fluence with the world's players. Even our success in Desert Storm depended, at least in part, on our ability to marshal by the justice of our cause the active support of over 30 different countries, including some who in times past were our adversaries.

town; but even Peter Muhlenberg could not defeat the dark side of human nature. There will always have to be Peter Muhlenbergs, even in your generation, who are willing to put their lives at risk for the sake of what they believe in.

Now, it may be tempting to pretend that our power in the world is ours to take or leave, according to our whim, but it's not.

We cannot simply retire to our island continent and let events in the world drift as they may. We've tried that too many times before; and each time the result has been unimaginable violence, misery and chaos.

and the opportunities of the post-Cold War era, the era which will soon be yours to shape in whatever image you choose.

I only ask you to remember when you begin to shape that era that the end of the Cold War has not meant that the world is suddenly a safe and tolerant place. Desert Storm should have made that abundantly clear, not to mention this historic, breathtaking week in Moscow.

The end of East-West tension has, in effect, taken the lid off quarrels that have been simmering all over the world for years— in Yugoslavia, for example, in Algeria, in the Ukraine, in Pakistan and India. Eastern Europeans are rediscovering old ethnic identities and prejudices and the inevitable conflicts that go with them. The Middle East is still the tinder box it's been since the days of the Hittites and Assyrians.

And there are new sources of conflict as well. Oil has caused bitter quarrels already. Water, and access to it, may provoke fights in the near future. So could hunger, economic crises and the migration of populations from poor regions to rich ones.

No matter how much we want to believe otherwise, there will always be strong countries willing to violate weak ones. There will always be people with the means and the will to make war on others. There will always be tyrants wanting to feed on innocent human lives.

Gen. Peter Muhlenberg .. understood those truths back in 1775 when he cast off his clerical robes and strode from his pulpit in the uniform of an officer of the Continental Army. The Reverend Gen. Muhlenberg later defeated the British at York

Moral Nation

The plain fact is that America is a moral nation with obligations to the world. Those obligations arise from our principles, from our inherent power and from the fact that we alone possess the means to build and lead a coalition-for example, the kind that liberated Kuwait. We are the world's only superpower. We cannot pretend that we are just another face in the crowd when the free and peaceful fabric of the world community, a fabric we helped create, is threatened. Indeed, among the first words from Boris Yeltsin during the tense early hours of last week's coup was a plea for moral support from the United States of America.

Yet, at the same time, the world is not America's playground. We lead the community, we don't rule it. We have neither the right nor the means to impose our will unilaterally. Our ability to exert power is a function of our alliances, our international relationships and our moral in

America's Challenges

But the military challenges of deterring war, of preserving peace and stability, are only a part of the test that faces America in this new era. They may not even be the most important part.

We won the Cold War, and we proved ourselves in Desert Storm. But our long-term credibility as a nation of hope and opportunity depends also on what we do about other vitally important issues such as about high-school graduates that can't read, about the savings and loan disaster, about continuing tensions between the races, about America's health, about our industrial competitiveness, about the AIDS epidemic, about our environment and about the national debt.

In a recent Foreign Affairs article, Robert Hormats pointed out that military power is a necessary thing for the world's only superpower, but that military power alone is irrelevant if we allow our economic strength to wither, if we don't educate our young people to function in society and in the work place, if we don't tap the productive potential of our minority groups and if we don't invest in the long-term health of our population and our industries.

In short, the United States is facing many competing national priorities in the post-Cold War period, and the world is watching to see how we will balance those priorities. It is waiting to see if we will make the hard decisions that have to be made.

We've begun to make some of those decisions already, including those that involve the nation's defense.

For example, President (George) Bush, Secretary of Defense (Dick) Cheney and those of us who lead the military departments are deeply involved

Before I discuss the framework and plans for the drawdown, I'd like to thank the subcommittee for its staunch support of a core of programs to aid our separating military and civilian personnel in making the transition from DoD into the private sector. Both the committee and the department had the same goals in mind for this programto treat departees with fairness and dignity and to provide them with adequate separation pay, benefits and useful transition services. I am pleased to tell you that, with your help, we have met or exceeded these goals.

During the past year, we have been hard at work defining and implementing programs to serve our transitioning military and civilian members. The military services, working with my office and the departments of Labor and Veterans Affairs, have established a core program that meets the requirements of the National Defense Authorization Act for fiscal year 1991 and the needs of our separating personnel and their families.

Programs have been established to ensure that everyone discharged receives appropriate counseling to include financial planning; advantages of affiliation with the Selected Reserve; discussion of the Montgomery GI Bill benefits; job-search and placement assistance for government and private-sector programs; relocation advice; effects of a career change; medical and dental coverage; compensation and vocational rehabilitation benefits (for medically separated personnel); and

the availability of the Transition Assistance Program seminar. A preseparation counseling guide will be published and made available to the services to supplement their existing efforts.

