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The current Administration has made a concerted effort to modernize and improve the Army, investing $415 billion (in fiscal year 1987 dollars) from 1980 through 1986 in new equipment, better pay and benefits for its soldiers, repairs and maintenance of its facilities, and stockpiles of war reserves. The Army still has, however, areas that it feels could be further improved. This analysis, requested by the Subcommittee on Procurement and Military Nuclear Systems of the House Committee on Armed Services, projects future Army budgets that would be required to meet the goals that the Army has established for itself for the period from 1987 through 1991. It also examines the effects that lower rates of budget growth might have on the Army's plans and future force structure. In keeping with CBO's mandate to provide objective and nonpartisan analysis, this study makes no recommendations.

Frances M. Lussier of CBO's National Security Division prepared the study under the general supervision of Robert F. Hale and John D. Mayer, Jr. The author gratefully acknowledges the contributions of William R. Thomas, V. Lane Pierrot, Tasha Wallis, and Sandra Christensen of CBO and of Lawrence J. Korb of the University of Pittsburgh. (The assistance of an external reviewer implies no responsibility for the final product which rests with CBO.) Patricia H. Johnston edited the manuscript and Rebecca J. Kees prepared it for publication. Nancy H. Brooks provided editorial assistance.
 

Rudolph G. Penner
Director
December 1986
 
 

SUMMARY

CHAPTER I - INTRODUCTION

• Improvements From 1982 Through 1986
• Army Goals, 1987-1991

CHAPTER II - ESTIMATING THE COSTS OF THE ARMY'S GOALS FOR 1987-1991

• Estimating Methods Used
• The Cost of Meeting The Army's Goals
• Modifying Army Goals

CHAPTER III - THE IMPACT OF ZERO BUDGET GROWTH ON THE ARMY'S ABILITY TO MEET ITS GOALS

• Option I-Emphasize Operating And Support Funding
• Option II-Emphasize Investment
• Option III-Place a More Balanced Emphasis
• Conclusion

APPENDIX A - METHODS FOR ESTIMATING OPERATION AND MAINTENANCE COSTS

APPENDIX B - IMPACT OF TWO METHODS FOR PROJECTING O&M FUNDING ON OPTIONS FOR ZERO GROWTH BUDGETS
 

SUMMARY TABLE 1.	BUDGET REQUIRED TO ATTAIN ARMY GOALS
SUMMARY TABLE 2.	IMPACT OF THREE OPTIONS ON THE ARMY'S GOALS AS OF FISCAL YEAR 1991
TABLE 1.	CUMULATIVE QUANTITIES OF MODERN WEAPONS SYSTEMS PROCURED FROM FISCAL YEARS 1982 THROUGH 1986
TABLE 2.	ARMY FORCE STRUCTURE, FISCAL YEARS 1982 AND 1986
TABLE 3.	AIRCRAFT OPERATING TEMPOS, FISCAL YEARS 1986 THROUGH 1991
TABLE 4.	ARMY MAINTENANCE GOALS
TABLE 5.	ARMY WEAPONS MODERNIZATION
TABLE 6.	ARMY PERSONNEL, FISCAL YEARS 1987 AND 1991
TABLE 7.	MILITARY PERSONNEL FUNDING, FISCAL YEARS 1986-1991
TABLE 8.	PERCENT OF EACH APPROPRIATION ACCOUNT DEVOTED TO LINE ITEM SUMS FOR SPECIFIED PROGRAMS
TABLE 9.	PROJECTED FUNDING NEEDS IN PROCUREMENT, FISCAL YEARS 1986-1991
TABLE 10.	COMPARISON OF NEEDED 1991 PROCUREMENT FUNDING USING THREE DIFFERENT PROJECTION METHODS
TABLE 11.	ADJUSTMENTS REQUIRED TO BRING PROCUREMENT IN LINE WITH DEPLOYMENT GOALS, FISCAL YEARS 1988-1991
TABLE 12.	AMMUNITION FUNDING REQUIREMENTS, FISCAL YEARS 1986-1991
TABLE 13.	PERCENT OF THE ARMY BUDGET APPORTIONED TO RDT&E, MILCON, AND FAMILY HOUSING, FISCAL YEARS 1981-1987
TABLE 14.	COSTS ASSOCIATED WITH MEETING THE ARMY'S GOALS
TABLE 15.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND EMPHASIS ON OPERATING AND SUPPORT, FISCAL YEARS 1986-1991
TABLE 16.	IMPACT OF OPTION I ON THE ARMY'S GOALS AS OF FISCAL YEAR 1991
TABLE 17.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND EMPHASIS ON INVESTMENT, FISCAL YEARS 1986-1991
TABLE 18.	IMPACT OF OPTIONS I AND II ON THE ARMY'S GOALS AS OF FISCAL YEAR 1991
TABLE 19.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND BALANCED EMPHASIS, FISCAL YEARS 1986-1991
TABLE 20.	IMPACT OF THREE OPTIONS ON THE ARMY'S GOALS AS OF FISCAL YEAR 1991
TABLE B-l.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND EMPHASIS ON OPERATING AND SUPPORT, USING TWO PROJECTION METHODS
TABLE B-2.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND EMPHASIS ON INVESTMENT, USING TWO PROJECTION METHODS
TABLE B-3.	FUNDING FOR VARIOUS ACCOUNTS WITH ZERO GROWTH IN THE ARMY BUDGET AND BALANCED EMPHASIS, USING TWO PROJECTION METHODS
TABLE B-4.	IMPACT OF THREE ZERO GROWTH OPTIONS ON THE ARMY'S GOALS AS OF 1991, USING TWO PROJECTIONS METHODS
FIGURE 1.	ARMY BUDGETS, FISCAL YEARS 1981-1987
FIGURE 2.	RATIO OF OPERATION AND MAINTENANCE FUNDING TO CAPITAL STOCK VALUE, FISCAL YEARS 1973-1987
FIGURE 3.	THREE PROJECTIONS FOR OPERATION AND MAINTENANCE FUNDING, FISCAL YEARS 1986-1991
FIGURE 4.	DISTRIBUTION OF ARMY PROCUREMENT FUNDS, FISCAL YEARS 1981-1991
BOXES
ARMY TERMS BOX
ARMY SYSTEMS BOX
DEFINITION OF BUDGET APPROPRIATIONS BOX

 

In a statement to the Congress in the spring of 1980, then Army Chief of Staff General E. C. (Shy) Meyer called for greatly increased budgets to rectify the "hollow Army"--one that needed both modern equipment and additional operating personnel. From 1980 through 1985, the Army enjoyed annual real budget increases averaging nearly 10 percent and was able to improve the quality and capability of its troops and equipment. Nevertheless, the Army has not yet attained all its goals,, including further enhancements of its readiness and sustainability, modernization of its equipment, and increases in the size of its reserves. This study estimates that attaining these goals by 1991 would require average annual real increases in the Army's budget of about 6 percent. (In some cases these goals, and hence their costs, may differ from those in the Army's latest budget proposal.)

Serious questions arise regarding the likelihood of continued budget growth for the Army. For the past two years, budget constraints have led the Congress to cut the Defense Department's--and the Army's--budgets in real terms, and large increases may not be possible in the near future. Thus, this study assesses several alternatives that would be compatible with more limited budgets.

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