Friendly Fire: How The Budget Could Blast The Pentagon

The magic asterisk is one of the oldest fallbacks for harried budget writers. Pressed for time, budgeteers will often pencil in a number and promise the details later. In 1981, for example, Ronald Reagan's budget pledged $70 billion in future "management savings" that never materialized. While Bill Clinton's first fiscal effort generally won praise for honesty, it contains a monumental asterisk: $127 billion worth of defense cuts over the next five years, with no details on what programs will be affected. Defense contractors and the armed services are worried--and with good reason.

The big fear is that the number is not only real but also will grow as the Administration seeks further cuts to help pay for Clinton's spending plans. "Defense is the only place to go for the spending increases Clinton wants," says Loren B. Thompson, a Georgetown University national security expert.

MARCHING HOME. Pentagon bungling has left the military vulnerable. Cost overruns and development snags are bloating the price of new weapons such as McDonnell Douglas Corp.'s C-17 transport aircraft. Defense specialists say the Bush Administration underestimated the cost of all the weapons now in development. Defense Secretary Les Aspin has ordered a study to determine how big the shortfall will be. The results, due in late March, "will be political cover for Aspin to come back and ask the services for further cuts," predicts consultant Charles A. Gabriel Jr. of the Washington Research Group. Worries one Democratic armed services staffer: "We may have to find another $20 billion or $30 billion to cut."

Personnel will be the first target. The President has called for shrinking the armed forces from 1.7 million troops today to 1.4 million. That cut would be 200,000 deeper than the level planned by Bush. And Administration officials are thinking about taking manpower levels down to 1.2 million by 1997.

Personnel cuts alone won't save enough. Stretch-outs or outright cancellation of some weapons are unavoidable. The Administration's love of high technology doesn't extend to Star Wars, which will likely be cut to $3.8 billion from the $5.4 billion Bush asked for last year. On Capitol Hill, knives are out for the C-17. If forced to choose between the Air Force transport and the F-22 advanced tactical fighter, Air Force top brass would almost certainly choose the sexy fighter.

The news isn't all bad for hard-pressed McDonnell. At a recent press briefing, Joint Chiefs of Staff Chairman Colin Powell pointedly declined to endorse a deep-strike role for the Navy--the mission of the next-generation A/FX attack plane. If the Navy drops the A/FX, it may substitute purchases of McDonnell's F/A-18 fighters.

The detailed decisions, however, will be slow in coming. The Administration's failure to fill key jobs, including secretaries of all three services, has contributed to the snail-like pace of planning. And Aspin's Feb. 22 hospitalization for a mild heart condition may further delay decisions.

HOUSE DIVIDED. Things could get even more confused when a detailed spending plan hits Capitol Hill in March. Senate Armed Services Committee Chairman Sam Nunn (D-Ga.), thinks Clinton's cuts are too deep, aides say. His House counterpart, Ron Dellums (D-Calif.), wants far steeper reductions. These differences may not be resolved before fall.

Clinton probably hopes to go easy on defense. His relations with the military are dicey. And he knows that deeper cuts will cost jobs in such hard-hit states as Texas and California. Still, with no compelling military threat looming, the President may find it hard to resist the temptation to choose fewer guns and more butter.

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