers (12 active and one for training). The Clinton Administration has proposed reducing the fleet to about 330 ships by 1999, including 12 aircraft carriers (11 active and one in reserve that can be used for training), 120 to 126 active and reserve surface warships, 45 to 55 attack submarines, about 40 amphibious ships, and 14 ballistic missile submarines.
Although the size of the fleet is declining, the Navy is still developing expensive new ships and aircraft that it will begin purchasing in the late 1990s and the next decade. The Navy will develop a new attack submarine, to be purchased in fairly low numbers beginning around the turn of the century, and a new surface combat ship (SC-21), which would be procured in moderate quantities starting in the middle of the next decade. During the next decade, to maintain an aircraft carrier force of 12 ships, the Navy will purchase a new carrier every four years, beginning in 2002. The Navy and Marine Corps will modernize their aircraft fleet, buying the F/A-18E/F and V-22 aircraft beginning in the late 1990s and a medium-attack aircraft emanating from the Joint Attack Strike Technology (JAST) program late in the next decade. These expensive new weapons will have to be financed out of budgets that will probably be considerably smaller than those of the 1980s.
Will sufficient funds be available to pay for the new weapons and adequately support smaller, but still substantial, naval forces? The Congressional Budget Office (CBO) has examined the affordability of the Navy's program in the next decade, when the service's large bills will come due. CBO's estimate of costs in the 2000-2010 period are based on the Administration's Future Years Defense Program (FYDP) from 1995 to 1999 and informal Navy projections of quantities and costs of weapons purchased during the next decade. The Administration's program could change because projected costs prove higher than anticipated, offsetting savings are found, or programs are deferred. If the program changes, CBO's analysis of the post-FYDP period would also change.
Plan for a 330-Ship Navy May Create Budget Problems
Given the Department of the Navy's plans for acquisition and force structure, CBO estimates that its budget must average between $75 billion and $84 billion a year from 2000 to 2010 (see Figure 1).
CBO estimates that during the next decade, the plan for a 330-ship Navy would cost between $4 billion and $13 billion more than the $71 billion projected for the Department of the Navy's budget for fiscal year 1999 contained in the Administration's current defense plan. (Throughout this analysis, CBO assumes that the Navy will continue to receive this amount each year during the 2000-2010 period.)
CBO's current estimate of the Department of the Navy's budget, however, provides a much more optimistic outlook than its projections of December 1991. That earlier analysis, which was based on Navy planning during the Bush Administration, anticipated shortfalls in funding averaging from 10 percent to 23 percent ($9 billion to $26 billion) during the 2000-2010 period. CBO now estimates the gap for the Navy under the Clinton Administration at only 5 percent to 15 percent.
Further Budget Cuts Could Make Things Worse
Although they reduce the deficit, the fiscal proposals offered by the
Clinton Administration would not fully resolve the nation's long-term deficit
problem.1 If there is another round of budget
cuts, including further reductions in defense funding, the pressure on
the Navy to economize could be even more severe. If, for example, during
the next decade the Navy receives its current share of a national defense
budget of $200 billion, Navy funding would total about $60 billion a year.
That level of funding would make it even more difficult to finance the
plan for 330 ships.
1. Congressional Budget Office, The Economic and Budget Outlook: Fiscal Years 1995-1999 (January 1994), p. 29.
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