As I discussed in the chapter on Concepts for Defense Planning, we intend to use a Total Force approach in which all appropriate resources for deterrence, U.S. and Free World, will be available. Through the application of all resources across the full spectrum of possible conflict and the full spectrum of capabilities of our friends and allies, we will maintain sufficient U.S. strength and will mesh this strength with other nations in a new order of partnership.

For the U.S. forces, the Total Force concept will mean increased importance for our National Guard and Reserves. In this chapter, I analyze the progress and problems of Vietnamization, and discuss its relation to the Total Force concept in its broadest applications, utilizing both military and non-military resources. Looking to the future, we must continue to focus on the intimate relations of the military, economic, political and diplomatic facets of the Indochina situation as we move to terminate U.S. involvement in the fighting. This report does not address the day to day military situation in Indochina, or anywhere else. It seeks instead to explain the basic concepts that underlie our strategy for the future. To be realistic about it, there will continue to be ups and downs, gains and losses, temporary setbacks. The important thing is for the citizens of our nation to keep in sight the fixed goal of a generation of peace and to insure, as best we can that the policies we establish and the strategy we follow lead in that direction.

The chapter on The Threats to Free World Security provides an update of the threats to the Free World at all levels of conflict. The continued momentum of the Soviet Union in strategic missiles, aircraft, Naval forces and research and development are evaluated. Chinese weapons progress is also discussed. This threat assessment is related to the need for assuring that the United States maintains its technological leadership in order to assure the safety and survival of the American people. To maintain technological leadership, we must reverse the recent downward trend in R&D funding, which this budget does, and we must also move forward with new technological initiatives to guarantee that we have flexibility and timely options to meet possible threats of the future.

The fourth and final chapter in Section I, Force Planning under the New Strategy, provides a discussion of the specific programs being recommended as the "basic minimum capabilities deemed necessary and appropriate for the years ahead." We have completed our transition to what we describe as "base line planning," and are now building for the future. Of course, much will depend on the outcome of the Strategic Arms Limitation Talks. Because of uncertainty associated with SALT, we must maintain present capabilities

while preserving or creating options to adjust those capabilities upward or downward as may be required.

Mr. Chairman, no one hopes more for success at SALT than the Department of Defense because of the burdens and responsibilities we would face should SALT fail. The details of the President's decision on the FY 1972 SAFEGUARD program are contained in this section. SAFEGUARD continues to be a vital factor in the SALT negotiations.

The Chapters in Section II are focused on the need for better management of human, material and economic resources in the Department of Defense.

Chapter 1, Organization and Management, focuses on our management concept which is based on participatory decision-making, defined decentralization, and delegation of authority under specific guidance. I propose in this chapter the creation of an additional Deputy Secretary of Defense in order to enhance high level civilian management and to cope with the severe time demands now placed upon the single Deputy Secretary of Defense, David Packard. I also recommend creation of two additional positions for Assistant Secretary of Defense.

We will continue, of course, to make management improvements in the Department of Defense, including a modification of the Unified Command Structure which we are recommending to the President. We will continue to draw as appropriate on the recommendations of the Blue Ribbon Defense Panel which was so ably headed by Gilbert Fitzhugh.

Our examination into the intelligence activities of the Department of Defense will continue, and further changes may be anticipated, including the creation of a long-range planning group reporting directly to the Secretary of Defense. We have taken steps also to strengthen civilian control over investigative and related counter-intelligence activities.

The continued progress we expect under the Human Goals principles of the Department of Defense are reported in the Chapter on Manpower Objectives. Of particular importance, of course, is our program to achieve zero draft calls by mid-1973 and to accomplish further improvements of the Selective Service System which would complement last year's reduced draft calls and National Random Selection System. Many inequities in the Draft have been eliminated in the past two years, but so long as we need the Draft it must be made more equitable. One gross inequity today is the fact that the young men who attend college are given deferments which are denied to other young men who do not attend college. This is unfair and should be changed.

Once men and women are in the Armed Forces and are serving their country in uniform, we owe them respect and dignity for their service, and we owe them and their families fair play in the areas of pay, housing and educational opportunities.

Let me candidly tell you that we face some formidable problems in the manpower area that are not going to be solved overnight. In addition to complex recruiting and retention problems, we share with the rest of American society the agonizing problems related to race relations and drug abuse. We in the Department of Defense are determined to continue leading the way, as best we can, in seeking solutions to these difficult problems.

A final Chapter on The Defense Budget and the Economy surveys the impact of cuts in Defense personnel and expenditures over the past two years in response to our changing national priorities.

The impact of the massive cuts that have been made during the last two years in employment and expenditures related to national defense is assessed. These cuts have resulted in a considerable amount of turbulence, which results from our shift from a wartime to a peacetime economy.

