CONGRESSIONAL RECORD — SENATE

April 23, 1979

Page 8229

Mr. MUSKIE. Mr. President, I understood that Senator McGOVERN was to offer an amendment at 4 o'clock. Does the policy staff have anything to tell me about it?

I understand that Senator McGOVERN has been delayed.

Does any other Senator wish recognition?

Mr. RIEGLE. Yes. Mr. President, will the Senator yield to me?

The PRESIDING OFFICER. Will the Senator from Maine yield time to the Senator from Michigan?

Mr. MUSKIE. How much time does the Senator desire?

Mr. RIEGLE. Ten minutes.

Mr. MUSKIE. I yield 10 minutes.

Mr. RIEGLE. I thank the Senator for yielding.

I know Senator STENNIS was about and wanted to be here. I would certainly share with him what I say if he is not on the floor as I am speaking. My comments will relate to the Iranian ships and PAT MOYNIHAN is shaking his head.

Let me say at the outset that, as a new member of the Budget Committee, I have enjoyed very much serving on the committee. I have great respect and affection for the chairman and for the ranking Republican member and, for that matter, for all the members of the committee. I have enjoyed very much this first effort to produce the budget that is before us.

We have got one major point of controversy. I want to raise it early today so that everybody is alerted to it. I raise it in the nicest way I can. I am not looking for a quarrel with anybody. I just want to state clearly a problem we have with the budget resolution before us.

As members of the committee and the staff will recall, we had a long, difficult debate on the question of Iranian ships. I guess it is fair to say I took the lead in trying to delete from the budget, from the supplemental for 1979, budget authority and outlays for the U.S. Navy to purchase four ships that had been ordered by the Shah of Iran back in 1974. These four ships are under construction today in the Litton/Ingalls shipyard down in Mississippi.

We have a long committee record that relates to this. I will get into parts of it, if not today then tomorrow. Presumably, the Senate will have an opportunity to vote on this matter.

But after long debate the Budget Committee finally voted on a motion that I had put forward to delete all money from the supplemental for those Iranian ships. As I have read and reread the transcript, it is clear that my motion addressed all four ships. The figure of about $1.3 billion in budget authority was mentioned by me and by other Senators several times in the course of the discussions.

Well, my motion carried by a vote of 11 to 9. So I and, I think, most of the Members who voted with me, left with the feeling that we had managed to delete from the supplemental any money whatsoever for Iranian ships.

I should say, parenthetically, that I understood that the Budget Committee is not a line item committee. We make operating assumptions, we state what those are, we cast our votes, and ultimately the Appropriations Committee will make a separate and independent judgment, so we all know that going in.

But clearly our action, as I understood it in the committee, was to delete any budget authority for those ships; that is to reduce the budget authority by about $1.3 billion and the outlays by about $0.7 billion.

Lo and behold when the Budget Committee report came out, I found that the funds for four ships were not deleted, unbeknownst to me, funds for only two ships had been subtracted, despite the thrust of my amendment and of all the argumentation I had offered, and of the discussion of most of those who had spoken with me in the committee. The error is substantial. If only two ships are being deleted rather than four, in fiscal year 1979 the budget rises by $0.7 billion in budget authority and $0.3 billion in outlays. Outlays are also too high by $0.3 billion in fiscal year 1980, by $0.1 billion in fiscal year 1981 and bya smaller amount in fiscal year 1982.

I have talked briefly with Senator MUSKIE about this error. We both have been in our home States over the last week and last weekend, so it was not possible for us to talk about it directly until this morning. It is very difficult for us now to go back and reconstruct step by step what happened. But I have reviewed the transcript to do just that.

I am convinced the record is very clear on this matter. And if a technical amendment to correct the error will not be accepted, I will have to take steps to delete the amount of money for the extra two ships. I hope the issue can be quickly resolved right now.

Mr. MOYNIHAN. Mr. President, will the Senator yield?

Mr. RIEGLE. Yes, I yield to the Senator from New York.

Mr. MOYNIHAN. Things do not always turn out as badly as they seem at the moment. As the Senator will recall, I am one of those who made the mistake of thinking we had not voted to strike the Iranian ships. The Senator will recall the scene. It was a crowded room, and I counted the votes in my head, and I miscounted, and then was distracted for a moment when the vote was announced. I had thought that the vote was 11 nays and 9 yeas, whereas it was just the other way around.

So I proceeded to say in stronger terms — and it may have been inappropriate, but it was one of those moments — that I thought it was deplorable that those of us who had voted to increase the defense budget day after day, while we voted to cut programs we needed in our own States, were rewarded by this caricature of military men thinking that more military means are necessary but somehow never finally sufficient.

The Senator will recall the exchange that took place after my little intervention. Senator HOLLINGS asked me:

What are you all stirred up about?

Our distinguished chairman said at that point:

Pat, you just won a victory.

Whereupon Senator HOLLINGS said:

You just gave—

I regret to put this in the RECORD — well, I will do it, because there are his characterizations not mine

You just gave the Chief of Naval Operations a boot in the behind. You just knocked out the ships by the vote.

There was no question of what we had done. But I would like to say, as a sometime gunnery officer of the U.S. Ship Quirinus, an RL 39, that I did not then and do not now associate myself with anything but the most respectful posture toward the Chief of Naval Operations. Nonetheless, I believe we knocked out those ships.

Mr. MUSKIE. Mr. President, will the Senator yield?

Mr. MOYNIHAN. Yes.

Mr. METZENBAUM assumed the chair.

Mr. MUSKIE. The Senator from New York, in what he has just said, has put the key question to us. It has been knocked out from what? What was before us?

What was before us was not the defense authorization bill. What was before us was not an appropriations bill with provision for four ships.

What was before us was the budget resolution. The 1979 second budget resolution as proposed to be amended. The mark that was before us was that offered by Senator DOMENICI, and that was the President's mark: $2.2 billion in budget authority.

That contained only two Iranian ships. Only two. The President to this day only wants two in fiscal year 1979.

The President had asked for a lot of other items that the Armed Services Committee had knocked out in order to make room for four Iranian ships in the 1979 supplemental authorization. But that was not the mark before us. The mark before us had only two Iranian ships in it, because it was the President's mark. If we had knocked out the amounts that would have had to be provided for four Iranian ships, we in effect would have been rejecting other items that the President had requested in his supplemental.

The motion that the distinguished Senator from Michigan put was this. After some discussion as to whether or not we had a motion, and what it was, he stated:

The motion that I made the other day was to delete all the other moneys from the supplemental, and that is the issue on which I would like to have a vote.

What supplemental was before us? The President's. Not the defense authorization supplemental, but the President's supplemental. There are only two ships in it.

Now, with respect to the debate, yes, there is no question, but what the Senator from Michigan was opposed to the whole program of four ships. But not all four ships were before us in the document upon which we were working. In order to get all four ships — indeed, in order to get the two ships — you would have to wait until the supplemental authorization bill hits this floor, and seek to kill the authorization. Budget resolutions are not line item resolutions, as both Senators know. They are not line item resolutions.

If we had deducted $1.3 billion from the President's supplemental, that would not have had the effect of knocking out these ships. The amount left could still be used; if other things were deemed less important, they could still have been used for ships. We could have knocked out the whole $2.2 billion, and that would not have had the effect, necessarily, of killing those destroyers.

So what the staff did was what it always does: It takes the transcript — and I have it right here. I just read from the transcript the motion made by the distinguished Senator from Michigan. So far as that transcript is concerned, what he was trying to do was get that part of the four ships, all of which he did not like, so much of the four ships as was in the document before us.

I think that was a reasonable interpretation by the staff. The staff has never misled me in the 5 years I have been on the Budget Committee, and has never misled, so far as I know, any member of the committee. So I think the decision taken by the staff was reasonable, based upon the transcript, and I say so to the distinguished Senator from Michigan.

As to what the objective of the distinguished Senator was, nobody who was inthat debate could have had any doubt about what he wanted to do. But whether or not he thought he could achieve it all from the supplemental was not even discussed—

Mr. RIEGLE. Well—

Mr. MUSKIE. — specifically enough to provide a clear record to support the Senator's present assertion.

Mr. RIEGLE. Mr. President, let me, if I may, respond to what has just been said, and then I will yield again to my friend from New York.

We have gone through the transcript with some care, because it is important, I think, to follow the sequence of arguments and points that were made, that relate to the justification offered here by the staff.

The PRESIDING OFFICER. The time allotted to the Senator from Michigan has expired.

Mr. RIEGLE. Will the Senator yield me 5 additional minutes?

Mr. MUSKIE. Yes.

Mr. RIEGLE. Thank you. On April 4, when we reconvened, Mr. Chairman, you are quoted in the transcript to the following effect:

The pending issue before us is the 1979 weapons supplemental reported by the Armed Services Committee, and its implications for the figures which we approved for the 1980 defense function.

We go on in that fashion. Then later on that same day:

The question is as to what we are working from. In other words, what is our base document?

Here again, the chairman is quoted as saying:

We have not yet acted on a Third Concurrent Budget Resolution for 1979 at all.

That is page 278 of the transcript. Later on the same day — this is again the chairman speaking — we are talking about these four ships, and the chairman is quoted as saying, on page 303:

That is clearly the administration's intent, to acquire all four ships. So the question is whether we split them up in 1979 or 1980, or approve none or approve some. There is the option.

Mr. MUSKIE. Will the Senator yield?

Mr. RIEGLE. Yes.

Mr. MUSKIE. What I was saying is that that was the issue. I was not stating the parliamentary situation. If you look at page 302 of the transcript, it reads:

Senator PACKWOOD. You are talking about cutting the money out for all four of the ships?

Senator MUSKIE. There is no motion before us at this point, at this time.

The motion was as I have quoted it to you earlier. I concede it was a heated debate, with a lot of emotion on both sides and a lot of interruptions. So what the staff has gleaned out from all that is the transcript providing our quotes. The authorization bill was not before us, there was no appropriation bill before us, there was a mark before us, and the mark was the President's mark, with two ships in it.

Mr. RIEGLE. Well, Mr. Chairman, if I may, you have been on this committee a lot longer than I have, and I am very respectful of that fact, and have enormous fondness for you, so I do not like to be in a situation where we disagree. But I would like to make this point clearly: That is that I would hope that the staff works for the Senators on the committee, and not vice versa, and if the Senator who is offering an amendment makes it very clear, not once or twice but several times over the course of several days, what the intent of the amendment is, that ought to be respected.

Mr. MUSKIE. What is the intent, Senator, if we knock out other portions of the President's supplemental defense request? You never mentioned anything else other than the President's proposal for four ships that you wanted to cut, and he did not have four ships in his proposal.

Mr. RIEGLE. My proposal was to delete $1.3 billion, to delete four Iranian ships.

Mr. MUSKIE. That was not in the President's proposal.

Mr. RIEGLE. I understand it was not in the President's budget, but that was my intention.

Mr. MUSKIE. That was not before us.

Mr. RIEGLE. The question was whether anything was before us as a base line from which to work.

Mr. MUSKIE. We had adopted the previous Wednesday morning — the Domenici proposal, which was the President's budget mark.

Mr. RIEGLE. I have to disagree. Your own words do not say that at all. As you stated, we had not acted on the 1979 supplemental at all.

Mr. MUSKIE. Of course, we had not acted on the 1979 supplemental. That was true from the first day.

Mr. RIEGLE. But if the committee functions on the basis that the staff can change the meaning of my amendment, I say that is not the way the committee ought to operate.

Mr. MUSKIE. That is not my impression of what they did. I have read the transcript. I came in this morning with a lot of other things to attend to when I heard about your issue for the first time. Nevertheless, I have gone through the transcript, and I have examined the committee staff.

They know very well that their function is to serve the Senators, as you put it, and not the reverse. This is an unfortunate situation, but may I say the facts are as strongly in support of what I have said here on the floor as they are in support of yours.

(Mr. BAUCUS assumed the chair.)

Mr. MUSKIE. I do not challenge at all what the Senator is trying to do, but it was not addressed to the parliamentary situation before us, in my judgment. I will say nothing further about it.

Mr. METZENBAUM. Will the Senatorfrom Maine yield me minutes?

Mr. MUSKIE. Yes.

Mr. METZENBAUM. This is my first experience serving on the Budget Committee. It is the first experience of the Senator from Michigan, the first experience of the Senator from New York, and of a number of other Members. I must confess that it was an edifying experience, it was a confusing experience, and one for which I am very grateful. It is a privilege to serve on that committee under the distinguished leadership of the Senator from Maine who works very arduously, very zealously.

It is very confusing at times for newcomers to understand some of the terminology.

I rise to support the interpretation of the Senator from Michigan, because with no exception every member of that committee was talking about four Iranian ships.

I notice my good friend, the chairman of the Armed Services Committee, is here undoubtedly to address himself to this question. I respect him extremely well.

As I see this issue, it does not really have to do with the question of whether there ought to be two Iranian ships eliminated or four Iranian ships eliminated. I address myself to the question of what all the members of the committee thought they were voting upon. They thought they were voting to eliminate four Iranian ships.

If the staff looked at the language and the terminology—

Mr. MUSKIE. Will the Senator yield for a question? Has the Senator polled the members of the committee? Does he know what they thought?

Mr. METZENBAUM. No, I do not know what they thought.

Mr. MUSKIE. But the Senator just made that kind of a statement.

Mr. METZENBAUM. I am saying to the Senator from Maine that the Members were talking about four Iranian ships and there was no talk that I heard of two Iranian ships. So I am willing to assume that that is what they all thought they were voting on.

Mr. MUSKIE. If the Senator will yield, there is a difference. I know they were talking about four Iranian ships. I have said so.

Mr. METZENBAUM. All right.

Mr. MUSKIE. But what we were voting on is a separate question.

Mr. METZENBAUM. All right.

Mr. MUSKIE. The Senator said they thought they were voting on the specific question. I just wanted to know what the basis for that was.

Mr. METZENBAUM. The Senator is well aware of the fact that I have not polled the committee, but I do know that all the conversation had to do with four Iranian ships.

If the staff concluded on the basis of its determination that only two Iranian ships were to be eliminated, and it is to this point that I address myself, then I think the maker of the motion was entitled to a telephone call, to a discussion prior to the report being prepared and sent to the floor and to all of the Members. Then I think there would have been an opportunity to discuss this subject. But now we are facing the fact that the report comes in with only two Iranian ships eliminated and the order to eliminate the other two would require a floor amendment.

I would like to say to the Senator from Maine — and I will wait until such time as I can get his attention — I would like to say to the Senator from Maine that as he stated, and there is no Member of this body who has a reputation for higher integrity than the Senator from Maine, it is a fact we were talking about four Iranian ships, and it is probably correct that technically the amendment as it was submitted only affected the two Iranian ships. But certainly I think the Senator from Maine would agree that those who were voting thought they were voting on four Iranian ships. I do not know what their intent was, but I think they thought they were voting on four Iranian ships. If that be the case—

Mr. MUSKIE. If I may say to the Senator, in trying to translate what rests in any Senator's mind in the course of marking up a Senate resolution — and putting that into its proper text — would tax the genius of Demosthenes. I know what was before us. Sure, I have the advantage of being on the Budget Committee for 4 or 5 years. But let me add another point. This report was given to Senator RIEGLE'S staff, as I am told by my staff, with the numbers in the budget resolution now before us in it. No question was raised until it was raised by Senator RIEGLE himself recently.