Using available computer technology, a resume/registry data base, electronic bulletin board services and a verification document of military experience and training will be provided to all personnel leaving the service. DoD is establishing private and public partnerships with several organizations for job-search purposes. Additional Benefits

For those involuntarily separated, there are additional benefits, such as extended commissary and exchange benefits, employment preferences in nonappropriated-fund instrumentalities, extended health care, continued use of military family housing, excess leave or permissive temporary duty to facilitate relocation activities, priority affiliation with the National Guard or Reserves, expanded travel and transportation allowances, extensions in DoD schools and an additional opportunity to enroll in the Montgomery GI Bill.

The fundamental policy is now in place for all of these benefits and services, and we are now establishing the operational programs. I want to conclude this part of my testimony by emphasizing that while taking care of those leaving, we will not lose sight of the needs of those who stay with us. We will do everything we can to preserve the strength and vitality of our

all-volunteer force.

In turning to the main reason you asked me here today, the department's framework and plans for accomplishing the drawdown, I know you are aware that by the end of fiscal year 1995, the uniformed services must reduce their end strengths by 400,000 members. Our principal challenge is not simply to shrink the force. That would be relatively easy. Instead, we must shape our new and smaller force so that it meets our warfighting needs. Accordingly and pursuant to Section 402 of the fiscal 1991 National Defense Authorization Act, we have issued instructions addressing a uniform process for implementing reductions in strength to the military departments. These policies, issued in a Jan. 16, 1991, memorandum to the military departments, provide specific guidance to the services to ensure we maintain a vibrant, sustainable force with the proper mix of skills, grades and experience.

The policies reinforce the provisions of Section 402 of the 1991 act requiring the services to implement procedures to reduce accessions, initial-term inventories and retirement-eligible inventories to levels at or below that required to sustain the 1995 force levels before the use of any involuntary separation actions. Further, they instruct the services to protect all qualified members with 15 or more years of service until they are eligible for retirement and to minimize, wherever possible, the involuntary separation of

ever, once again, to maintain a vibrant, effective force with the proper mix of skills, grades and experience, some involuntary separations will be necessary. Our present estimates are that we will have to involuntarily separate approximately 22,000 to 24,000 more members each year than we expected to lose under normal conditions.

members with 12 or more years of service.

The Jan. 16 memorandum also allows for transient increases in promotions and adjustments to enlisted retention programs to prevent excessive increases in promotion pin-on points.

The services' reduction plans have been carefully developed to achieve the department guidance where possible. However, with existing personnel management authorities, the services must choose between retaining too many members in the middle of their career, at significant cost to promotion opportunity, new accessions and budget outlays, or separating involuntarily these members who have made significant personal commitments to their service and to the nation. Therefore, the reduction plans generally reflect an emphasis to retain these experienced members (e.g., sergeants, staff sergeants, captains and majors with more than six years of service but less than 20) that will be required for the smaller force in 1995 and beyond.

It is important to point out that our drawdown plans reduce strengths without the use of additional involuntary separation actions wherever possible. To date, we have reduced the department's military strength by over 130,000 from its 1987 peak exclusively through reduced accessions, voluntary separations and early retirements. Over the next four years, we plan to continue this approach as much as possible. In fact, about 85 percent of the remaining 400,000 strength reductions will still be achieved in this manner. How

armed forces as quality members would likely leave a stagnant force to pursue careers with more upward mobility. This situation would undoubtedly hurt recruiting as well.

I know you are interested in the effect the drawdown will have on certain populations-in particular, women and minorities. Our analysis to date indicates that the department's representation in these areas will be the same at the end of the drawdown as it is now. As we conclude more detailed analyses, we will provide this information to you. However, please be assured that we are sensitive to the impact on these populations.

In order to further minimize involuntary separations, we have developed a proposal for a voluntary-separation incentive, or VSI, to address both the problem of force imbalance and to reduce the need for involuntary separations. If enacted and implemented substantially as we suggest, the proposed incentive would not result in increased outlays-and could result in substantial long-term savings.

Ideally, perhaps, we would simply offer a lump-sum payment large enough to induce enough people to separate, and that would be it. However, members close to retirement expect to realize great benefit from their retirement. To replace a significant fraction of the present value of a member's retired pay, a lump-sum payment would be very large, and such an incentive would entail a significant-and ultimately unaffordable increase in outlays in the year offered. Accordingly, our attention focused on options which stretch the payment over several years.

Shared Concern

We share your concerns about involuntarily separating large numbers of members who are in the middle of their careers. These are people who have made significant sacrifices and served their nation well. On the other hand, we do not want to stagnate promotions, to mortgage our warfighting effectiveness or to incur unnecessary costs associated with a force more senior than we need. Therefore, we are opposed to any legislation that would limit the use of our existing involuntary-separation authorities. Any such restrictions would result in personnel inventories which are not aligned with the prerequisite skill, grade and experience mix needed to support existing and future manpower requirements. It would also result in a stagnant career force with substantially limited advancement opportunities. Additionally, a moratorium on involuntary separations would increase budget costs throughout the program years. We estimate that this would result in additional costs of nearly $8 billion over the next four years. The most serious consequence, however, is not the additional cost, but the gradual erosion in the fighting effectiveness of our

Payment Formula

We propose to provide separating members a payment equal in value to 2.5 percent times their final basic pay times the number of years of service. This amount would be paid each year for a number of years equal to twice the number of years of service. For example, members