Background and perspective on important national security and defense policy issues. 

Written and produced by House Armed Services Committee Chairman,

Volume 4, Issue 1 February 2000

The Fiscal Year 2001 Defense Budget:

 The mismatch between strategy, resources, and forces continues

On February 7, the President delivered his 

fi nal defense budget request to Congress. 

The good news is that the President’s fi scal 

year 2001 defense budget proposal is the 

best one to come out of the Administration 

in its eight years in offi ce. 

Indeed, the request refl ects the fi rst significant real spending growth in the defense 

budget in a decade and, at this preliminary stage, does not appear to be built on a 

foundation of assumed savings, questionable economic assumptions, and outlay 

gimmicks like last year’s budget request. 

In the context of longstanding bipartisan 

concerns in Congress, Defense Secretary 

Cohen deserves credit within the Executive Branch for getting the Administration 

to recognize that quality of life, readiness and modernization shortfalls are 

real, that they have real-world implications, and that increased defense spending is necessary. 

Unfortunately, the bad news with regard 

to the President’s budget is that serious 

mismatches between strategy, forces, and 

resources are not getting any better. The 

The following text is adapted from Chairman Floyd D. Spence’s 

opening statement at a February 9, 2000 House Armed Services 

Committee hearing with Secretary Cohen and General Shelton.

consequent widespread shortfalls have left 

a legacy of debilitating quality of life, readiness and modernization problems that the 

military services now confront on a daily 

basis. 

Indeed, it is unfortunate that the Administration waited until its eighth and last 

budget request to fi nally propose a budget 

with real growth in defense spending. Over 

these past eight years, the Administration’s 

cumulative defense budget requests have 

fallen more than $300 billion dollars short 

of even covering the costs of infl ation relative to the fi scal year 1993 defense spending levels it inherited — spending levels 

that already refl ected signifi cant cutbacks 

resulting from President Bush’s post-Cold 

— Continued on Page 2 —

300

310

320

330

340

350

FY 01 FY 02 FY 03 FY 04 FY 05

300

310

320

330

340

350

-$15.5 B

-$17.9 B

-$17.8 B

-$17.0 B

-$16.0 B Service Chiefs’

Requirements

Fiscal Year

FY 2001 President’s Budget

Defense Topline (function 050)

Service Chiefs’ Requirements

Total Shortfall FY 2001 - 2005: $84.2 Billion

Prepared by: HASC Staff

(budget authority in current year billions)

NATIONAL SECURITY REPORT

Defense Shortfalls:

The President’s budget falls more than $84 billion short of meeting the 

Service Chiefs’ requirements over the next fi ve years.
2 NATIONAL SECURITY REPORT

War downsizing of the United States military.

It was not too many years ago that the 

Administration’s defense budget requests 

were so low that the top-line fell short 

of keeping pace with infl ation even after 

Congress added more than $10 billion dollars! And it was not too many years ago 

that the President consistently threatened to 

veto these congressional top-line increases, 

arguing as he did, that it was too much 

money for defense. It is rewarding to note 

that Congress and the Pentagon have fi nally 

managed to alter the President’s perspective on these matters. 

Thus, the Administration’s fi scal year 

2001 defense budget request is certainly 

better than its predecessors, but this is 

hardly a useful standard. After years of 

decline, the Administration has dug such a 

deep “hole” that it will take a decade or 

more of real growth in defense spending to 

climb out of it and to catch up. 

One real growth budget proposal, presented during the Administration’s last year 

in offi ce, will not make much of a dent 

in addressing the long-term systemic problems the services now face. And one real 

growth budget proposal will certainly not 

solve the shortfalls caused by the Administration’s continued conduct of an aggressive 

“Base Force” strategy with a “QDR-sized”

force being paid for out of a “Bottom-Up 

Review” budget. 

Whether the services’ unfunded requirements are consistent with the approximately 

$150 billion identifi ed by the Joint Chiefs 

more than a year ago, or closer to the 

$400-$500 billion identifi ed by the Center 

for Strategic and International Studies in 

their recent Defense Train Wreck analysis, it 

is important to guard against getting bogged 

down in a debate over specifi c numbers. 

The fundamental point, and one from 

which to build consensus, is that the nation 

is going to need to spend a lot more money 

than the Administration is requesting, and 

projecting to spend in the future, in order to 

maintain even current military capabilities. 

For instance, despite signifi cant congressional increases to the defense budget last 

year, the service chiefs testifi ed last October to having at least $9 billion in critical 

unfunded requirements this current fi scal 

year, excluding the unbudgeted costs of 

Kosovo operations. Few, if any, of these 

shortfalls are addressed in the fi scal year 

2000 supplemental submitted with the 

budget request, and there is no end in 

sight to this level of short-term, operationally-related annual shortfalls in the years 

ahead. 

Whatever the level of annual operational 

shortfalls, annual modernization shortfalls 

will be signifi cantly greater. In this regard, 

it is important to note that while the Administration’s fi scal year 2001 procurement 

request has been advertised as fi nally reaching the fi ve-year old $60 billion dollar 

target, it was only with the help of some 

new accounting such as the inclusion of 

submarine overhaul funds in the procurement accounts for the fi rst time. 