Every mark that is before us, and the Senator has been a diligent attendant of the committee, has to relate to particular numbers which we are considering. We cannot be subtracting ships from a defense authorization bill that is not even before us. There were only two ships in the supplemental.

Mr. METZENBAUM. Everything the Senator says is technically correct.

Mr. MUSKIE. It is not. It is substantively correct.

Mr. RIEGLE. One thing the Senator said just now is not correct.

Mr. MUSKIE. Then I will ask the staff to confront each other and determine who is telling the truth. There is something funny going on here and I do not like it.

Mr. RIEGLE. I do not either, and the last thing I want to do is to find us pitted against each other on this issue.

Mr. MUSKIE. I did not raise it.

Mr. RIEGLE. I understand. I am forced to raise it. I thought we settled it in the committee. I feel no need to be on the defensive, because I am speaking here on behalf of 11 Senators on this issue. The Budget Committee did vote to strike the ships.

Mr. MUSKIE. I am saying to the Senator if he had stricken $1.2 billion he would not have stricken four ships but he would have stricken two ships and other items which were not even discussed. That is the point.

Mr. RIEGLE. Well, we disagree on that. The Senator is making a reference now to the President's budget.

Mr. MUSKIE. Which was before us.

Mr. RIEGLE. When we started debate on this issue in committee, the Budget Committee staff provided a table that showed the fiscal year 1979 supplemental as revised by the Armed Services Committee. On this particular the numbers reflect four ships. Here is the document right here.

Throughout the entire debate I, and other members of the committee. referred to this document. It was no mystery. It was available to the staff — in fact, it was provided by the staff for use in the meeting.

Mr. MUSKIE. The paper the Senator is holding in his hands is a paper produced by the Armed Services Committeestaff and not our staff.

Mr. RIEGLE. But the point is it was given to me by our core staff.

Mr. MUSKIE. The Armed Services Committee surely was not describing theparliamentary situation before us. How could the committee know the parliamentary situation? It was describing what was in its version of the defense supplemental authorization bill.

Mr. RIEGLE. I want to make two points. First of all, it was not pointed out to me or to my staff that the budget totals had been changed to reflect the removal of only two ships rather than four ships. Any suggestion by anybody that we were so notified is just incorrect.

Mr. MUSKIE. Nobody has suggested that, but it has been suggested to me, and I have said the following at least three times. The staff undertook to strike out all money for these ships that were in the numbers before us. That was two ships. Senator BELLMON has just shown me several quotes of his in the transcript in which he referred to $700 million as representing the amount that was involved.

Mr. RIEGLE. That is the outlay figure, if I am not mistaken. I would urge the Senator to check that. I think the record shows Senator BELLMON was referring to $700 million in outlays. That is the level of first year outlays resulting from the procurement of four ships. If the Senator were referring to only two ships,the figures would have been about $600 million in budget authority and only about $40 million in outlays.

I ask unanimous consent to insert at this point in the RECORD the transcript of the committee debate on this item sothat people can read it and draw their own interpretation.

Mr. MUSKIE. I have no objection.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

CHRONOLOGY OF SENATE BUDGET COMMITTEE DEBATE ON IRANIAN SHIPS
WEDNESDAY MORNING, APRIL 4

First mention of move to strike ships

As the Committee considered the Defense functional totals, Senator Riegle pointed out the Iranian ships item: "I would like to move to strike these out ..." (Transcript p. 267)

As the lunch break neared, it was clear that the FY 1979 supplemental, which included the Iranian ships, was too controversial to be resolved in a few minutes.

Chairman Muskie — "We agreed to break at 12. Could we get to a vote on the functional totals for 1980 and take up this other question when we come back at 1:30?" Muskie determined that the FY 1980 amounts included some outlays from the FY 1979 supplemental, and that the supplemental would require a third budget resolution.

Muskie: "Are those outlays included in these [1980] numbers?"

Brown: "That is correct."

Muskie: "I don't think we can vote on it."

Riegle: "I want to hear from Fritz and Gary and the others who are the insiders on the defense business as to how these ships suddenly came out of nowhere to become urgent."

Muskie: "Could we take a vote on the functional totals subject to revision after consideration of the 1979 total?"

The functional totals for FY 1980 were passed — 9 ayes, 6 nays. (Transcript p. 270)

WEDNESDAY AFTERNOON, APRIL 4

The issue was removal of four Iranian ships at $1.3 billion from armed services supplemental

Committee reconvened at 1:25.

Muskie: "The pending issue before us is the 1979 weapons supplemental reported by the Armed Services Committee and its implications for the figures which we approved for the 1980 defense function."

Mr. Sneed explained how that supplemental differed from that submitted earlier by the President. "With an addition of the two [ships] in the supplemental and the deletion of F-16 aircraft and some missile programs, the outlay totals that we had in our mark would be adjusted slightly."

Muskie: "That changes the overall figure?"

Sneed: "That is correct. The tactical figure for '80 would be $85 billion in budget authority and $76.2 billion in outlays rather than $76.4 billion in outlays which the committee discussed this morning." (Transcript pp. 271-272)

On two other occasions, Muskie stated the subject before the Committee was the FY 1979 supplemental as reported by the Armed Services Committee (Transcript pp. 273, 274) . Senator Domenici asked why the Armed Services Committee's supplemental was the subject of debate since his motion in the morning assumed the President's supplemental. He asked if he was mistaken.

Brown: "No, sir. You were not wrong. I asked the question this morning to make sure that was clear. Your motion assumed the supplemental as proposed by the President, the 2.2 in budget authority and $1.1 billion in outlays for fiscal 79 with a further $800 million in outlays for fiscal '80 and the final $300 million in outlays in '81. However, at the end of this session this morning the whole question of the supplemental was left to further discussion." (Transcript p. 276)

Muskie: "We have not yet acted on a third concurrent resolution for 1979 at all . . . (Transcript p. 278)

Riegle: "I would like to raise the issue of the Iranian ships. I want to propose an amendment that we delete that item. These four ships that are under construction at various stages of construction ... with the Iranian contract falling through we are stuck with these four ships." (Transcript p. 280)

Riegle had before him a table that was supplied by the Budget Committee core staff showing the FY 1979 weapons supplemental as reported by the Armed Services Committee including four Iranian ships. "I suggest we delete the Iran ships, and if I understand the mathematics on this sheet it is roughly $1.3 billion that is shown here." (Transcript p. 284)

Hart: "We are talking in terms of $1.3 billion for four ships in budget authority and I don't know what the outlay figures are but is a big chunk now for the four ships of the second revised supplemental." (Transcript p. 288)

Sneed (or Hollings): "The four ships sold to the Iranian government, [DDG 993, 994, 995, 996] — that is what we are talking about." (Transcript p. 292)

Packwood: "You are talking about cutting the money out for all four of the ships?"

Muskie: "There is no motion before us at this point of any kind."

Packwood: "Don is talking about cutting out all four. The Armed Services added two, the President asked for two in addition to get the additional two."

Hart: "Armed Services put in four." (Transcript p. 302)

Muskie: "I am told it is the Administration's desire or intent to acquire all four of these ships either into 1979 or 1980; is that information correct?"

Brown: "Yes. What they may prefer to do is get additional budget authority from the Congress to procure these four ships rather than finding some ways to reprogram existing authorizations or existing FY 1980 authorizations to buy the ship."

Muskie: "That is clearly the Administration's intent, to acquire all four ships. So the question is whether to split them up in 1979 or 1980 or approve none or approve some. There is the option. (Transcript p. 303)

Domenici moved to table the motion until Friday morning. (10 ayes, 7 nays)

MONDAY EVENING, APRIL 9

Vote "to delete all the monies for the Iranian ships from the supplemental"

Riegle (DWR): ". . . how in the world we can justify an item of $1.2 billion on an urgent supplemental basis for four ships that the Defense Department in the past has never indicated the slightest interest in . . ." (Transcript p. 1226)

DWR: "Is there an urgent need for ships of this kind?"

Tillson (group director): "No, I don't believe we could argue there is an urgent need for which a supplemental is generally supported but there is a valid use of (sic) the United States Navy would have for these ships." (Transcript p. 1228)

DWR: "I think anyone who wants to vote $1.2 billion for four Iranian ships when our own Armed Services Committee voted we did[n't] need them, you have an awfully difficult time talking about economy, at least on the same day." (Transcript p. 1234)

Metzenbaum: "What we are going to do is waste something in the area of $1.2 billion." (Transcript p. 1234)

Bellmon: . . we come in with this large supplemental of which $1.2 billion is for four Iranian ships. It seems if we approve it, we could reduce the outlay by a similar amount if the Navy wants them, which I am convinced they do want them and they are good ships and I am convinced they are, why can't we take out $1.3 billion in their FY 1980 budget?"

Hollings: "I would like to know the answer to that myself."

Sneed (staff): "If you wanted to reduce the 1980 outlay, I think the number is $0.1 billion in outlays."

Bellmon: "We have $1.53." [actually 1.353]

Sneed: "That is the budget authority associated just with the cost of ships. The outlays in 1979 associated with those ships are about $700 million." (Transcript pp. 1236-1237)

Iranian ships could not be accommodated by substituting them for other procurement items

Bellmon: . suddenly we come along and give them two bonus ships. If they want these ships . . . we should take that into account in dealing with their budget."

Tillson. "The one problem there is you can reduce budget authority . . [but] a large portion of the outlays for these four ships have already been paid. . . . The Iranian Government has paid for them. If we procure them in 1979, we will immediately catch up with all those funds that have been spent to date. . . . Whereas, if you reduce the shipbuilding program in the 1980 budget, that is based on an outlay flow which is much slower. In the first year, for instance, in ship building you have only about 4 percent outlay. For this $1.3 billion supplemental for the four Iranian ships you are going to outlay approximately 50 percent in FY 1979."

Sneed. "For instance, in 1980 the shipbuilding item is $6.2 billion, the first year outlays associated with the $6 billion is only $250 million, sir." (Transcript pp. 1238-1239)

Exon. "This committee is about to spend this billion dollars, two or three, if we do what you suggested, Senator Bellmon, out of the 1980 budget. I think it would probably cripple some needed thing in the Navy. It might be a thing, but I am a member of the Armed Services Committee and this is not a priority item . . . how much will we save the Iranian Government out of the trust fund ...?"

Tillson "How much would we save the Iranian Government?"

Exon. "Yes."

Tillson "$450 million." [CBO estimate related to for ships]

Exon. "That is the end of my question." (Transcript pp. 1239-1240)

Muskie. "What happens to the money if we pick up the vessels."

Tillson. "$450 million of that will flow through the trust fund back to the Iranian Government. That is the agreement that this government has with the Iranian Government, that if we pick it up they will reimburse." (Transcript p. 1240)

Motion to strike the ships

Bellmon. "I fully intend to find some way, if this passes, to take $700 million out of the FY 1980 outlay figure. If they want the ships . . . they ought to be willing to figure out some way of getting them into their 1980 numbers." (Transcript p, 1259)

DWR. "The motion that I made the other day was to delete all the monies for the Iranian ships from the supplemental and that is the issue upon which I would like to have a vote. If somebody wants to offer a substitute they are certainly open to do so."

BELLMON: "I would offer a substitute motion that the supplemental be approved with the provision that FY 1980 defense outlay figure be reduced by $700 million."

MUSKIE. "I see we have triggered another debate."

Hart: "It won't work."

Bellmon: "I will withdraw the motion ..."

Muskie: "The clerk will call the roll."

Johnston: "This is what?"

DWR: "To strike the money for the Iranianships." (11 ayes, 9 nays) (Transcript p. 1259-1263)

Bellmon: "Now I would like to make my motion that we approve the supplemental but delete $750 million out.

Tlllson: "Senator, you have just done that. You have taken out $750 million from the defense budget." (Transcript p. 1262)

Moynihan gave a speech deploring the Navy's position on the Iranian ships.

Hollings: "What are you all stirred up about?"

Muskie: "Pat, you just won a victory."

Hollings: "You just gave the Chief of NavalOperations a boot in the behind. You just knocked out the ships by the vote"

TUESDAY, APRIL 10, 1979 CONVENED AT 10:30

Criteria for including language in the report

McEvoy: "Senator Johnston raised one question about report language and, unfortunately, he is not here now. He asked me a question. I thought he was asking how do you get the language into the report. He may have been asking the question others have asked me and that is, what do we put in the report about programs, if anything at all?

What this committee staff tries to do — and you and your staff will want to capsulize by function — is explain what the committee's numbers meant when it was moved according to the undisputed comments of the mover of the motion. If somebody says, 'I think we should remove the cap from food stamps,' and the committee votes a billion dollars more money, it means that is what we say unless the committee voted not to. You will see some programmatic judgments expressed in the report which is what the staff understood from the record to be the position of the committee when it voted certain numbers. Otherwise, we do not explain deviations up or down.

I would say to members if you have a disagreement, let us know. We will check the record and live by it."

TUESDAY, APRIL 3, 1979

Senator Biden. Why don't you add that one and add one more. We are talking about cutting. I agree the commissary hasn't flown before. There are a lot of things that have not flown before 18 months ago that we sat in here and would not even consider the prospect of cutting and getting any support.

The mood has really changed out there as everyone has pointed out. Our constituency has not moved from any State to any other State. They are still mobilized but the countervailing force that can be brought to bear is much different.

If we don't keep banging at it every year, if we all implicitly agree it does not make much sense to do it that way, it mould be a mistake.

I would like to add one other thing if I may. I would like to ask the question and make the suggestion. It seems to me that the large supplemental that is included in here, the discretionary supplemental disrupts really basically good budgeting practices. It makes the 1980 artificially low by adding new programs in 1979. I think we should discourage this kind of budgeting. Why don't we add — and we are talking essentially about the MX program, the Iranian destroyers — at any rate, and I am not suggesting that we eliminate them.

What I am suggesting is that we are talking about the case of the supplemental for the MX and cruise missile or $400 million as requested in '79 by '84, $100 million of that will not be spent out of the $400 million.

Since the '79 supplemental appropriation won't be adopted until June or July .and since the '80 budget is affected three months later in October, can't we wait three months to budget the funds? That will make this a more sensible budget approach and especially since there is a lot of controversy surrounding some of these items that are not going to pass very rapidly on the floor.

There will be significant debate on them.

I am not suggesting we eliminate or cripple the program and this is a question of staff.

Can we maintain that in budget authority, what is now that supplemental number over $2 billion?

Mr. Sneed. $2.2 billion.

Senator Biden. Doesn't it make sense to include that in budget authority for 1980 and eliminate it from outlays in '80 and put it in outlays — do you understand what I am trying to get at?

Mr. Sneed With the program content of the supplemental, I don't think it would be possible.

Senator Biden. Why not?

Mr. Sneed. Because there are several programs associated with Iranian cancellation. If we accept budgetary authority for those, I think there will have to be immediate payoffs with those programs.

Senator Biden. What does that mean?

Mr. Sneed. I will give you an example. There are four ships involved. The normal first-year spending associated with shipbuilding is like three to four percent. In the case of the supplemental which we have is $2.3 billion if I understand all four ships are in that supplemental now. The first-year spending would probably be close. It would probably come close to $900 million just for those four ships. We would be assuming the cost for those. The Iranians have paid into the trust fund—

Senator Biden. Are you suggesting I move to cut it completely then? My staff just handed me a note "Can't we reprogram the existing funds to carry over to October 1st?"

