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1971. These reductions are actually reflections of management im-
provements, and have been so represented to our NATO Allies: we
have made no change in our commitment of combat forces.

Mr. SIKES. In a war in which nuclear weapons were not used, how
long could present NATO forces probably hold out against a Soviet
and Soviet bloc attack?

General WESTMORELAND. Off the record.

(Discussion off the record.)

Mr. SIKES. How do income taxes in the NATO countries compare
with those in the United States?

Secretary RESOR. All NATO countries have graduated income tax
laws. The chart below gives the initial, or basic tax rates, the taxable
income to which that rate applies, and the maximum rate and the
amount at which the maximum rate would apply, for unmarried in-
dividual taxpayers. Eleven countries have a lower basic rate than
the United States. Twelve have lower maximum rates.

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Mr. SIKES. To what extent have the troops in NATO forces, other than U.S. troops, increased in the past year?

Secretary RESOR. There have been no troop increases in NATO land forces during the past year.

Mr. SIKES. How do the foreign exchange balances in the other NATO countries compare with that of the United States?

(Secretary Resor provided the following tabulation :)

The table below reflects the foreign exchange positions of the NATO countries as of December 31, 1969:

Foreign exchange position of NATO countries as of December 31, 1969

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* Included in Belgium figure. Amount unknown.

Mr. SIKES. What was the balance-of-payments drain as a result of maintaining our Army forces in Europe in fiscal year 1969? What offset agreements are now in force?

Secretary RESOR. As a result of maintaining our Army forces in Europe, Army expenditures entering the international balance of payments in fiscal year 1969 have been reported at $858.2 million.

The only offset agreement currently in force is with the Federal Republic of Germany (FRG). Under the agreement the FRG will offset $1.52 billion of the foreign exchange costs of the U.S. forces in Germany in the fiscal years 1970 and 1971. This will be achieved by $925 million procurement of U.S. goods and services and $595 million of financial measures. In addition due to the revaluation of the deutsche mark by 9.3 percent, discussions are underway with the FRG as to its impact on the current agreement.

(The following tabulation was provided:)

FRG offset of U.S. military expenditures in Germany in fiscal year 1970 and 1971

Military procurement in the United States___

FRG loan to the United States (repayable after 10 years)----
Purchase by FRG of loans held in portfolio of Eximbank and of out-

Millions

$800

250

standing Marshall plan loans.

118. 75

Civil procuremnt in the United States by FRG

125

Creation of fund in United States by FRG to encourage German investment in the United States...

150

Advance transfers by the FRG for debt repayment to the United States
Retention in the United States of interest earned by the FRG on
U.S. Treasury deposits..

43.75

32.50

1,520

Mr. SIKES. On page I-7, you state that we should seek ways to decrease our European "overhead" but not at the expense of the soldiers'

standard of living. It has been said that duty in Western Europe is the "plushest" duty station in the Army. Is the standard of living of U.S. Army personnel in Germany on the average better than that elsewhere!

Secretary RESOR. The Army has not made a formal study of the standards of living of military personnel in overseas locations, although it is generally accepted that personnel overseas do have certain benefits that are not available to their fellow soldiers in the United States. These include a full range of medical treatment facilities to include dependent dental care. Furnished quarters are provided for eligible personnel, as compared to unfurnished quarters in the United States. This benefit is provided primarily to save the Government the cost of overseas shipment of household goods which would be considerably greater than the cost of furnishing and maintaining the furniture presently provided. Commissary and post exchange prices are slightly higher for U.S. merchandise; however, a limited number of locally procured items are available at the equivalent of duty-free prices. Prices in the clubs and messes are generally less than in the United States since the cost of labor is less, thus reducing operating costs which are normally charged to the member. Although these additional benefits are available, it must also be recognized that the American soldier overseas is required to maintain a higher state of combat readiness than his counterpart in the United States. This results in a large number of lengthy field exercises, performance of actual military operations under field conditions such as border surveillance, and longer duty hours performing maintenance on equipment to insure that the units are able to meet their operational requirements. Therefore, although our troops in Europe and other overseas areas may enjoy some limited advantages, their standard of living is by no means "plush."

Mr. SIKES. How much assistance has the United States received from the NATO countries while the war in Vietnam has been in progress? Seeing our manpower and financial expenditures in Vietnam, have they increased their contributions to NATO in order to decrease our overall expenses?

Secretary RESOR. The percentage of financial contributions to NATO has remained relatively constant since 1965.

The United States has received no direct financial assistance from NATO countries which would decrease our expenses in Vietnam. However, from 1965 to 1969, several NATO nations have made substantial direct contributions to Vietnam in the form of economic aid and large donations of medical supplies and professional medical personnel. In addition, late in 1968, the allies participating in NATO's integrated defense program reassessed the state of their defenses. Improvements in terms of manpower and equipment and an increase in mobilization capability were considered. These provisions and the additional budgetary resources formed a part of the NATO force plan for 1969-73. The major contribution to this plan is the intent of the Federal Republic of Germany to increase its defense budget spending by approximately 12 percent through 1972. More recently, there are indications that the Federal Republic of Germany is willing to discuss with the United States the entire issue of defense burden sharing.

LINE OF COMMUNICATIONS

Mr. SIKES. In your discussion of "Lines of Communication," on page II-33, you state that — of the proposed new line of communication. Why start to build this new line of communication unless

Secretary RESOR. As my statement indicates, under the NATO relocation agreement. The requirement for the new line of communication is a matter of military necessity. Under the current understanding of the NATO relocation agreement,

Mr. SIKES. What is the estimated total cost of building and stocking the proposed new line of communication?

Secretary RESOR. Our current best estimate is a total of MCA; $1.191 million is requested in fiscal year 1971 for construction at Burtonwood Army Depot in the United Kingdom and we would need

Mr. SIKES. How much is in the fiscal year 1971 budget, by appropriation, for the proposed line of communication?

Secretary RESOR. Funds requested in the fiscal year 1971 budget which are justified on the basis of the line of communication requirement are MCA $1.191 million, PEMA $8.8 million, and O. & M.A. $4.321 million.

SUPPORT OF U.S. FORCES IN EUROPE

Mr. SIKES. How much money is in the Army's fiscal year 1971 budget for the pay and support of Army forces in Europe?

Secretary RESOR. The operating appropriations of the fiscal year 1971 budget contain approximately $1,666.4 million for the pay and support of Army forces in Europe. This total includes the operation and maintenance of family housing but excludes the Army contribution to the support of NATO International Military Headquarters and Headquarters, U.S. European Command. This is not an incremental cost for maintaining the forces in Europe rather than in CONUS; it is the total direct operating cost for our forces in Europe. Mr. SIKES. Has the growing animosity between China and the Soviet Union and the buildup of Soviet military forces on the Sino-Soviet border decreased the probability of a land war in Europe? Surely the Soviets would be somewhat fearful of a war on two fronts. General WESTMORELAND. Off the record. (Discussion off the record.)

AIRLIFT TO EUROPE

Mr. SIKES. With our present airlift capability and with the capability planned in the next 2 years, how long would be required to airlift a division from the continental United States to Europe if heavy equipment and logistical requirements were prepositioned in Europe? General WESTMORELAND. Using wartime planning factors, 1. Preparation for overseas movement (POM) time –. This includes the time required, under emergency conditions, for command, supply, and administrative activities to prepare units for deployment to overseas commands.

2. Marry-up time.This includes time for the division to marry-up with prepositioned equipment, and time to prepare the

division for final commitment in support of contingency operations. Also included is intratheater movement time.

Thus, a total of would be required from the time the unit is alerted for air deployment until the unit is prepared for final commitment in Europe in support of contingency operations. This estimate assumes the division is in a high state of readiness, that all major items of divisional equipment are prepositioned in Europe and that there are no airfield constraints at both origin and destination. Further, the estimate does not consider the possibility of attrition of aircraft due to enemy action (or for any other reason) during the air movement. Mr. SIKES. Has the condition of NATO's reserve forces improved in the past 2 years? In the past, it had been felt that the reserve forces of the NATO countries suffered from a lack of training, shortages of modern equipment, and in transport.

Secretary RESOR. Off the record.

(Discussion off the record.)

Mr. SIKES. What reductions have been made in the various military headquarters in Europe in which the United States participates? Secretary RESOR. There have been no recent reductions in the U.S. Army contribution to international military headquarters.

FISCAL IMPACT OF POSSIBLE REDUCTIONS

Mr. SIKES. If a reduction of 50,000 Army military personnel in Europe was to be made in fiscal year 1971, what would the fiscal impact be on the budget now before us? What would the impact be if the 50,000 troops were moved to the United States and kept in the Army, and what would the impact be if total Army strength were reduced by 50,000?

Secretary RESOR. If 50,000 Army military personnel in Europe were withdrawn in fiscal 1971 and returned to CONUS, the Army would save approximately $22 million in fiscal year 1971. This does not include MCA cost in CONUS that could result from restationing.

If 50,000 Army military personnel in Europe were withdrawn in fiscal year 1971 and reduced from the end strength, the Army would save approximately $224 million in fiscal year 1971.

These savings are based on the following assumptions:

1. A reduction of 50,000 military personnel in Europe, given a full year to phase-down, would be phased into the normal rotation cycle thus avoiding a one-time PCS cost and in fact permitting a savings for the deployment of 50,000 replacements from CONUS to Europe.

2. There would be a one-time cost for packing, crating, and transportation of TOE equipment associated with either phase-down in Europe.

3. There would be a pipeline and annual recurring OMA savings associated with either phase-down in Europe.

4. In addition to the above, if the 50,000 military personnel were reduced from the Army in fiscal year 1971, the Army would save approximately 6 months military pay, CONUS OMA, and PEMA equipment and ammo consumption costs, plus any MCA cost associated with a redeployment.

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