The CHAIRMAN. Do you think that the public might seek changes in the allocation of the resources by the Federal Government if they were made more aware of how their money was being spent? Mr. SCHULTZE. Yes, sir, I think they would.

PSYCHOLOGICAL IMPACT OF VIETNAM WAR

The CHAIRMAN. These figures are so large and difficult to comprehend. I think this is one of the reasons there isn't a greater concern among the people generally as to how their money is being spent. It is so difficult to deal with this question of priorities. This again comes back to my feeling about the psychological impact of the war. It blinds people. They feel you shouldn't question what is being spent for the war because our young men are being killed. Therefore, it is sort of unpatriotic to even question anything of a military nature while that is going on and I can understand that sentiment.

This is what I meant. It is kind of an incalculable aspect of the war affecting what we do. These figures support the allegation made by some of those who are disillusioned with our country that we have become a militaristic country. The way you spend your money is a reflection of your own sense of values and of what is important in a society. Don't you think that is true?

Mr. SCHULTZE. I fully agree with that.

The CHAIRMAN. Therefore, it has very great implications as to the nature of your society.

There are several articles here on which you might comment.

EFFECT OF VIETNAMIZATION AND SALT ON DEFENSE SPENDING

The Atlantic magazine in May of 1970 contains an article by Miss Elizabeth B. Drew on the 1971 budget. Near the end it states as follows:

One of Laird's associates says that the amount spent for the military can be "more or less" what it is now only if the SALT talks and Vietnamization are a "complete success," and if we do not have to "join" the arms race.

Would you agree with that?

Mr. SCHULTZE. No, sir.

The CHAIRMAN. Why not?

Mr. SCHULTZE. I would not. I don't want to downplay the importance of the SALT talks, but I do want to point out or remind you that of the Defense budget, $18 billion is strategic forces, and $54 or $55 billion is for conventional forces, and clearly, it seems to me, there is major room for review and surgery there. That is point No. 1. And to pin the

The CHAIRMAN. She says only if the SALT talks and Vietnamization are a complete success.

Mr. SCHULTZE. Excuse me.

The CHAIRMAN. Vietnamization would include part of it.

Mr. SCHULTZE. The implication of that is that the only way to exit from Vietnam is through Vietnamization and I don't subscribe to that. The CHAIRMAN. I don't either.

Mr. SCHULTZE. If you accept those two premises then at least there is something in the statement, but even then I think it is overdone.

44-296-70-pt. 2- -9

The CHAIRMAN. I think that is a valid criticism because what I think she means is to assume that Vietnamization is well designed to accomplish its purpose, an assumption which I don't think is justified. Mr. SCHULTZE. Justified or not it is surely not the only, you know— I mean if this doesn't work then we are there forever; it seems to me that is absurd.

The CHAIRMAN. Of course, this wasn't her statement. She was quoting.

Mr. SCHULTZE. I realize that.

The CHAIRMAN. She was quoting Mr. Laird.

Mr. SCHULTZE. She is too smart to have made that statement herself. (The article referred to follows.)

[From the Atlantic magazine, May 1970 (Apr. 16, 1970)]

WASHINGTON

(By Elizabeth B. Drew)

The first budget for which he was fully responsible. President Nixon told us "begins the necessary process of recording our national priorities . . . I seek not only to address today's needs, but also to anticipate tomorrow's challenges. We must pursue our purposes in an orderly fashion."

From the outset, this Administration has placed great emphasis on orderliness, or the appearance of it. In addition to his penchant for announcing "firsts" (for example, the first time a British Prime Minister sat in a meeting of the National Security Council), the President is won't to say that a decision will be announced in thirty days, that a certain problem will be taken up next Saturday. His aides are constantly portraying the President as the great conceptualizer, the lonely man with the yellow legal pad in the Lincoln sitting room. Probably no recent Administration has struggled as hard to wrap its actions in philosophical packages.

But events still have a way of overtaking, and even in the steadiest of hands a great deal of government is by improvisation. The current Administration, perhaps particularly the current Administration, is no exception.