Mr. Sneed You can just slide the consideration of the supplemental into consideration with FY 1980 defense fund.

Senator Biden. Doesn't that make more sense really in terms of what the reflection of our budget is, a more honest reflection of what the budget is?

Mr. Brown. It could well be. If you look at the figures we have for fiscal 1979, you see $2.2 billion in budget authority and $1.1 billion in outlays. The fiscal 1980 further outlays associated with that stuff as shown in this book is $600 million. If you merely shifted it one year, that certainly is an option, but presumably you would shift out that $800 million and shift in a billion dollars. Outlays would probably go up in 1980 from what we are now showing in these materials if you assume that the supplemental slips. That may be a very good assumption.

Last year, I believe the big supplemental got signed in September and the year before it was June or July. There is no question the supplemental will come late. One could shift it.

The only point I wanted to make is if you shift it into the '80 and assume it, you will still have significant outlays.

Senator Riegle. I have been trying to figure out how the urgent supplemental and I stress the word "urgent" supplemental got changed and arranged for these four Iranian ships. I must say I don't understand at least in conventional terms how the urgent supplemental got turned upside down and suddenly these Iranian ships are hot items. I understand they are built in Mississippi and this may trouble some, but I think it is really kind of outrageous that something that is built as an urgent supplemental item can't wait and we can't take it in the context of the next budget.

Lo and behold, we have a situation change in Iran. Here is a socialized power. I thought it was two, but we have four very specialized ships being built down there. The Iranians bail out on these things, and all of a sudden we are being asked basically without any kind of careful consideration to finance these things. I really think it is outrageous.

I would think the Administration would be embarrassed to make that request. I think we would look like fools if we honored it.

If there is some compelling strategic reason — and I like John Stennis as well as anybody — the fact that this is in the Chairman district, I would like to know what it is. If there isn't such a justification, I would like the record to be clear as to why we are prepared to spend this sum of money basically just to keep this project going.

I say to my friend from Florida and others here who are really out front on this cost-saving charge in the Congress, if we are not going to blow the whistle on this kind of thing and we are going to concentrate on picking around the edges on CETA and senior citizen lunches and so forth, you have close to a billion dollars here. I mean we are just going to look absurd. We are not fooling anybody.

Senator Metzenbaum. Since we are on the Iranian ships, I suppose we should finish that. If they want to talk on that, sharing views, I will wait.

Senator Domenici I don't want to talk about ships, and I don't want to preclude my good friend from offering an amendment.

I move that the committee accept as a substitute for the Bellmon proposal the President's mark in BA and outlays indicating, however, that it is our intention that there be a 25 percent absorption and a switch to once-a-year cost-of-living, and to the extent that those two cause a savings that such savings be transferred to procurement, to hardware procurement in the budget.

Senator Johnston. Do you have the CBO re-estimate of the government?

Senator Domenici Yes.

Chairman Muskie. Senator Metzenbaum.

Senator Metzenbaum. It seems we are getting confused about whether we are talking about the supplemental.

Senator Biden. They are both the same. The supplemental is included in the President's mark re-estimated by CBO. It is not an inconsequential figure. That is the whole point I was trying to make. I thought I yielded for a question or comment, and I was prepared to make a motion to eliminate that entire supplemental from the budget. A guy who knows a lot more about it than I do is Senator Hart.

Chairman Muskie. Senator Metzenbaum.

Senator Domenici. How much difference can there be? Aren't we all in accord?

Chairman Muskie. You don't have all of the amendments.

Senator Riegle. I don't think you have seen all of the proposals that are to be offered.

Senator Bellmon. Let's vote on mission 1.

Senator Domenici I move the President's recommendation on mission one on the basis this does not relieve my substitute motion to the Bellmon amendment on the remaining missions.

Mr. Brown. Mr. Chairman, I do not know the numbers for the odd years on mission 1.

Senator Domenici. They are on the board behind you.

Mr. Brown. The technicians tell us that is not true.

Senator Domenici. Let's clarify this.

How are we as senators going to be able to propose anything? Do we have to have a recess and have you prepare outyear substitutes? We can't prepare those years.

Chairman Muskie. We did pretty well last year.

Mr. Brown. CBO tells me they have the numbers for your version, Senator, but it is different from Senator Bellmon's We have them both. This is just on mission 1.

Senator Domenici. What is different about them?

Mr. Capra [CBO]. The difference is when you made the statement you wanted to spread the savings from 25 percent absorption and from the retired once a year to procurement. That mission, strategic warfare forces has a good deal of procurement. In fact, the ratio of the $700 million savings is $500 million for mission in budget authority, $500 million for mission 2 and $200 million for mission 1.

You could, if you like, specify all those go into mission 2, all of those savings, but that is not the way the substitute was phrased.

Senator Domenici. I would so amend mine that they all go to mission 2 so we can vote on mission 1.

Mr. Brown. Then you are talking about the numbers on the board for mission 1.

Chairman Muskie Yes. Senator Hatch.

Senator Hatch. As you know, I am concerned about AMX hardware design which would allow earlier and better testing. So, we suggested that you add another $200 million for that at $200 million in budget authority and $160 outlay for each.

It is my understanding that if you add that budget authority in the outlay figure that you would be able to reach a testing

Do you agree with that or disagree?

Mr. Tillson. On the MX missile, I can't answer that. The existing program is a very complex one which the Air Force has been working on for quite some time. One might imagine that you could go to testing more quickly, but there are certain points that have to be met on the schedule. I don't know that putting more money into the program would in fact accelerate our development. I just don't know the answer.

Senator Hatch. That is a problem, and I would want to move those figures be added into mission 1, the budget authority of $200.2 million for the MX with the outlay of $200.16 and the same for SLCM. I think we just have to do this.

Mr. Tillson. You have the same amount for both.

Senator Hatch. You will find we will reach the testing phase much more quickly if we have that additional money, and it is crucial that we do that.

Senator Hart. Mr. Chairman, the Armed Services Committee spent a number of weeks on the supplemental request of the Administration, and I am not sure the record comports with what the Senator from Utah indicated.

I think it would be important before we accepted that to know what the Administration's position is.

As you know, this is a very vital program and a very complex one, and we have to proceed, I think, methodically on it because we are, in fact, in the closing stages of the SALT agreement. I would hope this committee would not take any steps on a program such as this, particularly at four minutes of six when I am sure the Senators did not hear the argument of the Senator from Utah. If we are going to discuss hundreds of millions of dollars in the AMX program—

Chairman Muskie The Chairman concludes it is not as simple to approve mission 1. As a consequence, we shall recess at this time and reconvene at 9:30 tomorrow morning.

[Whereupon, the committee was recessed at 5:56 to reconvene at 9:30 a.m., Wednesday, April 4, 1979.]

The Clerk. Mr. Moynihan.

Senator Moynihan. No.

The Clerk. Mr. Domenici.

Senator Domenici No.

The Clerk. Mr. Packwood.

Senator Packwood. Aye.

The Clerk. Mr. Armstrong.

Senator Armstrong. Aye.

The Clerk. Mrs. Kassebaum.

Senator Kassebaum. No.

The Clerk. Mr. Hatch.

Senator Hatch. Aye.

The Clerk. Mr. Pressler.

Senator Pressler No.

The Clerk. Mr. Chairman.

Chairman Muskie No.

The Clerk. Mr. Riegle.

Senator Riegle. No.

The Clerk. Nine ayes, six nays.

Chairman Muskie. The amendment is agreed to.

Senator Bellmon. Before we leave this—

Chairman Muskie. We have to have a final vote.

Senator Bellmon. I would like to offer another one.

I am informed the list of programs included in the 1979 supplemental, there are 75 items altogether. The total amount comes to $2.9 billion, if my figures are right.

Those are all outlays, I assume.

Mr. Sneed. Are you talking about the weapons supplemental?

Senator Bellmon. It all appears to be for weapons for such things as Iranian items, MX basing operations, Trident

Mr. Sneed. $2.2 billion is for the weapons supplemental.

Senator Bellmon. On the back it says $700million.

There appears not too many emergencies here. It looks like the military coming in the back door which they could have done through the right process.

I move to reduce this.

Mr. Sneed. The items on the second page were deleted from the initial weapons supplemental submitted by the President when the Iranian situation arose. The total in the supplemental is before the Congress and is $2.2 billion.

The second page or items deleted from the original supplemental submittal

Senator Bellmon. If that is the case, then the President has done what I proposed to do.

Senator Riegle. Mr. Chairman, can I inquire a little bit here? Do I understand the items on this page are the ones that the Iranian ships replace?

Aren't these the items that were originally asked for and now are being dumped overboard?

Mr. Sneed. The $700 million, that is correct, Senator.

Senator Riegle. I want to be sure we are clear on this. These are the items the President initially said were the urgent supplemental items. Then the Iranian ship problem developed and we decided nobody asked for these kinds of ships and these would be the urgent items we would finance and those are now taking place.

Is this a fair statement of the facts?

Mr. Sneed. That is right.

Senator Riegle. I would like to ask my friends here, if I may, Mr. Chairman, who are on the Armed Services Committee and those of us who are not, of course, don't have the same flow of information that they have.

But, on the fact of it, this looks very fishy. All of a sudden we have these items the administration felt were urgently needed, but suddenly the Iranian ships cancelled the order and are sitting down there partially under construction, everybody is sort of jumping aboard and are saying that we need these ships which nobody asked for before.

This looks like the classical situation where we are bailing out. I don't know whether it is the Senators from those States or the defense contractor.

If we do this, this makes trying to cut the budget a problem.

I would like to move to strike these out, but I am open to reason if somebody can tell me why it is three months ago this was not anything on anybody's agenda to discuss and now suddenly it is such a hot item we have to finance it in the tail end of the current fiscal year.

Is there anybody here who is prepared to defend that kind of urgency?

Chairman Muskie We agreed to break at 12.

Could we get to a vote on the functional totals for 1980 and take up this other question when we come back at 1:30?

Does the 986 number include the supple-mental?

Mr. Sneed. It includes $780 million in outlays.

Chairman Muskie But the '79 supplemental would require a third concurrent resolution; wouldn't it?

Mr. Brown. It will add to the problem on outlays. Any supplemental will because there is already an outlay overage.

Chairman Muskie. Are those outlays included in these numbers?

Mr. Brown. That is correct.

Chairman Muskie. I don't think we can vote on it.

Senator Riegle. I want to hear from Fritz and Gary and the others who are the insiders on the defense business as to how these ships suddenly came out of nowhere to become urgent.

The Clerk. Mr. Packwood.

Senator Packwood. Aye.

The Clerk. Mr. Armstrong.

Senator Armstrong. No.

The Clerk. Mrs. Kassebaum.

Senator Kassebaum. Aye.

The Clerk. Mr. Hatch.

Senator Hatch. Aye.

The Clerk. Mr. Pressler.

Senator Pressler. No.

The Clerk. Mr. Hart.

Senator Hart. No.

The Clerk. Nine ayes, six nays.

Chairman Muskie. May I remind members we will reconvene at 1:30, break at 6 p.m., return at 7 and work until 10.

[Whereupon, at 12:05 p.m., the committee recessed to reconvene at 1:30 p.m. the same day.]

Chairman MUSKIE. Could we take a vote onthe functional totals subject to revision after consideration of the 1979 total?

Does everyone understand?

Let's have a roll call vote.

First, would the staff tell us these functions? They are on the board. This is on the functional totals.

The CLERK. Mr. Hollings.

Senator HOLLINGS. Aye.

The CLERK. Mr. Chiles.

Senator CHILES. Aye.

The CLERK. Mr. Johnston.

Senator JOHNSTON. Aye.

The CLERK. Mr. Sasser.

Senator SASSER. Mr. Hart.

Senator HART. Pass.

The CLERK. Mr. Riegle.

Senator RIEGLE. No.

The CLERK. Mr. Moynihan.

Senator MOYNIHAN. Aye.

The CLERK. Mr. Bellmon.

Senator BELLMON. Aye.

The CLERK. Mr. Domenici.

Senator DOMENICI. Aye.

WEDNESDAY, APRIL 4 — AFTER RECESS

[The committee reconvened at 1:25 p.m., Hon. EDMUND S. MUSKIE presiding.]

Chairman MUSKIE. The pending issue before us is the 1979 weapons supplemental reported by the Armed Services Committee and its implications for the figures which we approved for the 1980 defense function.

I will ask the staff now to present the facts with respect to the supplemental that we reported out and what its implications are for fiscal 1980.

Mr. SNEED. Senator, the supplemental, our total assumed '79, amounted to $2.1 billion in the budget authority, $1.1 billion in outlays. The '80 outlay impact on that supplemental had been $800 million. The '81 impact had been $300 million.

With an addition of the two shifts in the supplemental and the deletion of F-16 aircraft and some missile programs, the outlay totals that we had in our mark would be adjusted slightly.

The impact in 1980 would be outlays of $200 million less. All these numbers are in the tactical mission, mission 2.

Before, we had counted on $600 million in tactical for '80 outlay impact on the sub. It would now be $400 million. There would be — our '81 number did not change.

Chairman MUSKIE. That changes the overall figure?

Mr. SNEED. That is correct. The tactical figure for '80 would be $85 billion in budget authority and $76.2 billion in outlays rather than $76.4 billion in outlays which the committee discussed this morning.

Chairman MUSKIE. For the bottom line, what does that read? How does that read?

Mr. SNEED. 124.7 rather than 124.9.

Senator DOMENICI. If we did what?

Chairman MUSKIE. If we make room for the entire supplemental reported out by the Armed Services Committee.

Senator DOMENICI. $100 million is all the impact on outlays?

Chairman MUSKIE. No, $1.3 billion in fiscal year '79 and $600 million in fiscal year 1980.

Mr. SNEED. They made adjustments. They kept the top line at $2.2 billion. Actually only 2.1 of the 2.2 has to be authorized so they were looking at $2.2 billion. They passed that total but they made programatic shift. They added two shifts into the supplemental and deducted things in order to stay within that overall ceiling.

Our best estimate at this time on the outlay impact resulting from those changes; would be to add $200 million in 1979 above our previous estimate for supplemental budget 1980. There is a $200 million decrease.

Senator DOMENICI. Mr. Chairman, I don't want to—

Chairman MUSKIE. Let me put it this way.The numbers we approved for '80 this morning included assumptions with respect to the 1980 implications of adopting the supplemental as reported by the Armed Services Committee. Those assumptions this morning totaled $800 million.

The reestimate shows that the '80 impact in outlays is $600 million, so, consistent with what we did this morning we can reduce outlays in '80 by $200 million and still cover the supplemental reported out by the Armed Services Committee.

Now, whether or not this committee wants to endorse the full supplemental is the issue before us, but the first facts that I wanted to get on the table are the 1980 implications.

We still need to act on the military weapons component of the third concurrent resolution. That is these figures.

Have you distributed those figures?

Mr. SNEED. We can distribute them.

Mr. BROWN. They are up on the board, including the $200 million change which was just mentioned. Notice the mission 2, fiscal 79 on the right, the 1.2 billion in outlays, .13 and the budget authority is 2.2.

2.2 and 1.3. There is your $200 million reduction in 1980.

Chairman MUSKIE. Do you have the mission totals up there accurately?

Mr. BROWN. Yes, sir.

The CHAIRMAN. They seem to differ from what I have before me. I have a number for defense wide.

Which mission is that?

Mr. SNEED. There is no adjustment. It is only $30 million so that is absorbed in the rounding process.

