much as possible. It is too early to tell whether this supplemental will cover all our FY 1991 incremental costs. But it will allow us to retire many of our known expenses and to manage our funding requirements without having to come back to Congress right away or frequently or before we have a better estimate of the eventual total cost of Desert Shield/Storm.

Mr. Chairman, members of the committee: Thank you for this opportunity to discuss the administration's fiscal year 1991 Desert Shield/Storm supplemental appropriations request.

Last fall's budget summit agreement specified that incremental costs associated with the Persian Gulf crisis would be treated as emergency funding requirements, not subject to the defense caps in the agreement. Consequently, the president's recently submitted FY 1992-93 defense budget request and its projected long-term outlays do not reflect those costs. FY 1990 incremental costs of Desert Shield and increased fuel prices were covered by shifts in previously appropriated DoD funds ($800 million) and by a supplemental appropriation ($2.1 billion). We now have presented to Congress a request to cover FY 1991 incremental costs of Operation Desert Shield and Desert Storm, at least in part.

Because it is impossible to predict accurately future operational requirements in so uncertain a situation, this supplemental does not purport to estimate definitively or necessarily fund completely what might be the eventual total cost of the war and the subsequent redeployment of U.S. forces. Rather, the primary intent is to obtain approval for a funding plan to cover our immediate and known operational requirements, to include establishing a mechanism for spending foreign contributions most effectively in order to offset U.S. costs as

Major Provisions

The FY 1991 Desert Shield/ Storm supplemental proposes the establishment of a Working Capital Account and requests $15 billion in new budget authority to be appropriated into the account. This is needed to provide the Department of Defense with the necessary flexibility to meet immediate operational requirements until sufficient allied contributions are received and to accelerate production of essential items.

This $15 billion in new budget authority, plus the $53.5 billion pledged by our allies, could prove sufficient to cover all our Desert Shield/Storm incremental costs. But it will be awhile before we know that. More new budget authority might be needed. On the other hand, we may not need the full $15 billion; and our supplemental proposal would give DoD the authority and flexibility to use offsets and allied contributions to achieve that if at all possible.

The supplemental also requests the appropriation of allied contributions deposited into the Defense Cooperation

Account and authority for the subsequent transfer of these funds, as needed, to specific DoD appropriation accounts in order to cover Desert Shield/ Storm costs. This would parallel the flow from the Working Capital Account into DoD appropriation accounts.

To redirect already appropriated monies within DoD, the supplemental requests the transfer from Guard and Reserve military personnel and operation and maintenance accounts of funds no longer needed for their original purposes to the active military personnel and O&M accounts. This action reflects savings in the Reserve account from the callup of large numbers of Guard and Reserve personnel to active duty.

Once appropriated, funds in the Working Capital Account and Defense Cooperation Account would be used in a specified priority.

First priority would be to finance our FY 1991 Desert Shield baseline costs, through March 1991. The term "baseline" refers to the cost to maintain and support our forces without hostilities. Hostilities add a highly unpredictable daily cost to a fairly steady baseline Desert Shield cost.

Our baseline Desert Shield costs are estimated to be $9.1 billion for October through December 1990 and $12.3 billion for January through March 1991. DoD has been financing these costs out of our regular appropriations, principally from the

Military Personnel and Operation and Maintenance accounts. Since the military services will soon run out of authority to obligate additional funds for Desert Shield, I now have authorized the obligation of funds in excess of available appropriations, in accordance with Section 3732 of the Revised Statutes, pending passage of a supplemental. Covering these ongoing costs will be our first priority.

Our second priority for newly appropriated funds will be for the production of missiles, ammunition and selected other items that are needed by our Desert Shield forces or will have to be replaced as a result of it. Much of this money is critical to ensuring that our industrial base remains capable of producing the items we will need.

Third priority will be $7 billion to cover estimated costs during an orderly phasedown, after hostilities end. This includes the cost of personnel, fuel, intheater support and appropriate operations tempo.

Fourth priority is the $5.2 billion we estimate it will take to return personnel and their equipment to Europe or the United States. This includes transportation, replenishment of pre-positioned and war reserve stocks, return of Reserve ships to non-deployed status and payments for accrued leave of reservists.

does discuss what a day of combat might cost, over and above the baseline cost of sustaining U.S. forces in the theater, absent hostilities. Costs for a day of combat would stem from increased OPTEMPO (operating tempo), maintenance, prisoner support, medical transportation, ammunition, missiles and lost or destroyed equipment.

All Desert Shield-related cost estimates consider only incremental costs. By "incremental" we mean costs that are directly related to the gulf crisis and are in addition to funds already budgeted for the forces involved. For example, incremental Desert Shield costs for an Army division are those that are over and above the budgeted amounts it would have spent if it had not deployed. The bulk of those incremental costs are due to the increased operating tempo and other preparations for possible combat under harsh environmental conditions.

Incremental costs are distinguished from total budgetary costs in that they are derived by subtracting previously budgeted funding. Incremental costs do not include previously budgeted funds for pay, training, maintenance and new equipment for active forces deployed to the gulf area.

