The budget we are submitting to you today will take us down in the 1995-1996 time frame to 3.6 percent-3.6 percent of Gross National Product being spent on defense. That is the lowest level since 1939.

Anybody who suggests, in my opinion-obviously others will disagree that the U.S. defense budget is a significant drain on the U.S. economy by 1995 or 1996 when we are spending as a percentage about what we spent in 1939, it seems to me hasn't looked at the facts.

Another way to analyze the defense burden, of course, is as a percentage of the total Federal budget. Again, the Korean War, 57 percent of the budget went for defense. Vietnam, 43 percent of the Federal budget went for defense. Peak Reagan years, 27 percent went for defense. At the end of this budget plan that we have here for you, we will be down to 18 percent of Federal spending for defense.

Now it may be that there are major deficit problems on the Federal level. Certainly, we have all wrestled with those. I would not challenge the proposition we have significant deficit problems in this country. But when you are spending only 18 cents on the dollar on national defense, it doesn't seem to me to be reasonable to suggest as some often do that it is the defense budget that is driving the deficit. Clearly it ain't the defense budget that is driving the deficit.

[The following information was received for the record:]

CHART 5.-DEFENSE BUDGET PRIORITIES

A quick summary. In the interest of time, I will run through these fairly rapidly. These are priorities that we have tried to emphasize as we put the package together this year.

The importance of people goes without saying. It is absolutely vital when you go out, as many of you have, and spend time with our forces in the Gulf that you recognize our number one asset today is the men and women in uniform. We think it is vital we continue to have that kind of force. The performance we have seen in the last 3 weeks in the Gulf War is a direct result of the investment we have made in our people over the last 10 years, and that continues to be a key priority.

Power projection and mobility the committee is well aware of. Force quality, readiness-the Chairman is fond of saying we will take the force down to whatever level the Congress will support. When we get it down to that level, we want it to be absolutely the best we can make it. That is a key priority for us in this package. Strategic offensive and defensive forces continue to be a priority. No question but what the situation vis-a-vis the Soviet Union is better than it was 3 or 4 years ago. But you cannot ignore our strategic requirements. That requirement has not gone away. The threat has not lessened. We indeed have to continue to maintain our strategic deterrent. We then move into the deployment eventually of strategic defenses.

Technological advantage speaks for itself. I refer everybody to the performance of our systems in the Gulf. The fantastic success of American arms in the Persian Gulf today relates directly to the investment this committee made over the years in technology. It is vital we retain that technological edge. We tried to do that in this budget.

Efficient acquisition refers to our efforts to try to do things intelligently in terms of how we buy systems. Streamlined infrastructure refers to the overall proposition, if we are going to downsize the forces as dramatically as we plan, it is vital we take down some of the infrastructure as well. We can't leave all the bases open, if we are going to have an army one-third smaller than it is today. [The following information was received for the record:]

CHART 6.-DEFENSE MANAGEMENT REPORT INITIATIVES

Data Processing and Corporate Information Management; Consolidate Finance and Accounting Services; Coordinate Maintenance Depot Services; Coordinate Maintenance Depot Services; Consolidate Supply Depots; Reorganize Contract Management; Improve Technical/Engineering Research and Development and Consolidate Commissary Operations.

This very quickly-defense management initiatives-you may want to spend some time on during the course of your hearings this year. Don Atwood, the Deputy Secretary, has been primarily responsible for these. All of this relates to better management in the Department, trying to find ways to save money without having to lay off personnel or reduce our combat capabilities. There are over $70 billion of savings in the 6-year defense program that we are submitting to you from these various initiatives.

[The following information was received for the record:]

Quickly, force structure changes-1990 to 1995, as I indicated, the Army goes down from 18 active divisions to 12 active divisions, from 28 to 18 total when you add in the Guard.

Aircraft carriers, 12. Carrier air wings shrunk to reflect that. Battle force ships, you remember the old goal was 600 ships. By 1995 we will be down to 451 ships.

Tactical fighter wings, 36 down to 26.

Strategic bombers, 268 to 181.