Chairman MUSKIE. So, essentially you have the two items, M-1 and M-2.

Senator DOMENICI. What do we plan to do with the '79 supplemental?

Chairman MUSKIE. The assumption—

Senator DOMENICI This assumption is we take it off.

Chairman MUSKIE. There is no assumption made if the committee has not made an assumption yet. All we are doing is presenting what the budget implications of the bill reported out by the Armed Services Committee this morning would be.

Whether or not this committee wants to make that much room in the 1979 third concurrent resolution is the question now before us as requested by Senator Domenici. We could make it less or more and subsequently the Appropriations Committee will act before this session is over.

Senator MAGNUSON. I apologize for not being here but I have been in the Appropriations Committee. This is a little confusing. There are several items on the supplemental that don't need authorization. We will have that supplemental, I suppose, in the next 60 days from the Defense Department and the other supplementals. The authorizations are not necessarily going to be sent up by the budget downtown for a supplemental. You are assuming here that the authorization for defense will be sent up by the OMB for full funding.

That is not correct. There are a lot of supplemental items that come up before the committee that don't need authorizations. They are already authorized and we take them or leave them.

Mr. SNEED. This supplemental deals with 2.2 billion and the $2.2 billion does require authorization and the Armed Services Committee did report yesterday the $2.1 billion total.

Senator MAGNUSON. I have no objection to the way you are going at this but I wanted to point out the differentiation that there are a lot of supplementals that come up that don't need authorization. That makes a great deal of difference.

Chairman MUSKIE. There are two documents that we would trigger here.

One is a waiver resolution for the authorization bill. That is going to be required. Secondly, a third concurrent resolution is going to be required because, combined with the spending that Congress authorized for this fiscal year, this supplemental and others will reach the ceilings of the second concurrent resolution for other reasons so we will need two documents to cover this defense supplemental bill which has been reported out by the Armed Services Committee and then you, of course, will decide how much.

Senator MAGNUSON. The Appropriations Committee will not appropriate any money that has been authorized and we have lived up to that rule pretty strictly.

Senator BELLMON. The Chairman is right.

Senator DOMENICI I don't want to belabor the point and maybe I am just dense, but I still don't understand why we had any recalculating anything. I understood my proposal as a substitute for Senator Bellmon's, including what was required by the 1979 supplemental. I thought that was over with. If we were going to have something on the supplemental or a third concurrent resolution, that is another matter but I thought we had accepted Mark's subject to a question about the Iranian vessels. That included everything required in BA and outlays for the 1979 supplemental to be carried over into the '80.

Was I wrong in that? I think the record says that.

Mr. BROWN. No, sir. You were not wrong.

I asked the question this morning to make sure that was clear. Your motion assumed the supplemental as proposed by the President, the 2.2 in budget authority and $1.1 billion in outlays for fiscal 79 with a further $800 million in outlays for fiscal '80 and the final $300 million in outlays in '81.

However, at the end of the session this morning the whole question of the supplemental was left to further discussion.

All we are saying here now is that as you begin to discuss this whole question of the supplemental, there is a new fact, namely what the authorizing committee did that you should take into account and should understand. It has no difference in the total. It is a slight adjustment in the mix between '79 and '80 outlook.

Now, you can decide what you want to do.

Chairman MUSKIE There is $200 million deducted from '80 but $200 million added in '79 in the spend-out estimate.

Senator DOMENICI That is because somebody reestimated—

Mr. SNEED. They changed the mix of the program which caused the outlay to change.

Senator DOMENICI. Who is they?

Mr. SNEED. The authorizing committee, Senate Armed Services Committee, from the President's budget to a supplemental request.

Senator DOMENICI What did we have before us when we started this debate? Did we just have the President's?

Mr. SNEED. Yes.

Senator DOMENICI. The authorizer did something yesterday and we got it today?

Mr. SNEED. BA is the same but the composition has changed.

Senator DOMENICI What did the House do with reference to the President's supplemental and do they have an urgent authorization?

Mr. SNEED. They cut the programs significantly from the Senate level. I don't have the complete

Senator DOMENICI To put it another way, did they take into consideration—

Mr. SNEED. The House Budget Committee rejected the supplemental. I think Chairman Giaimo's position is that it be taken up on the floor of the House. If the House wants to vote up or down on it, it will be done at that time.

Senator DOMENICI. They did not push it over into the '80's and won't unless the House votes in the supplemental and only to the extent that it impacts will they move it over.

Mr. SNEED. That is my understanding.

Chairman MUSKIE. We have not yet acted on a third concurrent budget resolution for 1979 at all, and it is conceivable although I don't think so, given this morning's vote that this committee may vote something less or could, at least, has that option. If that happens, the '80 impact will change again.

Senator RIEGLE. If I may inquire, Mr. Chairman, I would assume if we made any adjustment to reduce the supplemental any amount that may help us, in fact, in getting to a balanced budget in subsequent years. I gather the bulk of the money is spent quite quickly but apparently there is some '80 or '81 impact, which is minor and we will spell it out as we go along but I guess that would be the adjustment you are inquiring about.

To the extent we took that step, there might be some saving there.

Chairman MUSKIE. If we rejected the Iranian ships, it could have a significant difference in the changes in numbers for spend-out in '80 and '81.

Is it the pleasure of the committee to move to the third concurrent resolution?

Senator DOMENICI. Do I understand that there isn't any need for us to change the resolution which we arrived at just before noon, but if we want to we would be doing it at this point based upon somebody wanting to change the supplemental and its impact on '80; is that correct?

Mr. TILLSON. That is right. The only change you would make is a change as a result of the FY '79 supplemental which was assumed in your numbers.

Senator RIEGLE. If there is no objection, I would like to raise the issue of the Iranian ships. I want to propose an amendment that we delete that item.

Is there any objection to that?

Senator MAGNUSON. Go ahead.

Senator RIEGLE. There may be other colleagues who are relatively new to this issue as I am. I think those of us on the committee who have served on the Armed Services Committee are much more familiar with this since they have just been through this, but I would appeal to my friends to keep an open mind because this may be one area where we can save some money and not impair defense.

In fact, we might improve our defense by striking out these ships.

As I understand it — and I would like the staff to respond after I have had a chance to lay out my understanding as to whether or not this is accurate or if I have omitted anything.

These four ships that are under construction at various stages of construction, ordered by Iran, are of a very particular type. They are designed according to their specifications for use in that particular theater of the world and so forth, and they are ships of a type that our defense establishment has not previously asked for ourselves for any American operating need prior to this time and there was no request in 1979 or 1980, and, in fact, I am told in terms of the 5-year plan that has been put forward by the Department of Defense that there was not a hint of a requirement for a sense for needing this kind of a particular ship.

I gather what has happened here is with the Iranian contract falling through we are stuck with these four ships under partial construction and there is some sensitivity about the fact that — I assume it is no secret that the chairman of the defense committee comes from Mississippi where these are being built and wants to salvage this work project.

I think we all understand that kind of a situation, but the question is do we really need these ships. If we do, do we need them in terms of this urgent supplemental umbrella under which they travel because originally the requests for the defense monies was an entirely different list of items.

I am not proposing to touch any of the other items in the supplementals such as the MX and I would propose we leave them intact. I suggest we delete the Iranian ships, and if I understand the mathematics on this sheet it is roughly $1.3 billion that is shown here.

I am also told if the Defense Department in fiscal year '80 or beyond decides that they want to take and do some reprogramming that they can actually pay some amount of future authorizations for a different kind of ship and they can rebuild these ships.

Apparently they can start at the point where they are presently and put a different kind of configuration on top of it and actually end up with a ship they have told us they want and which we apparently acquiesced and said we would be prepared to advance.

There is another way for them out of this box without coming in at the last minute and somehow saying this is an urgent requirement.

Senator MAGNUSON. We would have to submit to the Appropriations Committee a reprogram. They could approve it or not approve it.

Senator RIEGLE. If that happened, they would have to go through an authentic military and strategic justification for these ships either in the Iranian form or some type of hybrid, rebuilt Americanized form which would somehow fit what the Defense Department people need.

This seems to me to be a classic case of a situation that is a masquerade. This is no more an urgent supplemental matter than the man in the moon. They got stuck with these ships under construction and obviously I think somebody has to put some leverage on the Defense Department to come forward and say they would like to have them but there is not a hint they said before they wanted them or in fact that they do want them.

I would hope what we could do here is this, and I think this sticks out like a sore thumb, we vote to delay it. It does give us help in '80 and '81 and I am sure the committee staff can give us those numbers.

If the Defense Department in the normal sense wants to make a serious rationale for these kinds of ships they can do it in the normal process. There is a way out in salvaging whatever ship building has gone on and they can do some reprogramming and build a different type of ship from what is proposed here.

I would hope the committee would delete these items and in light of earlier steps provide a very strong defense for the country. All of the amendments of the Senator from New Mexico which were put forward to be for the defense budget were accepted, so, I think to take and put an item aside and let it meet the main test that every other serious defense equipment has to meet would really be the proper course.

Let me also say I asked earlier before the lunch break if Gary Hart or Jim Exon, who serve on the Defense Committee and have gone through this exercise in the Defense Committee could shed further light.

Senator METZENBAUM. How far along are those ships as far as their being built are concerned Are they way down the road or are they just started.

Senator HART. Two are advanced construction stage and two are behind. They are not ready for trials yet.

Senator METZENBAUM. Isn't the keel to be laid for one of them in May?

Mr. TILLSON. The first ship is 30 percent completed. The second, 17 percent completed and the last two are 10 percent complete, from this note.

Senator HATCH. That is planning and construction up to now?

Mr. TILLSON Yes.

Senator MUSKIE. Senator Hart had asked to be recognized.

Senator HART. I just want a walk through of what happened here.

Senator JOHNSTON. I think there is a cozy relationship between the Government and contractor. I think it is officially a cozy relationship in that foreign military sales are sort of made by the Government as a patron and sponsor and there is almost a guaranteed relationship with the contractor unlike, for example, down in New Orleans a developer is building a bank down there which is Iranian. He knew he had to protect himself so he put the money in a New York bank.

It is my understanding on the foreign military sales they look to the Government to protect them. I think the question here is what kind of obligation does the Government have to the contractor and can it meet that obligation other than by, in effect, buying these ships for the Government, because I think the Government must fulfill its obligation, expressed or implied, to make the contractor whole.

Can someone tell us whether or not there is this implied obligation and if so to what extent there is an obligation and how can that obligation be satisfied other than by buying boats?

Mr. TILLSON. I think the fairest answer to your question is there are termination costs negotiated into every procurement contract so the Government would be fully within its responsibility to the contractor were it to terminate the contract according to the terms of the termination agreement. That would potentially cause harm to the contractor if it left him with production capacity unused but certainly it would be within the Government's right to terminate.

Senator EXON. Let's clarify and then I will let my senior colleague on the committee talk about it.

You are right but there are funds of the government of Iran which we can use to negotiate down if those are cancelled. The information which has been furnished to us, which I think is entirely accurate, is we could be facing a loss of $200 million in tax payers funds.

Gary, is that correct data?

Senator HART. I can't vouch for it.

Senator EXON. Maybe you were not there all the time but that is part of what came out of it.

Mr. TILLSON. The destroyers were purchased according to foreign military sales agreements that we enter into with foreign countries and producing countries. The United States becomes a party to the contract, actually makes the contract, in this case Litton and the shipbuilding firm at Pascagoula.

The United States Government enters into a contract with the government of Iran for these four ships so that the U.S. Government pays the contractor and the Iranian government pays the United States.

Now, the government of Iran terminated the practice of its contracts within the United States and there are certain functions in there to pay contract termination costs.

The administration has had great difficulty in deciding exactly where the funds were, whether there were sufficient funds to terminate all programs just to see what the impact would be on the Government if all or some of them were eliminated.

They recently provided an estimate for the Armed Services Committee, subject to error, but now it is very difficult for the administration to determine where we are with respect to the total Iranian problem.

Senator EXON. The latest information we received was if all of the programs were terminated the funds, by the latest estimates would be short by some $200 million and we assume the Iranian government will not make it up.

I would like to have the Chair recognize Senator Hart but I would point out that we recognize if we pick up these ships we are doing a considerable service in Iran and that was one of the considerations discussed in the Armed Services Committee.

Senator HART. Mr. Chairman, shortly afterthe Congress convened, a supplemental request of just over $2 billion was set up which by and large was a grab bag for all the Services and represented a variety of things they felt they needed. There was a real question at that time, to address myself to what Senator Bellmon said earlier about the urgency of these items but, nevertheless, there they were.

In the course of the committee's efforts to undertake this supplemental we were taken by two elements. We had the original request which did not take these requests into account and then we had a request to consider what was ordered on the open market.

After we had begun that, we had a Middle-East peace agreement, and all of a sudden the possibility came up that we might be able to buy some weapons from the Shah of Iran or pick up some he had ordered and meet some obligations to lease them to the Israelis and Egyptians.

Now what you have is a can of worms. We had prior commitment to the Israelis and discussed commitments to the Egyptians. We had a peace agreement which expanded those commitments, presumably to include the Egyptians and we had a bunch of weapons sitting around that the Iranian government did not want.

Here came the administration at separate times, but mostly after the peace agreement with the amended supplemental which tried to take into account all of these events.

The fundamental question is where does this lead?

It is my understanding that supplementals would only lie with the Congress if there were some degree of immediacy or urgency. If not, you took it up in the normal authorization cycle.

There has been a great deal of confusion in the Armed Services Committee about this. It seems to be the only urgency is some of the contractors for these weapons systems feel very insecure, and that seems to be the degree of urgency as far as the ships are concerned.

We are talking in terms of $1.3 billion for four ships in budget authority and I don't know what the outlay figures are but it is a big chunk now for the four ships of the second revised supplemental.

Essentially, the facts, as Senator Riegle presented them, are correct. A lot of questions were asked on the record whether these ships had ever been requested by the Navy. It is my understanding the answer is, no. The 5-year plan did not have plans of this type.

There seems to be some reference by the Navy to ships of this type for the year 2000. They do contain equipment the Navy has never wanted or needed on our ships.

The principal weapons systems on these ships is target standard system which in the view of the Navy is outdated the minute it goes to sea by counter response measures the Soviets produce.

Without burdening everyone with too much detail, the Armed Services Committee rejected a Navy request for a cruiser staff which would contain the missile system on it on the grounds that the system was outdated then. This is three years ago.

So, the principal issue for this staff is a weapons system which is already duplicated by carrier nets and this was seen by our committee to be essentially outdated.

So, the real question is, is this urgent and even if it is urgent, are these kinds of ships necessary?

This was voted out 5 to 9 for these ships, Phoenix missiles, Hawk missiles and standard missiles all of which were manufactured for the Iranian are involved here.

On the contractor's liability, the Defense Department and nobody else has pursued the European market for these ships. It is not a question of will the United States end up with them or will the Iranian government end up with them. There are a number of possible buyers — maybe the French or Germans want these destroyers.

Senator PACKWOOD. The original contract is between Pascagoula and the United States Government?

Senator HART. Yes.

Senator PACKWOOD. But we don't expect toget the termination money from Iran. If we do terminate we have the money to terminate.

Senator HART. Some money. Not enough.

Senator PACKWOOD. I don't know how many ways a shipyard has but, do they have four ships on the waves now?

Senator HART. Yes. This is a new construction method at the Pascagoula yards.