More troubling, perhaps, than the specifi c modernization fi gure is the fact that 

the fi scal year 2001 procurement request 

refl ects at least the sixth consecutive year 

that acquisition programs have been cut in 

order to pay shorter-term bills. This year’s 

$60.3 billion dollar procurement request is 

$1.5 billion dollars below what the Administration projected the request would be at 

this time last year. This is diffi cult to comprehend in an overall defense budget characterized by spending growth. 

There were many who criticized President Reagan’s defense build-up of the early 

1980s. Yet the very force that resulted from 

this build-up is the one being worn out as 

a result of extensive operational deployments and inadequate resourcing. As former Secretary of 

Defense Schlesinger indicated 

before the House Armed Services Committee on February 8, 

the United States military continues to live off and wear out the 

“capital” of the late Cold War. 

Modernizing and maintaining 

even today’s smaller military 

forces, following on the heels of 

the past decade of declining budgets, is going to take the kind 

of sustained commitment and 

investment in the years ahead 

that took place in the early 1980s. 

Some may argue that the nation 

cannot afford such an investment. What the nation cannot 

afford is another decade, like the 

last, of declining defense budgets 

and shrinking military forces if 

the United States is to remain a 

superpower able to promote and 

protect its global interests.

0

5

10

15

20

FY 01 FY 02 FY 03 FY 04 FY 05

Fiscal Year

Budget Authority in Billions

of Current Dollars

Last Year’s Shortfall Estimate

This Year’s Shortfall Estimate

Prepared by: HASC Staff

— Continued from Page 1 —

Growing Defense Shortfalls:

The Service Chiefs’fi ve year estimate of shortfalls has grown from $38 

billion to $84 billion since last year
NATIONAL SECURITY REPORT 3

250

275

300

325

350

FY 93 FY 95 FY 97 FY 99 FY 01

FY 1993 President’s Defense

Budget Adjusted for Inflation

President’s Defense 

Budget Requests

Fiscal Year

Billions of Current Dollars

Prepared by: HASC Staff

0

125

$25-$50 billion

Prepared by: HASC Staff

Center for

Strategic & Budgetary

Assessments

Center for Strategic

and International

Studies

Note: Estimates derived from February 2000 CSBA Highlight and “Averting the Defense Train Wreck” (CSIS, 1999)

$100 billion

Additional funding needed to properly 

fund the President’s defense program

Defense Budget Erosion:

The President’s defense budgets have fallen over $300 billion short of 

meeting the costs of infl ation

Underfunding Defense:

Two independent estimates of the annual shortfall in the President’s defense budget
“Because of some of the shortfalls we have, we cannot make the timelines that are specifi ed by command... The 

second MTW [Major Theater War] is going to be real high risk. What does that risk mean? It means that there’s 

going to be a real cost to taking on that second MTW.” Admiral Vernon Clark, Commander in Chief, US Atlantic 

Fleet, October 4, 1999

“We can execute a two major theater war scenario. The fi rst MTW would be moderate risk. The second one, risk 

would be in the high category with risk here measured in the amount of time it would take us to bring that second 

MTW to conclusion. You measure that risk in national treasure, lives, and expended dollars.” General Eric Shinseki, 

Chief of Staff of the Army, February 10, 2000

“If you have a child, grandchild or possibly even a great-grandchild born after 1990, the fi rst decade of the post-Cold 

War peace, they are at risk and may pay with their lives the consequences of today’s disinterest in military affairs and 

neglect of the military.” Jeffrey Ranney, Center for Strategic and International Studies (CSIS), February 8, 2000

“While we are trained and ready today, there is still a mismatch between the resources we have and the requirements 

we may face.” General Eric Shinseki, Chief of Staff of the Army, October 21, 1999

“The pigeons will come home to roost in the period from 2010 to 2015. We cannot maintain the present force 

structure and reequip the forces on the present budget levels or the prospective budget levels.” James M. Schlesinger, 

Former Secretary of Defense, February 8, 2000

“The percentage of our gross domestic product that we currently invest for the national security pillar upon which 

our superpower status maintains itself is about three percent, roughly three cents on the dollar. Over the last 60 

years, the average has been 8 percent. Three cents on the dollar for global responsibilities and global leadership. 

My opinion is that if we do not sustain this turnaround that we will not sustain our role as a superpower...” General 

James Jones, Commandant of the Marine Corps, February 10, 2000

“... lack of funds will inevitably limit our ability to provide America’s soldiers, Marines, sailors, and airmen with 

equipment and training they will need to fi ght future adversaries. The consequence could be more than simply a 

diminution of U.S. infl uence abroad. The result of underfunding could well be measured in American lives.” Jeffrey 

Ranney, CSIS, February 8, 2000

“Our nominal objective, our nominal strategy is to be able to fi ght two MRCs [Major Regional Contingencies] more 

or less simultaneously. The simple reality today is that we cannot fi ght two MRCs more or less simultaneously.”

James M. Schlesinger, Former Secretary of Defense, February 8, 2000

“Procurement proposed to you in this budget is $60 billion in round fi gures. My own judgement is it probably needs 

to be perhaps $70 to $80 billion...” William Perry, Former Secretary of Defense, February 8, 2000

Defense

Quotables

The Defense 

Budget:

Shortfalls and risks

A special Defense Quotables

supplement to the National Security Report

Volume 2, Issue 1 February 2000

The National Security Report is archived on the House Armed Services Committee website (http://www.house.gov/hasc). 

Additional background information may be obtained from the committee staff (x54151).