[The following information was received for the record:]

Manpower. You can't cut the force without reducing people. You will note the most significant column is the far right-hand column that shows the change from 1987 to 1995. The 1987 figure over here, about 2.1 million total active duty military personnel is roughly where it was when I became Secretary just over 2 years ago. From that time until 1995, the end of this program, we will reduce active duty military personnel by 521,000 people. It is roughly a 25 percent cut. If you take all of the force that is deployed today in support of Operation Desert Storm, all of the U.S. military personnel in Saudi Arabia, the oceans around it, there are a little over 500,000 people.

We are going to take a force of that size in terms of personnel out of the United States military over the next 5 years, if we follow this budget plan.

The numbers by service are up there for all to see. Two other key points to be made, though. We do not want to cut just active force. We also have to cut the reserves. I know that will be contro

versial. It will be a source of great debate. There is the notion that the reserves are cheaper. That is true.

But the fact is, we built a reserve structure in a Cold War environment; just as we built the active force in the Cold War environment, and there is justification, of course, in taking down the active force to take down the reserves as well. The cut is roughly proportionate.

Civilians; also we will be laying off almost 200,000 civilians out of the Department under this plan.

[The following information was received for the record:]

Major program terminations; always one of my favorite charts. The items up there are a collection of programs. Some of them we terminated because it didn't look like we were going to be able to produce them at an acceptable cost or they weren't going to perform the way we hoped they would.

Other programs we are terminating simply because, if you have a smaller army, you don't need as many Bradley Fighting Vehicles as had been the case. If you have a smaller air force, you don't need as many F-16s.

These terminations are a vitally important part of ending up with a balanced force. We have to cut personnel. We have to cut force structure. We have to cut programs. We have to cut bases, if we are going to finish up 5 years down the road with the kind of balanced force that we think is required to give us the maximum return on our dollar.

[The following information was received for the record:]

CHART 10.-MAJOR PROGRAMS TERMINATED LAST YEAR

V-22 Osprey (Production); F-14D Aircraft; Army Helicopter Improvement Program (AHIP); Phoenix Missile; M-88A2 Improved Recovery Vehicle; F-15E Aircraft; Apache Helicopter; M-1 Tank and Maverick Missile.

These are some of our old favorites that we have debated before. There is no new money in the 1992-1993 budget for any of these programs.

We have recommended in the past they be terminated and the recommendation hasn't changed. The budget we are submitting to you does, in fact, shut down or terminate all of these programs. We can come back and talk to them one by one later on.

What are we going to buy?

[The following information was received for the record:]

CHART 11.-FISCAL YEAR 1992-FISCAL YEAR 1993 STRATEGIC FORCES

Well, these key strategic systems, the B-2 bomber, a source of great controversey. I recognize it was an item that was debated at great length before this committee last year. I expect it will be debated again.

If there is one lesson I have learned from the Gulf conflict, it is the value of stealth.

Let me repeat that. One lesson that has come through loud and clear out of the Gulf conflict is the value of stealth technology. To give you a rule of thumb, to think about, in terms of Operation Desert Storm, in the first hours of that conflict, 40 percent of all the combat missions that dropped ordnance on targets, were flown by 5 percent of our Air Force, our F-117 stealth bombers.

We could not have done it as efficiently and effectively at lower cost to life, ours and the enemy's, if we had not had that stealth capability.

The B-2 represents that capability in the strategic bomber. We have an enormous amount invested in it. It is very important that we go forward with the program. That is in the budget I am submitting.

Strategic Defense Initiative is a major priority for the President and the administration. The President spoke to it in the State of the Union Address, one of the few programs he focused on specifically.

Another lesson I think that comes out of the Gulf War is the importance of defending against ballistic missile attacks. You cannot, in my opinion, sit there and watch the Scuds fly at Tel Aviv and Riyadh and not be concerned that we have to have a way to develop the capacity and field the capacity to deal with ballistic missiles. Whether it is the Scud, a relatively cheap, crude system which the Patriot has admirably performed very well against, or whether it is the far more robust ballistic missile threat we see developing out there, not only from strategic systems in the Soviet Union, but also Third World capabilities, I continue to believe that future sec