Senator PACKWOOD. Will we halt construction or what?

I remember the cruiser shipyards but that is the extent of my knowledge.

If there is the money, even reasonably enough money in the Iranian account to pay us the termination costs, we lose not much. I have no idea what the costs might be and what we might have to pay the contractor.

The other thing I am intrigued with, Mr. Chairman, we are all familiar with the fights between this committee and the Finance Committee on specific things. Armed Services has studied these things and we could not be talking about anything more than these things. We are second guessing the judgment of the Armed Services Committee.

Senator MAGNUSON The 79 supplemental has been revised to provide $628 million to buy two of the four destroyers which Iran ordered. We understand down in Appropriations the fiscal 1980 supplemental will request $723 million to buy the other two ships. So, they have zeroed in on this.

Senator EXON. They added two more, Senator Magnuson. They came up with a 13 to 5 vote. The Armed Services Committee decided to buy all four of the ships rather than the two.

Senator MAGNUSON. That is what they have changed.

Senator HOLLINGS. I would like to learn from the military advisors here of the utility of these ships to the U.S. Navy. The statement has been made that it has equipment that three years ago the military found obsolete and out of date and nobody wants to vote for a missile that the Navy will not move.

Under these proposals this has been included. That is what the President asked for; that was part of the Domenici amendment. The Budget Committee has adopted two ships and not four.

Mr. SNEED. The supplemental considered this morning included two ships. The one submitted by the President included two ships. We had not bought the four. I know the Armed Services had but it seems to me under the circumstances if they are of value — from what I have just heard described everybody has not heard much about these ships.

But as we all know, this year we did not have the complete presentation of the defense budget with respect to mission controls.

In past years we have sat around at a table and gone into each section on a mission control basis.

You would get to the Naval power and sea control and you would project in the outlays the construction effort.

As a member of this committee, I remember a Navy of 600 vessels. a 500-vessel Navy and we got down to 300. We are trying to get it built up.

I understand these vessels are a similar type. On the one hand adapting them to have a capability that these vessels have or some of these kinds of vessels have that had been planned in the out years so if we had a situation of a need to terminate we would try to fill down the road, namely '85 or '86, whatever it is, with the Iranian predicament we should hold up on some of this. The Navy could work out a couple of proposals and later down the road to make these an additional supplemental.

Are these any good? Should we go to Europeand see if they are interested in them?

We did not say there was no need of the ship. I think that is a slight exaggeration. There have been hearings right here in the Budget Committee that we need some alternate vehicles in the Mideast.

We start with the type of destroyer bought several years ago. The last number is 963. That is the whole number of the ships.

The four ships sold to the Iranian government, 993, 993, 45 — that is what we are talking about.

In 1978 the Congress authorizes a 99.7 which is the last of the class authorized today.

However, in addition to those ships, DCC class ships, the Government is procuring DDG-47 Class ships which are the Aegis ships which have the more modern air defense ability.

These ships have essentially the same haul as the 930 Class ships, so the DGB ship in the 1980 budget will be the same as the 993 Class ships that the Iranian government has decided not to procure and exactly the same as the 997 Class ship which the Congress authorized the administration in the Navy to apply in FY 1978.

These are ships we expect to buy in the out years.

Senator HOLLINGS So there were some ships they were going to buy in the outyears. What was the reprogramming done by the Navy order to get this supplemental before Senator Magnuson and the Approps Committee?

Mr. SNEED. They did not have to program for anything. What they planned to do was take the other two, indicating they no longer made it necessary to make adjustments in the 1980 shipbuilding program to keep SCB level out deleting a couple of other ships.

Senator HART. It is the weapons system on board that is important here. The Navy has been requested by the Armed Services Committee, essentially the DDG-47 which is the AEGIS ship, same hull but a much more advanced, modern weapons system on board.

They have not made this request of our committee. I think that this is the principal point here. If we buy these ships, it will delay the types the Navy wanted because it takes up that money.

That is what is important.

Senator HOLLINGS Are they planning to buy these?

Senator HART. The whole record is toward the AEGIS system.

Senator HOLLINGS. I can't see the Armed Services Committee voting that down.

Senator HART. The whole record Is toward the AEGIS system.

Senator HOLLINGS. I can't see the Armed Services Committee voting that down.

Senator HART. You get them cheap.

Senator Hart. That is the argument. They are cheap.

Senator DOMENICI. I appreciate Senator Hart bringing me up to speed on the difficulty that surrounds either two or four. I had no idea, to be honest with you, that it was this complicated yesterday when I lookedat the so-called urgent supplemental.

I appreciate your bringing this Senator current on the problem. If we take out the two requests in President Carter's amended request, we let out the four which is what this committee had in mind. They buy this or that or none.

We take them out and they buy them and then we are stuck. Those of us who thought we were supplying other things to the military, we are stuck with using the money we thought was going to these ships.

If there is some way to unequivocally delay action on the ship by delaying money — the supplemental is not a line item.

Senator JOHNSTON. Does the Senator understand why this is going to be in the third supplemental for 1979, why it is in the budget?

I never have understood that and I missed something.

Senator DOMENICI. What is your question?

Senator JOHNSTON. Why is this supplemental in this budget as opposed to the third supplemental.

Chairman MUSKIE. I thought I tried to make that clear. Number one, we face the need for a third concurrent budget resolution for fiscal year 1979, not just for this reason but because inflation and unexpected inflation since the second budget resolution and higher interest rates because of the declining dollar and the need to act have put over the outlay targets for fiscal year 1979.

I think we were over that by about $3 billion in outlays independent of this particular supplemental and the effect of an inflation rate three points higher than at the time we approved the second budget resolution has increased the cost of resolution.

Because we have the need for that third concurrent resolution, and this other item came down a parallel track — if the authorizing committees act as they have and if the Appropriations Committee needs some room — the Appropriations Committee has not yet dealt with it — needs some room for these items or part of it, then we have to consider whether or not we want to respond in the third concurrent budget resolution in 1979 in order to make use of them.

This has not affected 1980 because if we approve these ships for 1979, then there is a spend out rate as there is for all ships that is reflected in 1980 and 1981 which affects the 1980 budget.

We got at it because of the spend out rate because we had not had the details of the authorizing committee so we began in 1980.

Let me get at this business of line items. We are not a line-item committee, but the fact that we consider particular programs especially big ones is certainly no mystery to those of us — how else do you arrive at an estimate until you consider what programs are decided in the function.

We don't decide them. We just decide what total resources available to the government should be made available in that function given to us from the authorizing committee on March 15, the President's budget and so on, so inevitably you are driven to the discussion of major items.

We tried to discuss it in missions, to separate ourselves specifically from line-item decisions but for something like that which comes up due to economic circumstances not anticipated last October, we have no choice but to look at the justification for providing additional resources for this function in fiscal year 1979.

The fact that we make room for it, if we decide to, does not mean we will provide the Appropriations Committee. That is a decision for Senator Magnuson and the others.

The budget process is this committee, the authorizing committees, the Appropriations Committee, the Senate as a whole and House — we take into consideration what the overall should be, taking into account the overall of these functions, so occasionally we appear to be deliberating as a line-item committee.

We don't have a way and I don't think we should have a way of vetoing such a system, and only to the extent the amount of money we have influence over do we affect that decision.

Now, if the Appropriations Committee, after it has been adopted by both Houses, should decide the money available in a function should be spent in a different way than we assume, that is the Appropriations Committee prerogative; it is not ours to veto.

Senator RIEGLE. We are well down the line in fiscal 1979 and we have sort of a tail end item that has come up in the last minute.

Because of its immediacy, it seems to me you are compelled to look at details. It seems to me as you get down to the tail end of our budget year you really cut the whole heart out of the budget process if things are brought in at the last minute that look questionable or flimsy because it undoes everything you have tried to do later on.

I would say the late-arriving ones we should be concerned about and there should be compelling justifications.

Otherwise, we say even though we make these judgments early in the budget year, if you get in a bind at the end of the year, you could come in and do other things

Chairman MUSKIE This is markup and people differ as to what is urgent.

Senator HART. Mr. Chairman, can I try to answer a question which the Senator from South Carolina asked?

The question was raised as to why we would buy ships without regard to weapons systems when in fact what the Navy wants is more modern systems.

It is our understanding weapons systems for ships one, two and three have been purchased, and in any respect would not be debated, at an additional cost of 400 million, which would be the cost of the AEGIS system, but one, two and three are foregone.

Chairman MUSKIE. Senator Hollings.

Senator HOLLINGS. I guess this is the reason you have an Appropriations Committee and not a budget.

I go to experts and I find four ships are being built on sort of an assembly line. One is 30 percent completed and the last ones are mainly housed there. It is true, as Senator Hart said, the guns and weaponry have already been ordered delivered. We can't change that, but that does not mean the hulls can be changed to come into the DA-3 system.

If I know I would be going to the AEGIS class, I would not want to delay my modernization plant, which you mentioned a little while ago, and I would not have anybody I wanted to buy the weaponry.

That is sort of ex post facto. That is on the side of the vessel, leave it there and not on the dock, but I understand the hulls could then be used and in a sense we would not be slowing down but speeding up some of the Navy procurement by not buying archaic equipment.

I don't know how you do this other than by sticking to the Domenici proposal. We have four of us right here who feel let's take those hulls and use them for better things.

Senator DOMENlCI. Has the AEGIS system been paid for?

Senator HOLLINGS I am only parrotting. There is a cost of $200 million to install but the best round figure is $350 million for an AEGIS system.

Senator HART. The Secretary of the Navy and CNO developed ships one, two and three cannot be converted to AEGIS. That is a technological judgment. I can't answer why.

Senator HOLLINGS All three here agreed they could.

Senator HART. AEGIS systems have not been ordered. They have hulls sitting there for years since AEGIS systems were built.

Senator MAGNUSON. The AppropriationsCommittee has funding for two or three ships.

We have now before us a budget request for two of these three ships. We said we were going to have them go ahead with the new ships. We may not.

We are going to take a good, hard look at this. If they want to change it, they have to come before the Appropriations Committee by law and ask for a reprogramming for this particular month.

Whether you want to provide room for the Appropriations Committee to make a decision on this, that is all that is in front of this committee, I think.

Senator MOYNIHAN. Mr. Chairman, I am sure it is a matter of my intentions and experience but I was not aware this morning we approved any supplemental for fiscal year 1979.

Senator HART. I only heard us discussing fiscal year 1980. If I am wrong in that, would you explain it to me?

Chairman MUSKIE. There was clearly stated, at least it was clear up here, that the '80 numbers proposed by Senator Bellmon and Senator Domenici specifically included an assumption that in 1980 we would pay some costs on the order of $800 million in outlays, relating from the defense supplemental under consideration in the Armed Services Committee and $800 million was included as an assumption that is not the same thing as with all the supplemental, but it assumed or made room for that in the event we should approve this.

Senator MOYNIHAN Was that a decision on'79?

Chairman MUSKIE. No. I don't recall it as such.

Senator DOMENICI. Specifically, the '80 figures both Senator Bellmon used and which I prescribed as substitutes referred to the amendment supplemental of the President because that came to us yesterday.

The authorization committee hasn't seen it and we said to the extent the department's supplemental becomes law what will be carried over we accept this and it apparently was contained in this supplemental request.

We took two he requested. It certainly does not mean they are going to take three or four. We either had to prescribe for the eventuality or leave all of it out.

Chairman MUSKIE. Senator Packwood.

Senator PACKWOOD. You are talking about cutting the money out for all four of the ships?

Chairman MUSKIE. There is no motion before us at this point of any kind.

Senator PACKWOOD. Don is talking about cutting out all four. The Armed Services added two, the President asked for two in addition to get the additional two.

Senator HART. Armed Services put in four.

Senator PACKWOOD. In order to get the extra two, they would cut out $450 billion in here.

Was it for Iran only?

Senator HART. We found out the F-16's were authorized and now we are shipping them to Israel.

Senator PACKWOOD. I don't find these ships urgent and I find some of the things that were set out in order to make up for the two ships a more timely expenditure, if that is the term, for the two ships, and then I don't understand why we want to continue with these and you can correct me, if I am wrong, Mr. Chairman, why can't the President come back and ask for these as increases in the fiscal 1980 budget rather than an urgent supplemental now.

Chairman MUSKIE. I would like to join in your question this way: I am told it is the administration's desire or intent — it may not be desire but intent — to acquire all four of these ships either into 1979 or 1980; is that information correct?

Mr. BROWN. Yes, that is correct.

What they would prefer to do is get additional budget authority from the Congress to procure these four ships rather than finding some ways to reprogram existing authorizations or existing FY1980 authorizations to buy the ship.

Chairman MUSKIE. That is clearly the administration's intent, to acquire all four ships.

So, the question is whether to split them up in 1979 or 1980 or approve none or approve some. There is the option.

Mr. TILLSON. There is one other potential option, if I might. The 997 authorized in FY 1978, to my information, has not been started under construction yet, and there are funds in the budget, in the 1978 budget, which could potentially be reprogrammed to cover these four ships until funds from 1980 would become available.

Senator RIEGLE. This addresses the point that Pete Domenici made and others have made about the Defense Appropriations Subcommittee dealing with this issue.

You have a very strange situation here which at least we all recognize and that is the chairman of the full defense committee, John Stennis, who all of us have the warmest feeling about, happens also to be the chairman of the Defense Appropriations Subcommittee.

These four ships are in his State. This is basically his home-State problem and we are all familiar with those problems of life.

I think it is a peculiarly awkward situation to expect that somehow the Defense Appropriations Subcommittee could take the kind of detached measured view of this in light of that obvious sort of built-in conflict.

In addition to that — well, let me just leave it at that. It seems to me that that problem makes it very difficult for us to assume that it is going to get sort of a dispassionate consideration there.

Maybe this is the point where the Budget Committee ought to maybe face its responsibilities.

The other thing I would say is this: As I understand the vote in the Defense Committee, it was 13 to 5. I would say the fact that there was even divided opinion that five members would feel strongly enough about this to cast what was obviously a painful vote

Chairman MUSKIE. May I suggest facetiously our votes today might suggest chairmen are not all that powerful.

Senator RIEGLE It seems to me if the vote was 13 to 5 and there was a legitimate difference of opinion in the committee, that the fact that there were five dissenters would suggest to me more people have skepticism and they just decided they did not want to get crossways with the Chairman.

That is just the way the situation exists.

Senator DOMENICI The Chairman might have been in the minority like ours.

Senator MAGNUSON. Is the Senator from Michigan assuming because Stennis is the chairman that the full committee of Appropriations would accept word for word what he says, what he wants. I would resent that.

Senator RIEGLE. I know the chairman of theAppropriations Committee and my former chairman on Commerce too well to know that. The point is when it gets looked at within the Defense Subcommittee obviously the Chairman of the full committee certainly has some considerable influence at that point.

I don't know what position the full Appropriations Committee will make. All of that is aside but that does not relieve us of of our responsibility.

Senator MAGNUSON. The House has to act on this.

Senator RIEGLE We have to act on it too, and this is a budget item. I think we ought to look at square in the eye.

Chairman MUSKIE Senator Bellmon.

Senator BELLMON. I would like to ask a question or two of the staff of my own enlightenment, and the question is this: Are we asked to buy these ships because we are bailing out a shipyard, the Government of Iran, because we are trying to keep some shipyard workers from losing their jobs.