By the end of the first few months of this year, the Nixon Administration had issued its own set of the documents by which the group in power traditionally defines itself: the State of the Union Message, the Economic Message, and the Budget Report. To these was added a Nixon "first," a report on "United States Foreign Policy for the 1970's." ("The first of its kind ever made by a President to the Congress." Mr. Nixon told reporters gathered in the East Room for a briefing on the message, "the longest report made to the Congress except for the budget message.") There then followed the Defense Department's traditional "posture statement," describing the military budget for the new fiscal year and, more important, the assumptions and attitudes on which it was based. There was also a paper on domestic strategies, or the "New Federalism," as the Nixon Administration calls it, written by a White House speechwriter, William Safire, under the pen name "Publius." The paper was not an official White House document, but it was purposely circulated to the press. Safire, a former public relations man who snapped the famous photograph of Nixon and Khrushchev debating in the kitchen, has emerged as the President's major speechwriter. There is good reason to believe that the President played a major part in the creation of the "Publius" paper.

It is perfectly consistent with presidential tradition to use these documents as instruments of propaganda, telling us what an Administration wishes us to think is happening. Domestically, the Administration was not only "reordering priorities" but also decentralizing government, "abolishing obsolete programs," and "improving the delivery systems." In economic management, there was to be a balanced budget, a curb on inflation, and "restricting the rise of unemployment to a relatively small and temporary increase." The foreign policy, or "Nixon doctrine," is a lower profile and less interference. The military budget, reflecting the new foreign policy and the "reordered priorities," had been cut to "rock bottom."

In its efforts to project the desired image, the Administration has thus far been blessed with a remarkably complaisant press. This works both in small matters and in large ones. Not long ago a Very Important Journalist here remarked privately and quite seriously, "I fear for this country." He had in mind the setbacks in dealing with our race problems, the rising national distemper, and what many journalists who have taken a close look feel to be a striking, and surprising, lack of competence on the part of those now in power. Neither he nor his paper, though, he conceded, has reflected this.

There are exceptions, but for the most part the collective press here is protective of the President, or the presidency. It did not turn on Lyndon Johnson until the country had. Now there is the sense here that the country is either (a) pleased by the President's performance, or (b) so bored by Nixon and his men that it doesn't want to read about them. Therefore, though they are troubled by what they see, and though the President is developing a rather substantial credibility gap of his own, the men of the press have not yet hit him very hard. The events of the recent weeks, in particular the number of times the Administration was tripped up in its explanations of what was happening in Laos, may well turn out to have been a turning point. For too long, it seems, the Administration has failed to realize how sensitive the public, the press, and the Congress become when they are not being told the truth about a war.

In smaller matters, the Administration has developed the fine art of multiple ballyhoo, and gets away with it. For example, the same cuts in defense spending were announced again and again last year, giving the impression that much more cutting was taking place than did. The same thing is happening this year: first, the cuts were announced in the defense budget, later, base closings which were already encompassed in the earlier cuts, were announced. The same reductions, most of them quite minor, in domestic programs were announced in the budget message and again later in a special "Economy Act." The Economy Act was sent forth from the White House with great fanfare, and newspapers and television were helpfully supplied with, and ran, features on the Board of Tea Tasters, whose abolition would save the government all of $125,000 a year.

PENTAGON PEACE-KEEPING

The "reordering of priorities" in the Nixon Administration's budget for the 1971 fiscal year resulted largely from military savings through the partial withdrawal of troops from Vietnam. On the civilian side, there were substantial increases for transportation, the new family assistance program and food stamps. But the major increases in domestic spending were those required by law-the built-in increases in such programs as social security, welfare, Medicare, and Medicaid. The spending which was counted up under "human resources' also included $8.5 billion in veterans benefits, arguably a cost that should be charged to national defense.

The foreign policy report and the defense posture statement both explain that, for the first time domestic and military needs were weighed against each other in the National Security Council. A Defense Program Review Committee was also established, with representatives from various defense, foreign policy, and economic policy agencies, to review Pentagon requests. "This permanent committee," said Mr. Nixon, “reviews major defense, fiscal policy and program issues in terms of their strategic, diplomatic, political and economic implications and advises me and the National Security Council on its findings."

