1992 Defense Budget to Continue Military Cutbacks Despite Gulf War : Spending: Bush is expected to propose a sharp 3.3% reduction after inflation. The Pentagon is 'banking' on peace.

By MELISSA HEALY

Feb. 1, 1991 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

The Bush Administration is readying a fiscal 1992 defense budget that would continue the cutback in military spending begun last year, despite the stepped-up war in the Persian Gulf and recent setbacks in the Soviet Union’s move toward democratic reforms.

The new spending plan, to be disclosed on Monday, is expected to propose cutting military outlays by a sharp 3.3% after inflation, reducing further the number of military personnel and canceling two key nuclear missile programs.

“We are anticipating peace,” a senior Pentagon official said Thursday. In fact, he added, “We’re banking on it.”

The proposed $278.3-billion defense budget does not include either the added costs of Operation Desert Storm or money for additional sea-lift ships, whose numbers officials had said were inadequate during the initial U.S. troop deployment in the Persian Gulf.

The Pentagon is expected to propose in February a supplementary budget seeking additional money for Persian Gulf operations. And Administration officials say they have raised $40 billion in contributions from allies to cover the U.S. war effort.

Pentagon planners currently are debating how much more they must seek in order to cover the Gulf War operations.

Pentagon officials said that the overall budget will stick rigorously to the spending pact reached between Congress and the White House last autumn, which directed the Pentagon to slice $243 billion from its five-year spending blueprint between fiscal 1991 and fiscal 1994.

Officials said that the budget accord had forced the military services, despite the huge deployment in the Gulf, to make much deeper cuts than they had envisioned under previous plans.

The fiscal 1992 budget calls for the early retirement of two aircraft carriers, including the Midway, which is one of six Navy carriers stationed in or around the Persian Gulf.

The carrier Forrestal, which is on alert at its Mayport, Fla., home port for possible duty in the Persian Gulf, also is scheduled to be retired under a proposal to reduce the Navy carrier fleet from 14 to 12 ships ready for rapid deployment.

The proposed cuts in manpower are expected to force the military to slash its active duty rolls by 13% from the fiscal 1990 level of 2,076,000. With the Gulf War preventing any early reductions, the orders mean that almost 270,000 GIs will have to be cut by October, 1992.

“At the end of this conflict, we will return to peace and to the carefully constructed force drawdown that we had planned,” one senior official said Thursday. However, he said, after the Gulf War ends, “we intend to pursue that (reduction) with all deliberate speed.”

The reduction is part of a broader plan outlined last year by Defense Secretary Dick Cheney to reduce military spending by at least 12% by fiscal 1996 and to shrink the armed forces by 25% by that date.

But Cheney had conditioned that budget reduction on several factors, including a continuation of the Soviet push toward peaceful reform and the signing of the strategic arms reduction treaty between Moscow and Washington.

In recent months, Cheney has watched with increasing concern as Moscow has cracked down on breakaway Baltic republics and critics have charged that the government of Soviet leader Mikhail S. Gorbachev has been sliding toward dictatorship.

Last week, in a move that was seen partly as a U.S. rebuke for Moscow’s Baltic crackdown, Washington proposed to delay a superpower summit meeting until June. Bush and Gorbachev had been scheduled to sign the START agreement at the meeting, originally scheduled for mid-February.

But, although a senior Pentagon official said that Cheney “is not necessarily more comfortable” with Soviet behavior, the defense secretary apparently has concluded that the Soviets are now “ill-equipped” to mount any kind of challenge to U.S. interests, he said.

“They’re imploding at this point,” the official added.

Accordingly, officials said Thursday that Cheney will recommend that Congress terminate a program to place 50 10-warhead MX missiles on rail cars across the nation--a weapons system that was expected to cost almost $10 billion over the next eight years.

He is also expected to slash funding for the Midgetman, a small intercontinental ballistic missile, and to refocus the program to design a less complex missile that could replace the MX in existing Minuteman silos.

Officials said that Cheney had hoped to retain full funding for both missiles at least until the START treaty was signed but ultimately bowed to budget pressures in accepting the cuts for 1992.

In other major strategic programs, however, Cheney is expected to oppose many of the cuts previously sought by Congress.

Although President Bush only last week ordered a “refocusing” of the Strategic Defense Initiative, known informally as “Star Wars,” to develop protection against limited missile attacks, Cheney still plans to seek $4.5 billion for a broader program.

The Pentagon sought the same amount last year, but Congress cut the program to $2.89 billion.

The fiscal 1992 budget also seeks funding for the procurement of four B-2 Stealth bombers, built by the Northrop Corp. in Los Angeles.

To date, Northrop has built 15 of the planes, which are expected to cost about $870 million each.

But the program has continued to spark controversy in Congress, which last year earmarked $4.1 billion for the program but left it to the Administration to decide whether to begin building additional aircraft or merely to complete those already under construction.

Meanwhile, Cheney plans to call for terminating production of the F-16 Falcon jet fighter, which has played a major role in the Persian Gulf War, in fiscal 1993--several years earlier than had been expected.

The Falcon, which was designed for use in a war in Central Europe, is believed to lack the range and the bomb capacity needed for the kinds of wars that the Air Force increasingly expects to fight throughout the Third World, one knowledgeable official said.

PAYING FOR THE WAR

The Gulf War is making history as the most expensive conflict in daily costs, $500 million or more a day. To help share the burden, the U.S. has sought financial assistance from allies and trading partners. Some of the contributions are in cash, while others are “payments in kind”--donations of goods or services such as fuel, food and military transport. Total U.S. Military Costs: $60 billion

Pre-war costs: about $10 billion

Estimated war expenses: more than $50 billion

Pledges: $41.5 billion total

Japan: $9 billion

Germany: $5.5 billion

Kuwait: $13.5 billion

Saudi Arabia: $13.5 billion

Cash Received: $4.998 billion total

Kuwait: $2.5 billion

Saudi Arabia: $760 million

Korea: $50 million

Japan: $866 million