If they had four yachts on the way somewhere, we would not have fought those to keep the ship from losing money on a contract. I think we have to find out whether or not these ships are really something the Navy wants. I don't think anybody has said that here and I don't think anyone knows.

I would like to suggest we pass this item over for the time being and ask our staff to get objective information from the Navy as to whether they wanted to buy the ships or use this money in some other way.

Senator EXON. Let's not delay this. The Navy testified that they want these ships.

Senator BELLMON. It is strange they did not want them last year.

Senator EXON. That is exactly the point.

Senator HART. The record is replete with Navy testimony that they want the ships.

Senator EXON. If you ask them, they are going to say yes, they want the ships. I don't think that is critical to our decision here.

Senator CHILES. I think Henry has a good idea. Maybe we ought to find out very definitively if these hulls can be used to put AEGIS on even though it is going to mean a loss of money of the launchers and the weapons that were ordered for these hulls to start with.

If it is clear that this is delaying the conversion process or getting the newer ships and somebody has told us today they are actually cutting back on ships in '80 or '81 of the four converted ships to provide these, if that is clear, I want to find out is there anyway you can just go ahead and say, "All right, we will build the hulls, but we won't let you put AEGIS on it because it would cost more money or say starting off in '81 for AEGIS.

It has to cost more money if they are the same kinds of hulls. It seems to me we can get that and then we will be here through the recess if we don't get some of those answers.

Chairman MUSKIE. Maybe it is answered in the testimony, but if it is we have not had access to the testimony. Two very articulate and knowledgeable members of the committee — I want to add my appreciation to Senator Hart and Senator Exon for that, but I want to know what impact will the aquisition of these four ships have on our ongoing shipbuilding program. What will it do to the ships that have previously been programed and requested by the Navy, the pace at which they will be developed? Are these going to be substituted for something else and, if so, what? Is there a chance these will be converted? If so, in what way?

I have a lot of curiosity about questions of that kind. I happen to believe that we need to build up the Navy. We need to keep the sea lanes open and I would like to know to what extent acquiring these ships that were dropped in our laps by events largely unanticipated by us, what it is going to do to a program that has already had a lot of thought in the Department of Defense, in the Congress, in the Armed Services Committee, in the Appropriations Committees.

What is the impact? Are other ships going to be dropped? If so, and why and what will that do to our posture and to our objectives, objectives I assume are the result of long, careful and rational thought. We have not heard that part of it discussed at all and I would like to hear it discussed.

So, I think there is some merit to Senator Bellmon's proposals and I am moved also by the fact, gentlemen, that we are now almost two days into our markup and we have not finished a single function.

Now, I enjoy these debates and I get a lot of education out of them, not always the kind I would like, but I get it and it does me no harm if I get it, but it seems to me in this issue we have raised more questions, a lot of them answered, but the answers to which we are not yet fully assimilated to our satisfaction.

I would like to get some momentum behind the building of this budget.

Senator RIEGLE. Mr. Chairman, I raised this issue, and I would like to resolve it, too. So, I would like to make a motion at this time and it is to the following effect:

I would like to move we accept all of the '79 supplemental with the exception of the ship money. I would like to take it out and its future year impact and have us vote on that proposal. If that proposal carries, we will have voted for the supplemental portion of this area of the budget, the defense area of the budget. If somebody wants to come along in a day or two or three or four and has a case to make which nobody here has been able to make and I frankly don't think it exists — if you give somebody three or four days, they may be able to construct a case — that is a different ball of wax.

We all know that is how it works. I want to put the burden on the people who make this urgent recommendation and last minute turn around in recomposing this list of requests. I would like to have us vote on it. I would like to make the motion we delete it. We are entirely free if there is a compelling justification that comes along in the next few days, we can reconsider it. I suggest that is not the best way to proceed. The facts as we are likely to have them are pretty much present.

I would like to bring to the head the issue that we act on the supplemental with the exception of the four ships and that those be taken out.

Senator DOMENICI Mr. Chairman, I move that that motion be tabled until Friday morning, so that they will have adequate time to become better informed on the matter.

Senator HOLLINGS. You can't look it square in the eye.

Chairman MUSKIE. A motion to table is—

The CLERK. Mr. Magnuson.

Senator MAGNUSON. Aye.

The CLERK. Mr. Hollings.

Senator HOLLINGS. Aye.

The CLERK. Mr. Chiles.

Senator CHILES. Aye.

The CLERK. Mr. Johnston.

Senator JOHNSTON. Aye.

The CLERK. Mr. Hart.

Senator HART. No.

The CLERK. Mr. Metzenbaum.

Senator METZENBAUM. No.

The CLERK. Mr. Riegle.

Senator RIEGLE. No.

The CLERK. Mr. Moynihan.

Senator MOYNIHAN. No.

The CLERK. Mr. Exon.

Senator EXON. No.

The CLERK. Mr. Bellmon.

Senator BELLMON. Aye.

The Clerk. Mr. Domenici.

Senator DOMENICI. Aye.

The CLERK. Mr. Packwood.

Senator PACKWOOD. No.

The CLERK. Mr. Armstrong.

Senator ARMSTRONG. Aye.

The CLERK. Mrs. Kassebaum.

Senator KASSEBAUM Aye.

The CLERK. Mr. Boschwitz.

Senator BOSCHWITZ. Aye.

The CLERK. Mr. Pressler.

Senator PRESSLER. No.

The CLERK. Mr. Chairman.

Chairman MUSKIE. Aye.

The CLERK. 10 ayes, 7 nays.

Senator RIEGLE. Will this be the first item on the agenda for Friday morning?

Chairman MUSKIE. Yes. We will deal with it one way or the other.

Senator METZENBAUM. Mr. Chairman, I am going to impose upon the committee's time for not more than ten minutes, but I do believe it is an important subject that I would like to take it up having to do with the Department of Defense procurement policies.

Back in December, six members of the Senate addressed a letter to the head of the OMB, McIntyre, talking about the cost of overruns, cost of productivity, cutting off contractors with poor records of past performance and expanding use of competitive bidding.

MONDAY, APRIL 9 — AFTER RECESS

(The committee reconvened at 7:10 p.m., Hon. EDMUND S. MUSKIE, chairman of the committee, presiding.)

Chairman MUSKIE. We have a working quorum. I hope that other Senators will assemble quickly so we can get moving.

The first order of business, I take it, is the Iranian ship issue as to which we had an agreement for 30 minutes debate, 15 on each side.

I would like to announce before we begin that, and I would like to wait a few more minutes to give other Senators a chance to be here, but I have a package proposal to offer.

What it will do, and I am prepared to distribute this at the right time when we finish the Iranian ship deal — what it will do is cut what we have already done in a minimal way with respect to any particular function, but it will produce spending cuts across the board for each year 1980, 1981 and 1982. It will reduce our deficit on our economic assumptions to 28.8 for 1980.

On the President's economic assumptions it will produce a deficit under $20 billion. It will produce a half-billion dollar surplus in 1981 and a $46.9 billion surplus in 1982.

Senator BELLMON. Mr. Chairman, I also have a proposal to offer. Mine is a little deeper in cuts.

Chairman MUSKIE. I suspect on the basis of this afternoon's very much interrupted discussion that may be the only practical way to get a final decision.

In any case, we will have ample opportunity to debate the proposal. I think perhaps we are in a position now to begin the debate on the Iranian ship matter.

Senator Hart is the one missing Senator who has been involved in this debate up to this point. I assume he will be here shortly. Is there any reason why we couldn't begin?

Senator RIEGLE. I don't think so.

Senator DOMENICI Procedurally as soon as we are finished with the Iran ship, you are going to present a package and I understand Senator Bellmon has a package. Do you think we might take those up tonight?

Chairman MUSKIE. I would hope one or the other of these packages will generate the support necessary to complete the markup on the spending side and maybe reduce the debate on the revenue side so that we might even conclude, but that depends on a strain on all our lives to conduct our arguments to the essential minimums. Every controversy of which I am aware has had debate and not much more by way of arguments can be advanced. That is not to say we ought not have any debate, but we should have restraint on debate.

I would hope we could at least finish the spending side. It is then the pleasure of the committee to come back tomorrow fresh to consider the revenue side. If this be your desire, I have no objection to that. We ought to plan to come in early in the morning, if we come back tomorrow at all. If we get through unbroken hours of debate, if we can get through the spending side, we will be a long way toward a final resolution on this job.

Senator Riegle is the proponent of this issue.

Senator RIEGLE We are starting at quarter after and I will not talk at length now because I want to conserve some of my time.

Chairman MUSKIE. How much time will you use?

Senator RIEGLE. I will try to stay well within five minutes.

To refresh everybody on the issue here, and I don't serve on the Armed Services Committee, so I can't speak with quite the same degree of knowledge as others who do serve on that committee can bring.

My sense for this issue is that we had an urgent supplemental composed of a grab-bag of things and a mixed bag of defense items. In the unusual supplemental there was no mention or hint or desire to pick up these two now expanded to four ships, which it turns out are under construction in the State of Mississippi that were under contract to Iran.

It appears as much as one can gather, when the Iranian situation changed and suddenly that contract was up in the air, the items that the Defense Department said that it earlier wanted, it suddenly changed its mind and decided those items were not too urgent after all and what they really wanted were these Iranian ships which previously they had never requested in any approximate or similar form.

If one goes back and tries to reconstruct the arguments in the past on this kind of ship, and I can cite this data — I would just as soon have Gary Hart make that point as make it myself. Later in my time, if he is not here, I will do it.

Back three years ago ships of this same general sort, both the bottom and the configuration on top, were thought by the Defense Department to be obsolete in terms of U.S. needs and, therefore, we had decided against incorporating these kinds of ships into our own naval operations in those three years.

What this situation has the earmarks of is a situation where suddenly because of the situation in Iran these ships become very much up in the air in terms of completing them. I think it is basically sort of a public works project for the State of Mississippi. I mean by that no disrespect to anybody because we all know how the system works around here. But it is obvious from everything I can gather that the Defense Department was persuaded they had better need these ships in place of other things on the supplemental list.

But the problem it poses for this committee is how, in light of all of the work and effort and all of the speeches that have been made and all of the argumentation that has been made with respect to cost-cutting and eliminating and working down the deficit and stopping waste in government, how in the world we can justify an item of $1.2 billion on an urgent supplemental basis for four ships that the Defense Department in the past has never indicated the slightest interest in and whatever work one could do would suggest these are not things we need in our own Armed Services.

Two avenues have been suggested as better alternative routes for us to take at this point. Apparently in contracts of this sort the Iranian Government has to put up a certain amount of money in the beginning so there is money sitting in a bank account somewhere. If they cancel these ships, there would be a workout to cover a substantial portion of the costs, but that is not all of it.

That is one route and presumably you firesale or do whatever you can do to find another buyer for these ships. I am told while these ships are not suited to the U.S. naval operations as it is foreseen, it would be suitable to other international buyers if any efforts were made in an effort to try to find one.

I think this is a classic case where the situation is it falls in the home State of the chairman of the committee, who is a dear friend of all of us, and I mean no disrespect when I point it up, but I really think in light of all this pressure on all these other issues and talk of saving money to ante up to buy four ships, there has never been a shred of evidence we ever wanted these, is the essence of kind of a pork barrel and poor priority decision that really flies right in the face of everything else you are trying to do here.

I would be delighted, by the way, to invite the professional staff — if I said anything that is in error or if what I have said is substantially correct on my own time in a minute of two additional time, I would be very happy to have the professional staff comment on it one way or the other.

Chairman MUSKIE. How much time would you like them to have?

Senator RIEGLE. Two minutes.

Mr. TILLSON You would like us to comment?

Senator RIEGLE. I guess I would the assessment of the professional staff of whether the case facts I have laid out here are correct or, if not, if there is some major compelling fact we should consider for or against the shift.

Mr. TILLSON. The real question in my mind,Senator, is whether the United States Navy can make effective use of these ships.

Granting the fact that the Armed Service Committee a number of years ago said that the nuclear cruiser with this same weapons system was obsolete, there are, I believe, some roles where the Navy ships could be used and could be useful. They are very competent carrier escorts in every mission except for the situation where the United States Navy is going into the brunt of a Soviet backfire cruise missile attack; in other words, for what you need an Aegis ship.

Senator RIEGLE. Is there an urgent need for ships of this kind?

Mr. TILLSON No, I don't believe we could argue there is an urgent need for which a supplemental is generally supported, but there is a valid use of the United States Navy would have for these ships.

Senator RIEGLE I would like to reserve the balance of my time.

Senator DOMENICI. I was going to ask a couple of questions, but I think you ought to go ahead,

Senator HOLLlNGS.

Senator HOLLINGS. I would like to use a couple of minutes.

I was disturbed when I heard just those kinds of expressions that we heard a little bit earlier the other night.

Since we have pork barrel for the State of Mississippi and there is no urgent need and no one has ever expressed the slightest idea about how this kind of ship can be used, the fact of the matter is, the next morning I was talking to my colleague from Florida.

I said I was not going to vote for any pork barrel. More specifically, we really wanted to know whether it was obsolete. I had heard that word "obsolete" used. I met with Secretary Claytor and asked him and cross-examined him pretty thoroughly and I asked him if he wrote the chairman a letter, of which I am sure he had a copy, would he outline the need. I have so many papers in front of me I don't see that particular letter, but we did receive a letter from Graham Claytor. I have a great regard for his business judgment. I knew him when he ran the Southern Railroad down in our backyard when all the other railroads were going broke.

I asked him if this is a sop or pullout, and then I asked him when he went over it to write you a letter and send copies to the other members.

No. 1, this is not the first time, Don, the Navy heard of this. On the contrary, Claytor tells you and me and everybody else that he talked about having these kinds of vessels and submitted the request and was cut back some months ago. Secretary Brown and the Navy had requested, "We also requested a ship identical to the 993 in FY 1979 supplemental request, the DDG-998, going back a bit more to fiscal year 1978. Dr. Brown and I testified in support of partially filling our AAW requirements with four additional Virginia class nuclear power cruisers equipped with Aegis, but these were deleted because of fiscal constraints.

"However, as can be seen from the attached comparison, the Iranian 993's have the same combat capability as our Virginia class without nuclear power."

This is not out of the clear, blue sky that all of a sudden they find some use in public works for the State of Mississippi. He testified a long time.

The CLERK. Your time has expired.

Senator HOLLINGS. Throw that thing away for a while.

Chairman MUSKIE. Keep time and turn off the mikes.

Senator HOLLINGS The shipbuilding people in the justification which was submitted along with this budget in November of this past year asked for this identical vessel. That is the record and this is the actual picture of that request in November when everybody was backing the Shah and everybody else — nobody was thinking of public works for the State of Mississippi. That is just extreme irresponsible talk because you can find out by asking, like I did, so there is the exact request made.

They put it into the supplemental vessels and when they found they had four, they would like to get the four available and perhaps change the one to Aegis equipment.

No. 1, the vessels were asked for in 1978. They were thinking of several of them at that particular time. One was asked for in the supplemental, submitted by the Department of Defense in November this past year. The question was, was it obsolete?

I heard from Senator Hart that the 2-D system was obsolete. That is not the case. Now we have the original secret classified testimony where they answered that to Senator HART when he asked the question. It was not obsolete. He made that point in the Armed Services Committee and the majority of the Armed Services Committee set it down. I asked for the other particular point if we go with this buy, does it set with the Navy procurement payment program in the outlays that we so carefully planned?