In the end, however, after all of the reviews, the shape of the Pentagon budget is no different than it was before. Even some Administration men concede that the procedural changes were not sufficient to make a substantive difference. For one thing, the National Security Council is not exactly neutral ground for weighing domestic needs against those gathered under the heading of defense. For another the exercise started with various levels of defense spending, showing what would be left for domestic purposes, rather than the other way around.

HEW Secretary Robert Finch, for example, was not invited to tell the group what he saw as the irreducible domestic needs, and what would be left for defense thereafter. The President, according to associates, gave the Defense Department a ceiling on defense spending, one low enough to result in "reordered priorities," and one that seemed politic in terms of the debate over military spending, and prudent in terms of his own view of the world. "This went as far as the President wanted to go," says Robert Mayo, the Director of the Budget.

The Pentagon budget of $73.6 billion represents a reduction of $5.8 billion from last year. To keep peace with the Joint Chiefs of Staff while reducing the budget, Defense Secretary Melvin R. Laird gave them the major role in deciding how the money would be divided up. He called this "participatory management." As a result, while the purchase schedule for some weapons has been stretched out, no major weapons systems have been scrapped. Defense officials still point to decisions to abandon the Manned Orbiting Laboratory and the FB-111 plane, which were made last year. (The MOL had been a sop to the Air Force, and Pentagon and budget civilians had had their skeptical eye on it for some time. Its reconnaissance functions overlapped those of other programs. It was scrapped one afternoon last year, according to a reliable White House source, when the White House decided that it had to respond to pressure from Capitol Hill to expand the food stamp program. At that time, the White House refused to say where it had found money for food stamps. The MOL cut was not announced until later. This, and the sizable increase for food stamps this year, show that if the pressure of a program is strong enough, and is maintained, the President can still be flexible.)

The most expensive part of the Pentagon budget is for the maintaining and equipping of troops. As long as troop reductions can be made, so can large savings, and the harder decisions can be postponed. Troops, unlike weapons, do not have contractors to lobby for their survival. At some point, and it won't be very far away, either the weapons will have to be reduced or the defense budget will go back up.

In detailing how defense savings are being made, defense officials may have cast some light on the President's near-term "plan" for Vietnam. The Administration intends to end the fiscal year-June 30, 1971-with 2,900,000 men in arms. Before Vietnam, troop levels were at 2,700,000 men. The military required 800,000 more men in arms in order to send 500,000 to Vietnam. This brought the wartime total to 3,500,000 men. A reduction to 2,900,000 indicates, therefore, that the Administration contemplates withdrawing some 300,000 to 350.000 men from Vietnam by next June. If the President continues to hinge a pullout on the ability of the Thieu-Ky government to survive, however, these plans will not really be in his control.

In the longer run, the Administration says, our defense planning will be geared to a capacity to fight "12," rather than to "2%," wars. But since the capacity to fight "22," wars was more concept than reality, subtraction of one war is not very meaningful. Moreover, the language in the official reports was so confusing that reporters in the background briefings counted up and found at least two wars. ("We will maintain in peacetime general purpose forces adequate for simultaneously meeting a major Communist attack in either Europe or Asia, assisting allies against non-nuclear Chinese threats in Asia, and contending with a contingency elsewhere.") "They have taken advantage of our ridiculous concept," says a former Democratic defense official, "and come up with their own ridiculous concept." Both concepts assume a war in which the United States and the Soviet Union would not use strategic nuclear weapons against each other, but would fight an extended land war across Europe. Several defense planners do not think that this would be agreeable to the Europeans.

Since defense planning still assumes that there could be another war along the lines of World War II, our arsenal is still being stocked with World War II weapons. Thus the new budget contains funds for a new large tank (called, straightfacedly, the New Austere Main Battle Tank); for a new nuclear aircraft carrier, like all carriers highly vulnerable in an all-out war; for amphibious assault ships of the sort that were used in the island-hopping war against Japan in World War II. Expensive modernization of the Navy continues, despite the diminished likelihood of a war at sea.

The money for research and development has been increased. This is where the momentum for new weapons begins. Once a weapon is ready to be developed, it usually is.

"WALL-TO-WALL SHIPS"

The Pentagon rests the case for much of this, plus the expansion of the antiballistic missile system, on what the Russians are doing. They point to the fact that the Soviet Union has increased its spending for research and development, and to its naval buildup in the Mediterranean Sea and the Indian Ocean.

"Why should we allow our decisions on weapons to be controlled by what the Soviet Union is doing?" asks Paul Warnke, Assistant Secretary of Defense for

International Security Affairs under President Johnson. "They have a military bureaucracy, too, and we have no reason to believe it's as bright as ours. There's a tremendous tendency to match what the Soviet Union has and also keep what they don't have. For instance, they have no aircraft carriers. If we do both, we're going to bankrupt ourselves. We started off with a monopoly situation in such things as strategic weapons, or naval power. The fact that they build up may be regrettable, but we can't maintain the monopoly, whatever we do. The only way you could counter their Mediterranean ships is with enough ships that there wouldn't be room for theirs-wall-to-wall ships. That their ships are there has nothing to do with whether there would again be a naval war."

The defense posture statement says at the outset that "the Soviets are continuing the rapid deployment of major strategic offensive weapons systems that could, by the mid-1970's, place us in a second-rate strategic position with regard to the future security of the Free World." It frequently uses such conditional language to cite potential threats. Moreover, the Defense Department's own count further back in the document shows that the United States continues to maintain a four-to-one lead in the number of deliverable warheads, is ahead by about two years in the capacity to deploy multiple independently targeted warheads (MIRV's), has four times as many bombers, and has nuclear-missileequipped submarines that are invulnerable. Defense officials say that the United States is now so far along in the testing of MIRV's that they are likely to be deployed within months. This means, they concede, that since MIRV's are so hard to inspect, it is probably already too late to ban them through an agreement with the Soviet Union. With both sides equipping themselves with multiple warhead missiles, the ABM becomes more vulnerable, and the land-based missiles it is designed to protect become obsolete.

The foreign policy statement described the Nixon Doctrine as follows: "Its central thesis is that the United States will participate in the defense and development of allies and friends, but that America cannot-and will not-conceive all the plans, design all the programs, execute all the decisions and undertake all the defense of the free nations of the world. We will help where it makes a real difference and is considered in our interest." This rejects something that not even Lyndon Johnson and Walt Rostow sought. The gist of the doctrine is that it seeks to maintain the Communist versus Free World status quo, without having to use our troops. The Pentagon statement, reflecting this, argues for more arms assistance for other nations. "Many of our most willing and potentially helpful friends and allies," it says, without further identification, "simply do not have the resources or technical capabilities to assume greater responsibility for their own defense." The Congress, in particular the Senate Foreign Relations Committee, has been hostile to military assistance in recent years. They see it as a waste, and as a questionable means of supporting questionable regimes. The Pentagon proposed to resolve this by asking, probably in vain, that jurisdiction over military assistance be transferred to the more sympathetic armed services committees.

If priorities have not yet been reordered, the next question is whether they can be expected to be. The study of the budget recently released by the Brookings Institution, a Washington research center which houses several former Democratic officials, suggests that varying strategies could produce a Pentagon budget by 1975 of anything from $49 billion to $78 billion in 1971 prices. Defense officials say that the new Nixon budget is "transitional." Give or take a little, though, several say, one should not expect the Pentagon budget to be much lower in the future. One of Laird's associates says that the amount spent for the military can be "more or less" what it is now only if the SALT talks and Vietnamization are a "complete success," and if we do not have to "join" the arms race. Given the predilections of this Administration, said one of its defense officials, one should not expect substantial further "self-generated" defense cuts.

MEANING OF VIETNAMIZATION

Senator CASE. There are others of us, Mr. Chairman, who think Vietnamization is only a cover for withdrawal.

The CHAIRMAN. Others think it is only a cover for making the war tolerable, but continuing it. So there is a difference of view.