Estimating incremental Desert Shield costs has been complex and difficult. At the source of the process, USCENTCOM (U.S. Central Command) and other .participating commands put together estimates of their total gulf-related costs. The military services and defense agencies then validated these estimates and subtracted—when

applicable—any FY 1991 appropriated amounts that will be foregone to derive incremental costs. Finally, the DoD Comptroller staff scrutinized these estimates to ensure that they were properly priced, legitimately attributable to the crisis and consistent in their derivation across all military services and defense agencies.

In sum, DoD's estimating procedures have been rigorous and, I believe, have produced sound cost estimates.

Our baseline Desert Shield costs cover the deployment and support of U.S. personnel in and around the Arabian Peninsula, absent hostilities. Costs include the Reserve call-up, imminent danger pay, transportation, fuel, in-country support, increased OPTEMPO and special equipment. While the estimates discussed above cover only the first half of FY 1991, we have generated cost estimates for the whole year. Our full FY 1991 Desert Shield estimates are based on past and projected troop levels, support requirements and other factors. To maintain our baseline Desert Shield force, FY 1991 incremental costs would total $39.2 billion. This estimate for the full fiscal year was formulated because this is the frame of reference in which we normally deal. It does not imply that we expect our operations to continue for the entire year.

Military Personnel. The military personnel categories of our FY 1991 Desert Shield baseline costs total $10.7 billion. During the gulf crisis, over 200,000 ready reservists have been called to active duty. Current plans project the total Reserve callup to reach 346,000 before the end of April. These reservists primarily are needed for critical combat service support. We need pilots, navigators, loadmasters, munitions handlers, aircraft maintenance, medical services and other specialities. The incremental FY 1991 cost of these activated reservists is estimated to be $8.4 billion.

By the beginning of FY 1991, 250,000 personnel were eligible for imminent danger pay at $110

Desert Shield Costs

This supplemental makes no assumption about when the war will end and does not attempt to estimate its total cost. However, the administration's submission

Good morning, and thank you for asking me to be here today. I am honored to participate in this important conference, and I am also honored to be speaking before representatives of the largest American Legion membership since World War II. American Legion membership recently surpassed the 3 million mark, a remarkable achievement that you should all be very proud of.

The international coalition has now been waging war against Iraq for a little more than a month, and I am happy to report to you today that the liberation of Kuwait is on course. Iraq's capacity to sustain war is being destroyed. The question is not if Saddam's forces will leave Kuwait, but when. Our objectives in the Persian Gulf remain constant: to drive Iraq out of Kuwait, to restore Kuwait's legitimate government and to ensure the stability and security of this critical region.

A thoroughly professional and effective military campaign is under way. But the task is formidable, and no one should underestimate Iraq's military capabilities. We may still have some tough sledding in front of us. The quality of American technology has enabled us to successfully deal with difficult military conditions and help minimize loss of life.

Americans are watching our Patriot missiles destroy Scuds over Riyadh and Tel Aviv. The F-117 stealth fighter comes and goes as it pleases without materializing on Iraq's radar screens.

Advanced weapon electronics like those in the Tomahawk cruise missile have made it possible to pinpoint targets with unprecedented precision. And now we're seeing the first-rate performance of our ground equipment. As the president has said, “We have given our men and women the very best, and they deserve it."

Many lessons will be drawn from our experience in this war. The biggest lesson for me is the success of the all-volunteer force. The progress of Operation Desert Storm and the competence and professionalism of our service members in Southwest Asia are a daily testimony to the wisdom of adopting an allvolunteer force. First-rate equipment is necessary, but the key ingredient is quality people. Since the implementation of the all-volunteer force in July 1973, the United States has relied exclusively on volunteers to meet its military manpower requirements. With congressional support and support from interested groups like the American Legion, we have built the most capable military force in our country's history—composed of people who are intelligent, well-educated, motivated and committed to the defense of our nation. Once again, there is a strong sense of pride and dignity in the military profession.

'believe that it can continue to meet our needs for the foreseeable future. Our volunteers in the Persian Gulf have demonstrated how well they can operate such complex equipment as tactical fighter aircraft, laserguided bombs and anti-ballistic missile systems. In addition, our Reserve forces have enthusiastically answered the call to duty.

Despite all our success, some people still say we still need to return to conscription. I know they aren't meant this way, but such calls are demeaning to the brave men and women now deployed in the Persian Gulf and to the United States military as a whole. They suggest military service is an onerous, unpleasant burden rather than a noble, honorable profession that offers its members challenges and rewards as well as the opportunity to serve one's country.

We have no intention to return to a draft. We don't want it, and we don't need it. There are currently over 2 million personnel on active duty and over 1 million in the Selected Reserve. This is more than enough to get the job done and get it done right.

Now, understandably, the general public is nervous about the conflict in the gulf, and we receive many letters opposing a return to conscription. But the truth is that the alternative to the all-volunteer force would cost more and would make a quality force more difficult to achieve. Advocates of conscription argue that a functioning draft system is

Voluntarism Works

We are convinced that voluntarism is the way to go. We have proved that we can make the allvolunteer force work, and we

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