I have another letter from the Secretary of the Navy and the Navy Department. This does not disturb in any wise the actual construction program. It was approved by the Congress when we started rebuilding the Navy and it was approved when we started rebuilding the Navy last year.

I will yield back to Senator DOMENICI. If he can't support me on those three points and they were obsolete, I was not going to buy them. But they are wrong on all three points.

Senator RIEGLE. Let me say on my own time to Fritz Hollings with whom I hate to do trial, he is such a good trial lawyer, he makes a good case when he has a bad argument.

I understand the Navy put in the supplemental when there were Iranian problems. They were sounding the alarm they might have to eat these ships. It was a Trojan horse type of thing.

Senator HOLLINGS. You are the trial lawyer, not me. They never heard anything until Iran fell and never heard about it and asked for them in February.

Senator RIEGLE. There was no request for four. Was there a request for four?

Senator RIEGLE. That is part of the question I think we have to answer, how all of a sudden this became that urgent.

Senator HOLLINGS Obviously the Iranian thing made it urgent and more important.

Senator RIEGLE. The basic question of whether it is worthwhile to spend this much money, it turns out the fellow you cite here, Mr. Claytor, has answered this question himself.

Let me cite some of the testimony verbatim from him. This is what he said: "One of the things that I think has not been made sufficiently clear that the Virginia class CGN, the Virginia, the Mississippi, the Arkansas, the Texas, which are our most capable existing cruisers, are identical almost down to the last jot and tittle from the DDG-993 class that we can now get from the standpoint of armament. They have the same armament, the same guns, the same ASW, the same everything."

He goes on and I end the quote.

In 1975, which is four years ago, the Armed Services Committee now — and we are not talking about Claytor, but the Armed Services Committee — was faced with a budget request from the Navy which included an additional cruiser of the Virginia class, which is this very class to which Mr. Claytor refers, but the Armed Services Committee in 1975 denied the Navy's request for the ship and in so doing this is what it said in its report, and I quote from the Armed Services Committee in 1975:

"The committee has carefully considered this request and believes it inappropriate to build any ship and especially a nuclear ship with a weapons system that is clearly inadequate to meet the projected threat within a relatively short period of time after delivery of the ship."

That was 1975. I don't know how a ship that the Armed Services Committee found to be obsolete in that fashion four years ago is suddenly such a hot ticket that they are asking for four of these things. It just does not make sense.

I think I would have to rely more on what the Armed Services Committee itself found to be the case sometime before. I have been told, and you can tell me if this is wrong or not, that we normally have four of these cruiser ships that accompany a carrier. We have 12 carriers now, so that would be 48. I understand we have approximately 60 ships that are functional that are in this same general class.

So why we would need to be adding four more even if we did not have this record, saying this was the kind of ship we did not want to build any more of, we would still have the question of why suddenly this has become such a key item.

If we were talking about a minimal number of dollars, that would be something else again. That is sort of how the system works around here. It is inconceivable that somebody from the Defense Department is going to give you the case against this just the way the cards sit. I would not imagine you would expect it. I would not expect it and it did not happen.

I think anyone who wants to vote $1.2 billion for four Iranian ships when our own Armed Services Committee voted we did need them, you have an awfully difficult time talking about economy, at least on the same day.

Chairman MUSKIE. What times have elapsed?

The CLERK. Mr. Riegle has four and Senator Hollings has used six minutes.

Senator RIEGLE. I yield two minutes to thegentleman from Ohio.

Senator METZENBAUM. This amendment ought to be known as the "you got to be kidding" amendment, because only one with a sense of humor could be advocating the four Iranian ships.

They were not part of the request. When Claytor was testifying before the Armed Services Committee, he said, "I would certainly agree with Dr. Perry the ships would have been requested had I known they were available. We did ask in the original supplemental at a cost of well over $500 million."

Really what happened in this committee is the following: Last week when this issue was before the committee, the committee was aghast about the four Iranian ships. We were ready to eliminate them. We did not think it made good sense.

Now there has been some work done, and the work that has been done has been very persuasive. What we are going to do is waste something in the area of $1.2 billion. That is the way it is with military appropriations around here at the moment. This committee did not cut the Defense Department appropriations. This one makes no sense at all. This one is illogical. It does not have any basis or reason at all, but we will sit here this evening and take money out of the mouths of people who need to eat, using food stamps, and we did take money away from the CETA program for unemployed young adults and young blacks who need jobs.

We are going to take money away from those who are an aid to families with dependent children and we will probably do something with respect to kids who are in college. But with respect to four Iranian ships we don't have the temerity or backbone to stand up and say the Navy did not want them, they did not fight for them and now they are stuck with four Iranian ships which

Iran could well pay for. If not, we cancel them, take our loss and that is the end of it.

We don't buy ships we don't need. It does not make any good sense and I think we are making a major mistake.

Senator BELLMON. I will be very brief. I was undecided about this matter when we met the other day, but since then I have talked to the Chief of Naval Operations, which is the place to get information, but I think he was leveling with me. He says that he considers that these Iranian ships are superior to many ships we now have in the fleet. He mentioned one called U.S. 963. He said the Iranian ships were much better than what we will be using many years in the future. It was not concluded they would put this Aegis system on all ships, but just a small number.

Apparently it can provide fire control for other ships other than the one on which the system has been installed.

Also he claims it will be possible to put the new missiles on these ships when they are brought in for major overhaul.

In FY 1979 the Defense budget was $113.9 billion and in FY 1980 the President had it for $125.4 billion and I am going to vote to see he gets most of it. In between we come in with this large supplemental of which $1.2 billion is for four Iranian ships. It seems if we approve it, we could reduce the outlay by a similar amount if the Navy wants them, which I am convinced they do want them, and they are good ships and I am convinced they are, why can't we take out $1.3 billion in their FY 1980 budget?

Senator HOLLINGS. I would like to know the answer to that myself.

Mr. SNEED. If you wanted to reduce the 1980 outlay, I think the number is 0.1 billion in outlays.

Senator BELLMON. We have 1.53.

Mr. SNEED. That is the budget authority associated just with the cost of ships. The outlays in 1979 associated with those ships are about $700 million.

Senator BELLMON. I will amend my question and ask could we not take $700 million out of the FY 1980 military budget?

Mr. SNEED. If you wanted to take $700 million out of the 1980 budget, it would depend on how you want to do it. If you want to do it with procurement money, you would have to take a very sizable amount of procurement dollars because the first year spending associated with procurement is so small.

Senator HOLLINGS. This should be on committee time. I can withhold the question.

Senator RIEGLE. I would like to hear the answer, too. Let's get it on committee time.

Chairman MUSKIE. We did not provide for that in the unanimous consent agreement, but I have no objection to that if no member of the committee does.

Does any member of the committee have objection to excluding staff responses from the amount allowed for debate?

There is no objection.

Mr. SNEED. You could reduce the budget by $2.3 billion. You would have to specify it was so we could figure out what the outlays associated with that were.

Senator BELLMON. Could you produce the outlays?

Mr. SNEED. You would have to identify whether they were operating accounts, procurement or R&D.

Senator BELLMON. Since this is for procurement of ships, why can't it be taken out of the ship procurement program?

Senator MOYNIHAN. Does the Chief of Naval Operations think that is a good idea?

Senator BELLMON. I did not ask him, but Ithink I can anticipate his answer.

Mr. TILLSON. None of this has assumed the naval shipbuilding program in 1980 would be reduced at all. I am sure that the Chief of Naval Operations would be against that.

Senator BELLMON. Certainly, but here after having been satisfied with these outlays for 1980, suddenly we come along and give them two bonus ships. If they want these ships and they are good, and I think they are, we should take that into account in dealing with their budget.

Mr. TILLSON. The one problem there, Senator, is you can reduce budget authority. That is true in the same way. The problem with outlays is that a large portion of the outlays for these four ships have already been paid. The ships were contracted for in 1977 and 1978, so that we have already paid a large portion of the outlays.

The Iranian Government has paid for them. If we procure them in 1979, we will immediately catch up with all those funds that have been spent to date. That is a large outlay number.

Whereas, if you reduce the shipbuilding program in the 1980 budget, that is based on an outlay flow which is much slower.

In the first year, for instance, in shipbuilding you have only about 4 percent outlay. For this $1.3 billion supplemental for the four Iranian ships you are going to outlay approximately 50 percent in FY 1979.

Mr. SNEED. For instance, in 1980 the shipbuilding item is $6.2 billion, the first year outlays associated with the $6 billion is only $250 million, sir.

Senator METZENBAUM. That was Iranian money, not our money in 1977. It does not have any relevance, does it?

Mr. TILLSON. If we were to take over the account, it would be where it is today. That means we would repay the trust fund for the moneys that have been expended to date.

Senator METZENBAUM. We give the money back to the Iranians?

Mr. TILLSON. Not necessarily. It goes into the trust which, which is 150.

Senator EXON. Could I ask the staff a question?

I will preface it with this remark. This committee is about to spend this billion dollars, two or three, if we do what you suggested, Senator BELLMON, out of the 1980 budget, I think it would probably cripple some needed thing in the Navy. It might be a thing, but I am a member of the Armed Services Committee and this is not a priority item. If we do what we are about to do, how much will we save the Iranian Government out of the trust fund that comes from the American taxpayers and probably at a sacrifice of more needed expenditures for the United States Navy.

Did we save $300 million or $500 million?

Mr. TILLSON. How much would we save the Iranian Government?

Senator EXON. Yes.

Mr. TILLSON. $450 million.

Senator EXON. That is the end of my question.

Chairman MUSKIE. May I ask the staff is the implication of that if we kept it in the 1979 supplemental, we get the benefit of what has been paid on the vessel?

Mr. TILLSON. No, Senator. We would pay it one way or the other.

Chairman MUSKIE. Something has been paid on the vessels up to now.

Mr. TILLSON. That is true.

Chairman MUSKIE. What happens to the money if we pick up the vessels?

Mr. TILLSON. $450 million of that will flow through the trust fund back to the Iranian Government. That is the agreement that this government has with the Iranian Government, that if we pick it up, they will reimburse.

Chairman MUSKIE. The argument has been made as to this question that we can get these vessels cheaper than we could if we ordered them today.

Mr. TILLSON. That is true, Senator. The Navy's estimates that these ships procured in the 1980 budget would cost about $450 million apiece.

Chairman MUSKIE. What do these cost?

Mr. TILLSON $340 million, so it is roughly a $200 million difference because the ships were bought several years ago.

The CLERK. Mr. Riegle has two minutes left and Mr. Hollings has six.

Senator HOLLINGS. The Secretary testified, as the staff has just reported, that the new one would cost 543 and two DDG's are available for 314 each, a saving of over $200 million per ship. We are getting these two ships for 628, which is $109 million less than the amount in the original supplemental request for one ship. You see, they already asked for that one.

We are also getting delivery in June and September of 1981 instead of 1984. Frankly, when I first faced the problem of buying ships, I was appalled at the extent to which you are spending money for future inflation.

There is no use in going into this, but actually we could buy that class today for 1981 delivery at a cost of about $1 billion instead of $1.7 billion if we authorize it this year. That is the situation we have in ships. It is a tremendous saving because of inflation.

The Navy says there would be no impact on the production schedule or contract pricing of other ships in the current five-year shipbuilding program due to the procurement of the four Iranian ships as an addition to the Navy's existing program. The procurement of these ships would not adversely affect the scheduled introduction of the Aegis ships to the fleet.

I think that is what the Senator from Florida was interested in just as I am.

I am not committed at this minute to John Stennis. He saw me on the floor and thanked me. I want to find out from the Navy. I might vote against those vessels. I would like Senator BELLMON and others on the committee, when they said they only heard of the ship at the fall of Iran, when they say you have obsolete equipment and might disrupt the future shipbuilding program of the Navy — when I verified those things were inaccurate, namely, it was not obsolete, it is a ship they have been asking for, the ships are desired at a bargain price and it would not disrupt the shipbuilding programs and taking money out of babies' mouths and all that sort of nonsense.

Those are the real records for those who have not gone to the record to find out what the facts are.

Senator RIEGLE. Were you aware of the fact that when the Navy submitted — the Defense Department submitted its five-year plan in January of this year, they included not a single ship of this sort in their five-year forward planning.

Senator HOLLINGS. They put in these other vessels they asked for in 1978. It is the same type. It is the Virginia class DDG. The Aegis system — there is a big argument about the Aegis system and it costs $450 million

Senator EXON. That is not true, Senator. I know you are a senior member here and you can say anything you want, but the $450 million, let me make that clear — the $450 million is money that would otherwise be paid by the Iranian Government if we canceled these. If we pick these up, it is coming out of our taxpayers' pockets, so don't confuse that issue please.

Chairman MUSKIE. Can I ask a question ofthe staff on this point? I have been told the Aegis system adds $450 million to the cost.

Senator EXON. That is not the $450 million I am talking about.

Mr. TILLSON. Yes, that is true. It would be $450 million additional to turn one of these ships into an Aegis ship.

Chairman MUSKIE. Whether these ships are involved or not, the difference between this type ship and an Aegis ship is $450 million?

Mr. TILLSON. That is correct.

Senator HOLLINGS. The Secretary said, "Iwould like to see it done," but there is no money,

Senator RIEGLE — there is no money he could make available out of a portion allocated to it in a supplemental because the Navy does not have that much in a supplemental unless an additional $450 million is added to the supplemental, I don't think it could be done.

Senator RIEGLE. It is my understanding to get this Aegis gear go on the top to make the switch, it is too late for the first three ships, so it is an academic exercise anyway. At least the first three can't be made into the ship you want.

Senator BOSCHWITZ. May I ask a very basic question?

Iran was able to cancel a contract they had with us and get their money back. What happens if we decide not to take the ship, who bears the cost?

Chairman MUSKIE. The relationship between the U.S. Government, Iran and the shipbuilder was described the other day. I will ask the staff to describe it again.

Mr. TILLSON The Government of Iran will take the loss if the equipment is not purchased by the U.S. Government or some other government.

Senator BOSCHWITZ. What will the loss be to the shipbuilding company or the U.S. Government and Iran if we just discontinue?

Mr. TILLSON I don't think we know that number, Senator. There are a number of different losses involved. The Government of Iran would take the loss we just talked about.

The shipbuilding company would have four partially built ships that they would probably not be able to sell, but they would be at least in part — at least a portion of their loss would be taken care of by the contract termination funds which are moneys in the trust funds, moneys that belong to the Government of Iran.

The additional cost to the U.S. Government is uncertain. At least there would be an additional cost in other ships that are procured at that shipyard because the overhead costs, which are spread over X number of ships, would be spread over a smaller number of ships.

Senator Boscxwxrz. You don't know those numbers?

Mr. TILLSON. We don't know those numbers. I just don't know how large those funds would be.

Senator HATCH. Have we indemnified the shipbuilding company? Indemnify. Do we have to pick it up?

Mr. TILLSON The U.S. Government is not obligated to indemnify the shipbuilding company beyond the terms of the contract. There are termination terms built into the contract.

Senator HATCH. But we may to a certain extent have to indemnify the shipbuilding company as a result of the broken contract.

Mr. TILLSON Yes.

Senator METZENBAUM. You just said Iran is to take the loss. You said Iran pays the loss if there is a breaking of the contract.

Mr. TILLSON. Iran pays for the breaking of the contract. It is unclear what we would have to pay. I don't think anybody in the U.S. Government knows that. There are sufficient funds remaining in the trust fund to pay all termination costs.

