Includes $6,118,000 for the special foreign currency program included under a separate appropriation heading. Includes $1,514,000 for the special foreign currency program included under a separate appropriation heading. / Includes $7,632,000 which is the total of a/ and b/ above. SUFFICIENCY OF SUPPLEMENTAL AND FISCAL YEAR 1968 REQUESTS [Deleted.] Chairman RUSSELL. I don't quite understand the modernizing you refer to on page 6, Mr. Secretary. Secretary MCNAMARA. Well, for example, we have deferred modernization of rolling equipment in the Army. We have deferred modernization of certain of the aircraft systems. Chairman RUSSELL. Would that be the same as replacement? Secretary MCNAMARA. No. We have replaced wherever necessary. But if we have a new model as we do in a truck, for example, but we have an older model truck that is perfectly acceptable, we will not discard the older truck and buy the new truck. Chairman RUSSELL. Have you extended the operating life of the old truck! Secretary MCNAMARA. Not beyond acceptable limits. But we have an option to modernize or not modernize, on many items of equipment, and where we have that option, we have postponed exercising it, and thereby held down the requirement for funds in fiscal 1968. [Deleted.] BASIS FOR SECRET CLASSIFICATION Senator SYMINGTON. Why is table I classified, Mr. Secretary? This is what everybody is asking us. Secretary MCNAMARA. There are 209 pages of this classified statement that have been released this morning by the committee in the unclassified version. Senator SYMINGTON. Can we declassify this page? Secretary MCNAMARA. Yes; it appears exactly as you see it in the unclassified version. Senator SYMINGTON. I am not criticizing, only asking. Secretary MCNAMARA. All of the data on this page are unclassified. If the committee goes through my unclassified statement, I think your criticism will be that we declassified too much information rather than too little. Senator SYMINGTON. Thank you, Mr. Chairman. Chairman RUSSELL. The three lines you have been discussing have all appeared in print. Secretary MCNAMARA. That is right, those three lines and, indeed, the whole table is in the unclassified version. [Deleted.] Secretary MCNAMARA. Every page of my statement is classified secret because we just had to have a classified statement. We don't want particular pages unclassified and others not, but there are 209 pages of it that have been declassified and already provided to the press by the committee. As I say, I think your criticism of me will be that I may have gone too far in putting the details in the unclassified version. In any event, let me call your attention to only two of the figures on table I. Senator RUSSELL. Although it is included in your unclassified statement, let table I appear at this point in the record for reasons of clarity. (Table I follows:) 1 Included is supplemental appropriation request for military and civilian pay increases authorized by Public Laws 89-501 and 89-504; medicare authorized by Public Law 89-614; and homeowners assistance program authorized by Public Law 89-754. * In 1961 and 1962, funds for this activity were appropriated to the military departments. 3 Excludes cost of nuclear warheads. PAY INCREASES AND RETIREMENT PAYMENTS pay Secretary MCNAMARA. The figures in the 1968 column, the last two figures in that column, one is $5.9 billion. That is $5.9 billion of increases and retirement payments that have been added to our budget since 1961. Senator ELLENDER. In total? Secretary MCNAMARA. In total, per year. Secretary MCNAMARA. Per year, $5.9 billion. I simply want to draw that to your attention, so when you look at $73 billion, you recognize that, in effect, $6 billion of it represents the rise in compensation costs for our military and civilian personnel since 1961. Senator ELLENDER. Are they asking for more money? Secretary MCNAMARA. It isn't so much they are asking for it, sir, as I think you will consider it equitable that they receive it. In any event, I am simply recognizing that possibility when I alert you to the fact that $73.1 billion of estimated expenditures in fiscal year 1968 will be increased if Congress enacts a pay increase this year. I simply didn't want to understate to you the likely costs for the year. UNFUNDED PAST SERVICE LIABILITY Below the figure of $5.9 billion is circled a figure of $74.1 billion. This can be a very confusing figure, but a very important one. The $74.1 billion represents the past service unfunded liability for military retirement payments for military personnel. It means we have a governmental liability of $74 billion, which has not been funded, which Congress has appropriated no funds for, and which has never appeared as a cost in the Defense budget, but which we have incurred because of the service to date of military personnel. That liability has increased about $30 billion in the past 7 years, and it simply means that our defense costs have been understated by $30 billion for that 7-year period. Senator ELLENDER. Will you describe this for us in detail, please? How did you reach a figure of $74.1 billion? Secretary MCNAMARA. Let me take General Wheeler as an illustration. He spent his life in the military service, and our Government has an obligation to pay him a retirement benefit. But the Congress has never appropriated one dollar for that. Now he has already earned it. Senator ELLENDER. Has he paid anything toward this? Secretary MCNAMARA. No, because that is part of his compensation, well recognized. We have a noncontributory retirement plan which is calculated dollar for dollar as part of the military compensation, and it should not be made contributory unless the military compensation is changed or the contract, in effect, is changed. But the point I want to make is that as a people we owe General Wheeler what we contracted to pay him, but the Congress has never appropriated a dollar for that, and this is what I call and what is commonly called an unfunded past service liability. |