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Defense budget makes tempting target for deficit action

AS big as it is -- like a battleship in the middle of Walden Pond -- military spending should be a most lucrative target for budget cutters. National defense is the single largest portion -- some 30 percent -- of a nearly $1 trillion federal budget. With 3.2 million men and women, the Defense Department accounts for about three-fourths of Uncle Sam's federal payroll. And the Pentagon buys four times as much stuff -- tanks to frozen tacos -- as the rest of the government combined; its inventory of more than 4 million separate items is valued at nearly $400 billion.

Surely, critics say, something can be squeezed out of that enormous budget in the interest of reducing the federal deficit.

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Yet, as Sen. William Roth (R) of Delaware has said, ``Trying to fix responsibility for military waste and mismanagement is like trying to nail Jell-O to the wall.'' And for this reason -- having largely to do with the politics of national security -- cutting defense is far from easy.

Those who would try to save money in defense spending have to consider two general things: what the Pentagon buys (weapons, combat and support units, training, and other activities), and how efficiently it operates.

Everyone agrees that the Defense Department could spend its vast sums more wisely and that those with whom it does business (contractors big and small) could do a better job as well.

W. Paul Thayer, a former deputy secretary of defense under Caspar W. Weinberger and one-time chairman of LTV Corporation, one of the largest US defense companies, has estimated that military contractors could save 10 to 30 percent if they didn't make so many management and production mistakes. Excluding payroll, defense purchases totaled $138 billion last year, a hefty sum.

Put another way, Air Force cost analyst (and famed whistle-blower) A. Ernest Fitzgerald says the department could save $30 billion annually if it clamped down on defense contractors' overhead charges. ``I think very conservatively we could save 30 percent of the acquisition budget, 30 percent of contractors' asking prices across the board,'' Mr. Fitzgerald told a Senate panel.

Secretary Weinberger argues that he and his staff have done much to improve Pentagon management, and, indeed, there has been noticeable progress. There are many more internal audits being conducted, and this is said to have reaped potential savings of $7.9 billion. More tangibly, the Pentagon has collected $2.1 million in refunded contractor overcharges. And officials claim that by ordering such things as B-1 bombers more than one year at a time, they will save $4.7 billion.

But such sums are just a small part of defense spending. And in some cases, such as multiyear procurement, they reflect actual increases in military spending that are part of the administration's ``rearm America'' program.

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There is talk on Capitol Hill of freezing federal spending, including Pentagon outlays, next year. This would require a $30 billion reduction in Weinberger's hoped-for 1986 budget. And it would also require wrestling with the other major defense spending issue: the size, shape, and operations of US armed forces.

For example, the antinuclear group SANE says the $30 billion could be found by canceling 15 major weapons programs including the MX, Pershing II, and Trident II missiles, the F-18 fighter, C-5 transport, Aegis cruiser, Apache helicopter, and antisatellite (ASAT) rockets. These cuts would also include slowing the procurement of the M-1 tank and Bradley infantry fighting vehicle, sharply reducing strategic defense (``star wars'') research, and eliminating most non-European overseas military construction.

Other analysts, such as William Kaufmann of the Massachusetts Institute of Technology, who has helped prepare many Pentagon posture statements over the years, say the B-1B bomber should be canceled in favor of ``stealth'' aircraft. Killing the B-1 and the MX alone would have saved $13 billion this year, he says.

Some military reformers, who believe too many weapons are ``gold-plated,'' would like to see the military buy fewer all-accessories items, such as the F-15 at $43 million a piece, and more simple but highly capable weapons, such as the F-20 at $11 million each.

There are a lot of sacred cows in such lists, as well as potential arms control bargaining chips. So it is unlikely that even a freeze-minded Congress would take exclusively from major weapons accounts.

More likely, some programs will be ``stretched out,'' as former President Ford has recommended. But unless actual reductions are made -- in, say, the total number of F-15 fighters to be purchased in coming years -- this ultimately would increase the overall cost. In trying to find significant savings, most analysts agree, it is better to decide between two similar, if not duplicate, programs and kill the loser outright. But that will always offend one of the services, not to mention local sensitivities about jobs, so it is politically difficult.

Meeting over breakfast with reporters the other day, Sen. Alan K. Simpson (R) of Wyoming said, ``It may be better to break some contracts, pay the damages, and step away from a system instead of falling for this old ploy of `you can't stop it now.' ''

Senator Simpson -- a consistent defense supporter who now says the Pentagon will have to take a much bigger reduction than Weinberger is willing to accept -- accused the Pentagon of ``bookkeeping gimmickry'' on procurement. Yet he waffled when reporters tried to pin him down on which weapons he would cut.

Another large area of defense spending is operations and maintenance (O&M), which heavily affects military readiness. Many critics have faulted the administration for increasing procurment for weapons much more rapidly than the less-glamorous funds to operate and maintain them. But savings could undoubtedly be found here. Drawing on Congressional Budget Office research, Rep. Les Aspin (D) of Wisconsin has concluded that the administration may in fact overspend in the O&M area by as much as $57 billion in the 1985-88 period.

Representative Aspin, chairman of the House Armed Services Committee, also is among those arguing for more reliance on National Guard and reserve units. Such units -- although fully equipped and trained for combat -- cost less to operate then active-duty units. And reservists draw lower pay and retirement compensation. (Military retirement and veterans' benefits are also targeted by budget-cutters. These controversial issues will be treated in a separate article in this series.)

One of the touchiest subjects is military bases. President Carter tried to close some, but was slapped down by Congress. Senate Armed Services Committee chairman Barry Goldwater (R) of Arizona has recommended closing 10 bases (and consolidating Air Force, Navy, and Army flight training) for a savings of $1 billion.

The President's Private Sector Survey on Cost Control, headed by businessman J. Peter Grace, concluded that ``the cost of maintaining unnecessary bases ranges from $2 billion to $5 billion annually.'' The commission didn't say exactly how many of the approximately 4,000 military facilities in the US were unnecessary. -- 30 --

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