Senator HATCH. I thought you said Iran's only obligation would be the $450 million. Do they have an obligation beyond that pursuant to this contract?

Senator BOSCHWITZ. Is there Iranian money in the trust funds?

Mr. TILLSON. There is still Iranian money in the trust fund. It is being paid out this week to pay progress costs on these four ships.

Senator BOSCHWITZ. In addition to the $450 million of Iranian money in the trust fund?

Mr. TILLSON Yes. There is about $350 million left.

Senator BOSCHWITZ. $750 in total.

Mr. TILLSON. $450 has been spent. The $350 remains in the trust fund. The reason for the confusion is there are so many Iranian programs, the accounting has been very difficult. The administration has found difficulty finding just where it was with regard to these individual programs.

Senator BOSCHWITZ. As I recall, you said in your previous testimony that one ship was 30 percent built, one 17 percent built and two were 10 percent built.

Mr. TILLSON That is correct.

Senator BOSCHWITZ. The total bill is about $1.2 billion?

Mr. TILLSON. It is more than just planning. All of the Government-built equipment, the weapons systems, the five-inch guns, that has already been built. It is in Pascagoula ready to be placed on the ships as they are constructed.

Senator METZENBAUM. Isn't it a fact even if there was not money in the trust fund Iran is collectible and they are paying whatever the damages are? Isn't that the fact?

Mr. TILLSON. I don't think that is true.

Senator RIEGLE. I don't understand the $450 million.

Senator EXON. Isn't it fair to say there are $300 million left In the trust fund and if we do what some wanted to do here, there will be $750 million in the trust fund?

Senator HATCH. They are offsetting other items.

Senator EXON. Did you hear what I said? There are $300 million in the trust fund. If we buy these ships, there will be $750 million in the trust fund.

Mr. TILLSON. That's right. In other words, those extra funds will be available to handle other portions of the Iranian shipbuilding contract beyond the ships.

Senator MAGNUSON. Have the Iranians canceled these?

Mr. TILLSON. Yes, sir.

Senator MAGNUSON. When did they do it?

Mr. TILLSON. They did it in two different phases. The interim government canceled the first two and then when the Ayatollah government came into power, they canceled the last two. That last cancellation was done just recently.

Senator EXON. They canceled it at the time they raised the price of oil to $19 a barrel for oil.

Senator HATCH. We would use the full $750 million to offset other broken contracts with Iran as well so we are not losing the $750 million if we purchase these four ships?

Mr. TILLSON. I don't believe the U.S. Government would lose anything. The moneys would go into the trust fund in 505.

Senator HATCH. We are purchasing these at $200 million less than they would cost us in the future, so we would be saving $800 million if we bought them now rather than deferring them.

Mr. TILLSON. Assuming we bought them in the future.

Senator RIEGLE. Bear in mind there are none in the five-year plan.

Senator BOSCHWITZ. Then the $750 million goes back to Iran?

Mr. TILLSON. Only when everything is netted out. When all Iranian obligations to the United States have been paid, then anything that is in excess to that would be returned to the Iranian Government.

Senator HATCH. And it does not look like there will be any excess.

Mr. TILLSON I don't know. There are many programs the Iranian Government had with this government, and the bulk of them have been canceled.

Senator BOSCHWITZ. Are there other trust funds?

Mr. TILLSON. They have all been part of the same trust fund. The funds got commingled and it is difficult to identify—

Senator BOSCHWITZ. The total amount we—

Mr. TILLSON. $300 million in the trust fund.

Senator BOSCHWITZ. For all contracts, besides these four ships?

Mr. TILLSON. Yes.

Senator HATCH. Is it your opinion we will offset their broken contracts to the full tune of the $750 million?

Mr. TILLSON. I just don't know that, Senator.

Senator HATCH. I have heard that that is so.

Senator METZENBAUM. Mr. Chairman, is there any question that we need some additional ships of some type if carriers' escorts are to remain part of the fleet?

Mr. TILLSON That is an opinion, Senator. I think that you can make an equally good argument either way.

Senator RIEGLE. The heat is on. What can he say?

Chairman MUSKIE. How much Hollings time is left? Mr. RIEGLE has three minutes, Mr.

HOLLINGS has a minute and 30 seconds.

Senator DOMENICI. I thought maybe in a couple of days we would have this understood, but it seems to me it is more confused than ever.

What would happen if Iran just canceled this out and tell me once more so I will understand, and there was no one around to bail them out? How much would they lose?

Mr. TILLSON. They would lose whatever they put into the contract plus whatever else was available in the trust fund to pay termination costs.

Senator DOMENICI. How much is that?

Mr. TILLSON. $300 million is in the trust fund. We really don't know what the termination costs would be, Senator. They are negotiable according to the contract.

Senator DOMENICI. Who has the contract with Iran?

Mr. TILLSON. The U.S. Government has a contract with Iran and with the shipbuilder and the funds are transferred through the U.S. Department of the Navy.

Senator DOMENICI. So the emergency has arisen is that Iran has indicated they are going to terminate a contract to purchase these four ships. That is the emergency that the United States Navy is addressing. Is that correct?

Mr. TILLSON. Yes.

Senator DOMENICI. They were not going to buy them, but now they have an emergency at some stage of construction and a termination order on record, is that correct?

Mr. TILLSON. Yes.

Senator DOMENICI. They are addressing that state of emergency in the supplemental, is that right?

Mr. TILLSON. That's right.

Senator DOMENICI. In the opinion of the Navy whether or not we had them planned for next year or the year after, we are now taking a look at that state of emergency, is that correct?

Mr. TILLSON Yes.

Senator DOMENICI. Under that case they are saying we should buy them. Isn't that right?

Mr. TILLSON. Yes.

Senator DOMENICI . They are not saying we would have bought them except for that contract termination, but they are there, is that correct?

Mr. TILLSON. That is true, yes, sir.

Senator DOMENICI Neither are they saying if this event had not occurred, that they would have had them in a five-year program. That is what Senator RIEGLE is saying?

Mr. TILLSON. That is true.

Senator DOMENICI. Are they officially saying to us, first, that they can use these kinds of ships and that this is a good use of Navy ship acquisition money? Have they told us that?

Mr. TILLSON. That is what they told us, yes, sir.

Senator DOMENICI. As I understand it, they do not prefer these over other things in their budget, but rather, are saying it is a good deal under these circumstances so we ought to buy them, is that correct?

Mr. TILLSON. Yes.

Senator D0MENICI That is why we don't find them taking things out because other things might be needed more, but they are not there under this state of emergency, is that correct?

Mr. TILLSON. That is correct.

Senator DOMENICI That is the answer to Senator Bellmon's question if one wants to accept the Navy's position, is that right?

Mr. TILLSON. Yes.

Senator DOMENICI. I don't know what we are going to do, but I really don't think while the case may not be made to buy them, I don't think the case has been made that JOHN STENNIS is trying to bail out Mississippi. I just don't believe we ought to be acting on that kind of premise.

Let me tell you why. First of all, I don't believe anybody believes he is that kind of Senator. But I think that is an insult to a whole bunch of Senators because 13 or 14 of them on the Armed Services Committee voted for them and I don't think they are about to bail out JOHN STENNIS.

Then I think it has to come over here to the double chairman, as Senator BIDEN called him. Don't you have to approve this in appropriations?

Senator MAGNUSON. We have to approve the supplemental.

Senator DOMENICI. It seems to me there is a whole group of Senators on Appropriations with all kinds of interests around this country, who have to vote "yes"or "no"on that appropriation. To say JOHN STENNIS, filtered that all down to bail out the State of Mississippi does not make sense and we should not buy it.

Senator EXON. If there had been a trifle statement made around the table tonight, it is the one you just made and I appreciate what you said. I think Senator STENNIS would be providing these four ships if they were being put together in Nebraska. I think any thought we have as to any improper motive on the part of Senator STENNIS is improper. I think that is a good point you made.

Senator RIEGLE Mr. Chairman, I don't want this vote to be twisted around to be a vote for or against JOHN STENNIS. That is not at issue.

What is at issue here is the reputation of the Budget Committee. We have been in here today and tonight for weeks trying to squeeze out nickels, dimes, thousands of billions. We are talking about ships that are not in the five-year plan. It is a bailout.

I don't know if it is for a State or the Defense Department or Iran, but it is a waste of money. If we don't need these ships, I think there are probably other things in the Defense budget we do need and let's spend the money on things we do need. If we don't need that money for other things in the Defense budget, then I know other areas of the overall budget that do need the money. But let's not debase ourselves as a budget committee to come in here and try to save a million dollars here and there and take a walk on $1.2 billion. We are the ones who are going to look like fools. This is not a vote on any other member of the Senate. It means does this process mean anything?

I am sure we can find other ships that may also be in difficulty that we can buy three we don't need, but I think that is the issue.

Chairman MUSKIE. I know that rhetoric has a way of getting heated around here and I have contributed my own share of heat from time to time. With due respect, Don, I don't buy that argument either.

I sat in this chair for five years now listening to different members of the Budget Committee passionately argue for their priorities and their points of view. I think that the whole process is a credit to the committee and to the Congress because we have made it work. I never regarded the Senator's vote against something I regard as important as debasing the Budget Committee. I make my case and I lose, but I think this committee is made up of Senators on both sides who are honestly trying to serve the national interests as they see it.

I would hope that with regard to whatever the decision is and I don't have the faintest notion how this committee votes and I see a lot of puzzled faces around the table. I don't have the faintest notion how it is coming out. I thought I knew how it was coming out when this debate started this evening. Now I am not sure.

Senator BOSCHWITZ. Do you know how much it would cost the U.S. Government if we did not buy the ships? I have not seen the contracts. Contracts that complicated in nature usually have penalties involved. I am not sure we are not getting off scot free. What is the penalty if we don't buy the boat?

Mr. TILLSON. It is not clear it will cost us anything, The $300 million remaining in the trust fund, if that is sufficient to pay the termination costs, there would be no costs to the U.S. Government.

Senator BOSCHWITZ. You alluded to perhaps other contracts that Iran has with this country. None of those other contracts have come to the attention of this committee. Are here any other substantial contracts for that $300 million?

Mr. TILLSON. There are many substantial contracts. The Iranians had a contract for F-16 airplanes.

Senator BOSCHWITZ. That is a saleable item. Any other non-saleable items or more difficult items like these ships?

Mr. SNEED. There were the Phoenix missiles, Harmon missiles.

Senator EXON. We are providing buying most of those, too.

Senator BOSCHWITZ. Are those saleable items, too?

Senator EXON. In the opinion of our Defense Department.

Senator BOSCHWITZ. Is this the only problematical contract? It will probably cost the American Government nothing if we say we are not going to buy the ships.

Senator RIEGLE. It is only going to cost us something if we buy the ships.

Chairman MUSKIE. May I say 15 seconds of time is left for Senator HOLLINGS.

Senator BIDEN. Can I have three seconds? I just wanted to get it clear. Earlier we mentioned Ayatollah, the one in Africa or the one in the Middle East are we talking about?

You are all dull tonight. I thought that was funny.

Senator HOLLINGS, Mr. Chairman, it costs — I am quoting again, and everybody is supposed to get a copy of this letter, "the costs of the ships contained in the 1980-1984 shipbuilding program are predicated on the assumption these four 993 ships would be built at Engles. If they are not to be built, the cost of other work in the yard current and prospective would clearly increase, although the precise amount is difficult to determine. The ships currently under contract DD-982, 992-L, HA-4 and 5, DDG-7, in summary these ships are under construction and in a business and military sense it is advantageous for us to obtain the ships."

First, we can avoid the penalty. I want to know the answer down there, too. I hate to disturb you — she is a lot more delightful. First we avoid the penalties to other programs incurred by terminating the contract.

When you ask the gentleman if there is a penalty, he tells about another fund. It is a penalty. I would like to know the amount. I came in like Senator CHILES, Senator BELLMON and everybody else with no commitment other than to try to do the right thing.

I am not senior. But, whether my facts are senior to this, I knew nothing about this when DON RIEGLE mentioned it, but it is incumbent upon us to go back and try to find out as best you can. If the chairman would permit me, you are missing something if you don't know JOHN STENNIS better. He is just one of the finest fellows you would ever meet. He protects his State. When he had enlisted men's allowances I opposed him in Appropriations, on the floor.

Senator, you were the one who raised the Stennis and pork barrel proposition and not us, and then you say you hope—

Senator RIEGLE. I am not saying that. You are over your time. I think it will have exactly that effect. That is the way it will be interpreted by the people of the country because that is the way it looks.

I don't think you could put another construction on it. I think it is unfortunate that way because it sort of puts the whole thing in a bad light and it will damage everyone who goes along with this deal.

Then these ships are not in the five-year plan, and this whole thing gets very rigged after the fact and Iran gets bailed out and gets $450 million that they would otherwise not get from this government of ours, as I understand the logic here — I mean, I just don't think that is what the American people want us doing.

We may go ahead and do it. We may do it for reasons of Claytor's letter, as compelling as it may seem to you or any other mystical reasons we have, but we are going to have to vote on it.

It is probably time that we do that.

Chairman MUSKIE. We have one out of town. It is the measure of the mighty to add to the time of debate.

Senator BELLMON. I would like one minute to explain my vote before we do this, if I could.

If it is going to start something, I won't ask for it.

Chairman MUSKIE. I can't promise the latter.

Senator BELLMON. The Navy did not expect to get this double hbit when this whole process began. If we vote this, we are going to give it to them.

I fully intend to find some way, if this passes, to take $700 million out of the FY outlay figure. If they want the ships and if they are good ships and I am convinced that is true, then they ought to be willing to figure out some way of fitting them into their 1980 numbers.

I don't see anything that would be difficult about that despite what the staff said.

Senator BIDEN. Would you amend this proposal and at the same time we deduct $750 million?

Senator BELLMON I would.

Senator BIDEN. I would second that and say let's get on with it.

Chairman MUSKIE We are on the '79 supplemental.

Senator RIEGLE. The motion that I made the other day was to delete all the monies for the Iranian ships from the supplemental and that is the issue upon which I would like to have a vote.

If somebody wants to offer a substitute, they are certainly open to do so.

Senator MAGNUSON. We have not passed a supplemental. This matter has to come before the Appropriations Committee.

Senator RIEGLE. We are not trying to interfere. The question is whether we want to budget the item in the supplemental.

Senator MAGNUSON. Whether we want to consider it.

Senator BELLMON. I would offer a substitute motion that the supplemental be approved with the provision that FY 1980 defense outlay figure be reduced by $700 million.

Chairman MUSKIE. I see we have triggered another debate.

Senator HART. It won't work.

Chairman MUSKIE It is the pleasure of the committee—

Senator BELLMON. I will withdraw the motion. I don't want to start another debate. That is the last thing I want.

Chairman MUSKIE. I would say to the committee the time for debate has ended. It is time to vote unless it is the pleasure of the committee to add to the time of debate. That is your decision to make.

[Chorus of ayes.]

Chairman MUSKIE The Clerk will call the roll.

Senator JOHNSTON. This is what?

Senator RIEGLE. To strike the money for the Iranian ships.

The CLERK. Mr. Magnuson.

Senator MAGNUSON. No.

The CLERK. Mr. Hollings.

Senator HOLLINGS No.

The CLERK. Mr. Chiles.

Senator CHILES.No.

The CLERK. Mr. