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COMMITTEE ON ARMED SERVICES

JOHN C. STENNIS, Mississippi, Chairman STUART SYMINGTON, Missouri

MARGARET CHASE SMITH, Malne HENRY M. JACKSON, Washington

STROM THURMOND, South Carolina SAM J. ERVIN, JR., North Carolina

JOHN G. TOWER, Texas HOWARD W. CANNON, Nevada

PETER H. DOMINICK, Colorado THOMAS J. MCINTYRE, New Hampshire BARRY GOLDWATER, Arizona HARRY F. BYRD, JR., Virginia

RICHARD S. SCHWEIKER, Pennsylvania HAROLD E. HUGHES, Iowa

WILLIAM B. SAXBE, Ohio
LLOYD BENTSEN, Texas
T. EDWARD BRASWELL, Jr., Chief Counsel and staff Direotor

John T. TICER, Chief Clerk

(II)

MILITARY PROCUREMENT FOR FISCAL YEAR 1973

TUESDAY, FEBRUARY 15, 1972

U.S. SENATE,
COMMITTEE ON ARMED SERVICES,

Washington, D.C. The committee met, pursuant to recess, at 10:07 a.m. in room 212, Old Senate Office Building, Hon. John C. Stennis (chairman).

Present: Senator Stennis (presiding), Symington, McIntyre, Bentsen, Smith, Thurmond, Dominick, Goldwater, Sshwieker, and Saxby.

Also present: T. Edward Braswell, Jr., chief counsel and staff director; John T. Ticer, chief clerk; L. R. Garcia; Hyman Fine; Don L. Lynch; C. J. Conneely; John A. Goldsmith; Édward B. Kenney, professional staff members; R. James Woolsey, general counsel; James Kendall, chief counsel, Preparedness Investigating Subcommittee; and Ben Gilleas, director of investigations, Preparedness Investigating Subcommittee. The CHAIRMAN. The committee will please come to order. The committee welcomes today the Secretary of Defense Melvin R. Laird and the Chairman of the Joint Chiefs of Staff, Adm. Thomas H. Moorer, who will make the initial presentation on the fiscal year 1973 overall Defense program.

DEPARTMENT OF DEFENSE

CHAIRMAN'S OPENING STATEMENT The CHAIRMAN. The Chair would observe that following the testimony of Mr. Laird and Admiral Moorer, we will hear from Dr. John S. Foster, Director of Defense Research and Engineering. We hope that the schedule for tomorrow and Thursday will enable us to complete this portion of our hearings.

The Chair would also point out that we have scheduled the Secretary and Chief of the Navy Tuesday, February 22; the Secretary and Chief of the Air Force for Wednesday, February 23; and the Secretary and Chief of the Army for Thursday, February 24. Of course, we have been looking forward to hearing you, Mr. Secretary, and you, Admiral Moorer; and, Mr. Moot, we are glad to have you back with us. We are always glad to have you. Mr. Secretary, the chair would like to make a few preliminary observations.

As the record will show, I have always supported and will continue to support whatever I consider necessary for a strong national defense; at the same time, as one member of this committee, I intend to give the pending legislation the closest possible scrutiny in view of what I consider to be a number of extremely serious conditions facing this Government and the American people.

I remember at one point we were fighting a war, carrying on the Great Society, and reducing taxes, all at the same time. Just commonsense made it look to me like that was going to bring inflation, which it did. To keep on coming forward with these huge deficit budgets one right after another, we are inevitably sowing the seeds for further inflation and for tax increases that will have to come, and I think they ought to be mentioned now to people. I mentioned them in a short speech I made the other day.

First is the unsound financial condition of the Federal Government, now faced with a fiscal year 1972 deficit, even including the trust funds, of $38.8 billion. Last year it was estimated that for this year, it would be only about $11.64 billion. The deficit for the current fiscal year 1973 budget is estimated at $25.5 billion, even including the trust funds; and if the underestimate of last year of over 200 percent remains true, the anticipated deficit for next year for fiscal year 1973 will be on the order of $75 billion.

The chair might add that the stated Defense outlays for fiscal year 1973 are $78.3 billion.

Second, the Nation next year will be faced with a substantial tax increase to pay for the Federal deficit or a possible severe economic adjustment caused by Federal borrowing to make up the deficit.

3. Even though the Defense outlays for fiscal year 1973 will be about the same as last year-slightly over $78 billion—the increase of $6.3 billion in obligational authority will build up I O U's for future years which will contribute to the need for a tax increase if the budget is not more in balance.

4. The matter of soaring manpower costs which, as you know, have increased from about 43 percent in 1964 to 57 percent in the current budget along with discussions of possible future legislation which will further increase this percentage.

5. The necessity of convincing our military overseas allies of the necessity for their contributing a greater amount of military manpower and weaponry for their own security.

The chair would observe for the record that the authorization request for the bill totals $22,173.8 million, of which $13,673 million is for procurement and $8.5 billion is for R. & D. This represents an increase over what was finally enacted for fiscal year 1972 of $812 million for procurement and $979.2 million for R. & D. Of the total procurement request, well over 50 percent or $7.7 billion is for the Navy and Marine Corps, approximately $4.39 billion for the Air Force, and $1.5 billion for the Army.

NEW PROGRAMS

The major new procurement programs include:
(a) $299 million in advance funds for the CVAN-70,

(6) $942 million for ULMS, which would permit an acceleration of the program,

(c) $193 million in lead funds for a new 50-ship program for Navy patrol escorts,

(d) $470 million for AWACS including $309.9 million in production funds for the first three aircraft, and

(e) $910 million for the F-15, including $456 million for the first production of 30 aircraft.

In addition, there are substantial requests for certain ongoing programs including:

(a) A request for $1.483 billion for Safeguard, the highest money requested for this item in any given year so far,

(6) $735 million for the F-14, including $570 million for procurement for 48 aircraft, and

(c) $665 million for the S-3A aircraft, including $628 million for procurement of 42 planes.

The chair mentions these for the record, in order to cite certain of the large high-cost items.

I think the present Secretary and the President have done more than anybody else in convincing our overseas allies that they have to do more. I think you have made some headway with them. But I believe we are going to have to make more headway with them, considerably more. I believe in putting pressure on them, not in the meat-ax method, but with certain gradualism that will let them know 2 or 3 years in advance what we are going to do. Then they will have a chance to make up their mind, as well as to do something about it.

I want to make it clear to Secretary Laird that I am not here flattering him; I am not given to flattery—I hope I am not. I think he has done an outstanding job as Secretary of Defense. He has had more than his share of the problems.

Whatever intimation you have made that you are planning to leave, I hope you will reconsider and stay with us.

On behalf of the committee, I wish to express appreciation to Mr. Laird and Admiral Moorer for furnishing their statements well in advance, which has facilitated better preparation for these hearings and your statement is a very voluminous, valuable supporting statement.

Senator Smith ?

Senator Smith. Mr. Chairman, you have pretty much spoken for the committee, especially with respect to the Secretary, and we join you in hoping that he will stay, not if the President is reelected but when the President is reelected, for the next 4 years.

Mr. Chairman, I give this committee high priority, but this year, I have a number of other things to attend to and I may have to come and go. I will be here all that I can, but when I am not and it is time for me to question, I would ask unanimous consent that I provide questions for the record to be answered for the record.

The CHAIRMAN. I thank you for your comment. Without objection, unanimous consent is given for the Senator from Maine to send in questions whenever she may wish, to be in the record and be responded to, of course.

The chair is conscious of the fact that perhaps the most important election this year is in Maine, a statewide race. We are glad you are a candidate and that means you will be back with us.

STATEMENT OF HON. MELVIN R. LAIRD, SECRETARY OF DEFENSE,

ACCOMPANIED BY RADY JOHNSON, ASSISTANT TO THE SECRETARY OF DEFENSE (LEGISLATIVE AFFAIRS); AND ROBERT C. MOOT, ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER)

Secretary LAIRD. Thank you, Mr. Chairman, Senator Smith, for your comments.

Members of the committee, I am very happy to have the opportunity along with the Chairman of the Joint Chiefs of Staff, to present to you my annual defense report and the chairman's statement on military posture for fiscal year 1973. I appreciate your comments. I do want to express to this committee my appreciation for your helpful criticisms, your suggestions, and the cooperation which I have had as Secretary of Defense from all of you on this committee and from the Congress generally, during the past 3 years. When I appeared here for confirmation hearings, I indicated at that time that I thought 4 years was long enough for any person to serve as Secretary of Defense. During these 3 years, the wisdom of that statement I made appeared here in confirmation hearings, I think, has been borne out. Although I appreciate your encouragement, I still feel that the position I took when I was confirmed for this job is the position that I will stay with. But I do appreciate your encouragement.

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