This year the rate of defense reductions is declining and we are going to do everything we can to keep to a minimum this turbulence, as it relates to our civilian employees, Defense industry employees, and our military people and their families. In short, the Defense Budget has been heavily affected in our national reallocation of resources. The period of Defense dominance in national resource allocation is over. Our Fiscal Year 1972 budget, in constant dollars, will be below the prewar year of Fiscal Year 1964. This fact cannot be ignored as we plan to implement during the next five years our New Strategy of Realistic Deterrence.

In current dollars, the FY 1972 Defense Budget transmitted to the Congress by the President totals $79.2 billion in Total Obligational Authority (TOA) and $76 billion in outlays, including amounts proposed for future pay increases. This is $3.9 billion in TOA and $1.5 billion in outlays above the respective amounts for TOA and outlays we now expect in FY 1971.

In summary, Mr. Chairman, I would repeat that we have not solved all the hard problems before us nor can I tell you that hard decisions do not lie ahead. As with the Fiscal 1971 transitional budget, there is some risk attached to our FY 1972 Defense Budget for it continues the downward trend in overall Defense Department purchasing power at a time when the threats we face around the world continue to increase, not diminish. Should events dictate, I will not hesitate to recommend any action that may be required to insure the continued safety and security of the American people.

As Secretary of Defense, I seek your understanding and your support for our new Strategy and want to assure you that I will continue to work with this Committee and other Committees of the Congress to advance the goals we share in common in seeking to serve the best interests of the American people.

SECTION I

TOWARD A STRATEGY OF REALISTIC DETERRENCE

I. STRATEGY OVERVIEW

In his first Report to Congress on Foreign Policy, on February 18, 1970, President Nixon enunciated a policy of peace and what is needed to achieve it. Based on the principles of partnership, strength, and a willingness to negotiate, this positive policy is designed to move our country and the rest of the world toward a generation of peace. This basic policy, reaffirmed in the President's second Report on Foreign Policy, on February 25, 1971, underlies and guides our new National Security Strategy of Realistic Deterrence.

The goal of peace and the need to maintain adequate combat capabilities are fully consistent. The President recognized this when he declared adequate strength to be one of the three pillars of his foreign policy; without adequate military power our nation could not attain or maintain peace.

From the President's Strategy for Peace, we derive this guideline for Defense planning:

Our goal is to prevent wars, to maintain a realistic and ready military force aimed at deterring aggression adequate to handle aggression should deterrence fail. As Secretary of Defense, I believe that in terms of force levels and expenditures, we can make the transition from war to lasting peace and expanding freedom with an efficient and modernized U.S. military force that, in peacetime, would require no more than seven percent of Gross National Product or less and be made up of no more than 2.5 million men and women who are volunteers. Combined with adequate strength, true partnership and constructive negotiations, such a force is designed to deter war.

The Department of Defense five-year program for FY 1972-FY 1976 is keyed to the goal of preventing war and securing peace.

A.

SECURITY POLICY AND STRATEGY IN PERSPECTIVE

The security a nation enjoys at any given time is, in great part, the result of past efforts, particularly in the area of technology. The United States and other Free World nations clearly enjoy greater security today than they would if the tremendous efforts of the past twenty years had not been made.

In the past two decades we achieved first place in nuclear capability, became pre-eminent in space, and substantially strengthened our conventional capabilities. Our military power was an important factor in preventing aggression and safeguarding peace in many parts of the world, notably Europe. ever, it did not prevent aggression in Indochina.

How

One problem was that national security policies during the past decade did not focus sufficiently on lowering the probability of all forms of war through deterrence of aggressors. The effect of these policies on military planning was to create forces that lowered the probability of nuclear war while stressing a growing U.S. military capability to engage and to fight in other types of conflict.

That this military capability proved not to be an effective deterrent was due to a second major problem in national security planning. This was the failure to correlate closely and fully military strategy, national security strategy, and foreign policy, which embrace all elements of effective deterrence non-military as well as military.

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This Administration believes and this is the foundation of President Nixon's Strategy for Peace that our central national security objective is the prevention of war, and the movement toward a generation of peace. A realistic military strategy for the decade of the 1970's cannot be permitted to become an end in itself. It must be an inseparable part of a broader national strategy of deterrence, and meaningfully related to our pressing requirements in the domestic field.

In conceptual terms, U.S. national security strategy went through two distinct phases during the past two decades. Figures 1 and 2 in the Appendix illustratively summarize the basic strategy concepts, budget levels (in constant 1964 dollars), and major forces associated with the Eisenhower years and the KennedyJohnson years. These two phases were characterized by different emphases with regard to planning for military forces and military assistance. They can be summarized as follows: