A time for hard choices at the Pentagon

NATIONAL-security chief Frank Carlucci III assumes the helm at the Defense Department at a crucial moment. Budget-reckoning time has come, and defense spending is at the heart of the debate. The legacy of Caspar Weinberger's stewardship at the Pentagon since 1981 may well be measured not in terms of military capability, but rather by the impact of the unprecedented expansion in defense funding on the federal budget. Growth in defense spending, along with the 1981 tax cut, has been a significant source of our large federal budget deficits. Without immediate attention to management and some prompt priority setting by the new secretary, defense spending will continue to make deficit reduction difficult.

Thanks to a serious overemphasis on weapons purchases since 1981 and plans for a new generation of weapons programs after 1988, Mr. Weinberger has left Mr. Carlucci and the next administration with ``stern wave'' and ``bow wave'' problems of enormous consequences for controlling the budget deficit.

The Weinberger budgets have focused on military hardware, with the ``investment'' share that goes for nuclear and conventional weapons procurement, research and development, and military construction rising from 38 percent of the defense budget of fiscal year 1980 (the last pre-Weinberger year) to 46 percent in fiscal 1987. Since investment funds are spent over a longer time period than other funds, the backlog of unspent money in the Pentagon's bank account has nearly tripled, from $92 billion in fiscal 1980 to an estimated $284 billion in the current fiscal year.

More than 80 percent of this backlog is already legally bound in contracts for future weapons and must be spent. Therefore, a rising share of annual defense spending - from 27 percent in 1980 to 40 percent in 1988 - is beyond the control of the new secretary of defense. This stern wave of spending has already locked in relatively high rates of defense spending for the rest of this administration and into the next.

This stern wave is matched by a forthcoming ``bow wave'' of procurement spending, brought on by Pentagon and congressional unwillingness to choose now among the many new weapons proposed for the 1990s. Locking in the next generation of weapons will restrict even further the defense and budgetary options available to the next president and a new Congress.

The weapons research-and-development account has been the fastest-growing part of the defense budget in the 1980s. As these programs move from the R&D stage into procurement, they will create pressures for a big jump in procurement funding - as much as 9 percent after inflation, both in 1989 and in 1990.

These R&D funds are intended to produce a number of new strategic programs, among them the Trident 2 missile and submarine, the Stealth bomber, the Midgetman missile, and initial hardware for the Strategic Defense Initiative. Minus SDI, these systems could cost at least $200 billion to $250 billion to acquire. SDI could add $750 billion more.

In addition, the Defense Department wants to begin developing a new series of major conventional weapons, including the C-17 cargo plane, the SSN-21 submarine, and the LHX helicopter.

Put simply, the Weinberger Pentagon has wanted to have it all - if not now, then soon. This unwillingness to make the hard choices among weapons programs has become even more serious with the deficit crisis.

If Gramm-Rudman-Hollings or other budget-balancing cuts occur, they will hit operating funds the hardest among Pentagon accounts. Yet ships must sail, armies must train, and pilots must fly, or there is no point in buying all this equipment. The services cannot cut ``people budgets''; people are required to carry out military missions and maintain equipment.

Since current ``budget summit'' discussions and appropriations plans make it clear that defense funds will not grow above the 1987 level, the overall level of the defense budget will already serve as a management tool to encourage priority-setting.

But Congress, the White House, and the new secretary of defense could lead the way to greater control over defense budgets and federal deficits in the future by following these guidelines:

Give preference to current weapons with known and stable costs, while canceling or deferring programs in the ``bow wave,'' for example, the Army's LHX helicopter, the Navy's advanced-technology aircraft, and the Air Force's advanced-technology fighter.

If new programs are to be funded, conventional weapons programs should have preference over strategic programs. For example, the Midgetman missile, the MX rail mobile missile, and the Stealth bomber could be deferred or canceled in preference to sealift, airlift, or air defense programs.

Funds for any new programs should take second place after funds to operate and support existing forces and their equipment in a state of readiness.

Budget summit negotiators and the new Pentagon leadership still have time to slow down the defense budgetary train, contribute to deficit reduction, and leave the next administration with the ability to make sound defense decisions. The choices made over the next 18 months will determine whether defense spending helps drive the nation into continued high deficits in the future or contributes to the nation's real security, both fiscal and military.

Gordon Adams is director of the Defense Budget Project at the Center on Budget and Policy Priorities in Washington, D.C.