WITNESSES AND STATEMENTS-Continued TUESDAY, FEBRUARY 2, 1971-Continued Irwin, Hon. John N., II, Under Secretary of State, accompanied by Table: Proposed military assistance and sales in fiscal year 1971.... Foreign Relations Committee staff study entitled "Arms Sales and Statement by Senator J. W. Fulbright on the military sales bill, Editorial entitled "More Tyranny for Greece," from the New York Article entitled "The Nixon Doctrine," by Flora Lewis, from the 3. U.S. commercial sales of military articles, fiscal year 1971_.. 4. U.S. economic assistance related to internal security and common defense purposes, fiscal year 1971_ _ _ Reponse to Representative Moorhead's request to supply for the record the annual operating cost of maintaining U.S. Forces in Response to Representative Moorhead's request to submit for the record a statement regarding Defense Department guarantees of Response to Chairman Proxmire's query regarding the statutory authority of the United States to conduct exchange transactions involving U.S. and foreign currency-- Response to Chairman Proxmire's request to supply for the record a list of GAO studies that have been made or will be made pertaining Response to additional written questions posed by Chairman Proxmire_ Selden, Armistead I., Jr., et al.: Comprehensive prepared statement.. Tabular response to Chairman Proxmire's request to supply for the record the fiscal year 1971 figures for military assistance and related Response to Chairman Proxmire's query regarding data on transfers of real and personal property to Vietnam and Thailand___ Response to Chairman Proxmire's query regarding the accountability of material and equipment in an active combat situation__ Response to Chairman Proxmire's request to supply for the record the unclassified reports regarding arms transfers made and estimates of requirements for the budget year to foreign nations. Response to Chairman Proxmire's request to supply detailed informa- tion on the use of MAP funds allocated and available to the Depart- Summary table of provisions of law requiring periodic or special reports to Congress in the foreign assistance field. Clarification of colloquy with Chairman Proxmire regarding the Response to Chairman Proxmire's request to supply for the record the number of ships in the U.S. ship loan program_ Response to Chairman Proxmire's query regarding reports that Soviet military aircraft have flown over or landed in Turkey on Response to Chairman Proxmire's query regarding the legality of Soviet military aircraft refueling in Turkey en route to the United Arab Republic in view of Turkey's NATO alliance obligations____ Irwin, Hon. John N., II, et al.: Response to Chairman Proxmire's request to supply a breakdown of the amounts spent annually by the United States on grant and loan programs and the total amounts of cash and credit sales to foreign Prepared annex to oral statement containing answers to specific questions posed in Chairman Proxmire's letter of January 22, 1971-- Response to Chairman Proxmire's request to supply for the record figures breaking down the contributions to NATO by the various Response to Chairman Proxmire's request to supply for the record measures taken to insure that military assistance does not have an adverse effect on the economic development of recipient countries___ McGovern, Hon. George: Table: Food for peace funds used for common defense purposes, 293 A list of GAO reports made during the period 1967–71 regarding investiga- tion of selected aspects of the military assistance program.. GAO report to the Congress entitled "Need for Increased Control Over Local Currency Made Available to Republic of Vietnam for Support of Its Military and Civil Budgets," No. B-159451, dated July 24, 1970--- ECONOMIC ISSUES IN MILITARY ASSISTANCE MONDAY, JANUARY 4, 1971 CONGRESS OF THE UNITED STATES, OF THE JOINT ECONOMIC COMMITTEE, Washington, D.C. The Subcommittee on Economy in Government met, pursuant to notice, at 10:05 a.m., in room S-407, the Capitol, Hon. William Proxmire (chairman of the subcommittee) presiding. Present: Senator Proxmire; and Representatives Moorhead and Brown. Also present: John R. Stark, executive director; Richard F. Kaufman, economist; and George D. Krumbhaar, Walter B. Laessig, and Leslie J. Barr, economists for the minority. OPENING STATEMENT OF CHAIRMAN PROXMIRE Chairman PROXMIRE. The subcommittee will come to order. Today, the Subcommittee on Economy in Government of the Joint Economic Committee begins hearings on the economic issues in military assistance. The subject of military assistance is an important one for many reasons. Previous investigation and studies by Congress and others have tended to emphasize the military and political aspects of military assistance programs. It is our intention to inquire into the economic aspects. There are two broad sets of issues that we hope to explore: First is the question of the costs and economic impact; what are the total budgetary outlays in sales; what are the economic impacts of the program at home and abroad? The second is the question of measurement, evaluation, and management; how are the costs and benefits of military assistance measured. Are the billions of dollars that the Federal Government is pouring into military assistance to foreign governments worth it even in a strict military sense? This morning we will look at the budgetary questions. For a number of months the subcommittee has been gathering information in an attempt to calculate both the total costs of military assistance, total government and commercial military sales to foreign countries. What we have found so far is that military assistance is a far more costly program than is commonly understood. For example, the budget document of the Federal Government for fiscal year 1971 states that military assistance in 1969 cost $685 million and estimated 1970 costs at $545 million. These figures are gross understatements of the true costs of this program. In fact the preliminary figures for all military assistance programs reveals that approximately $4 billion were spent in fiscal year 1970 and, I think, that figure is less than accurate and on the conservative side. It is more than $4 billion, not including sales programs. I doubt that more than a handful of Senators or Congressmen have been aware of this fact. Moreover, the commonly held belief has been that military assistance has been declining over the past several years. This, too, is a misconception, the magnitude of which will be brought out in these hearings. In my judgment, the most shocking concealment of military assistance funds in terms of rhetorical technique concerns the food for peace program. According to the budget document, "This program, closely linked to the AID program, combats hunger and malnutrition, promotes economic growth in developing nations and develops and expands export markets for U.S. commodities." That is a direct quotation from the act. Yet, we find that in the past 6 years nearly $700 million of food for peace funds have been channeled into military assistance programs. In 1970 $108 million worth of food for peace has gone for military aid to foreign governments. To continue using food for peace funds for military purposes is, to say the least, a corruption of the English language. The first witness is the eminent J. W. Fulbright, chairman of the Foreign Relations Committee. Senator Fulbright is an expert on foreign aid generally and on military assistance in particular, and has probably done more than any other individual to probe the intricacies of these programs and to disclose their strengths and weaknesses to public view. Among his many distinctions and qualifications is the fact that Senator Fulbright is one of the senior members of the Joint Economic Committee. Senator Fulbright, you may proceed in any way you wish. STATEMENT OF HON. J. W. FULBRIGHT, A U.S. SENATOR FROM THE STATE OF ARKANSAS Senator FULBRIGHT. Thank you, Mr. Chairman. With your permission, I would like to read my prepared statement and then if you have any questions about it why, of course, I will do my best to respond. Mr. Chairman, it is a pleasure to appear before your Subcommittee on Economy in Government to discuss the issue at stake in our military assistance programs. I cannot think of a subject which deserves and demands more careful study of the kind which has typified your work in the Senate. To quote Edward Hamilton, former staff director of the Pearson Commission and now a vice president of the Brookings Institution: One of the most undeveloped arts in the whole world is civilian analysis of defense budgets, and it's an important art, especially with relation to the general-purpose-forces budgets involved in most developing countries. Speaking in that context and as a fellow member of the parent body of this subcommittee, the Joint Economic Committee of the Congress, let me take this opportunity to express my gratitude to you, Mr. |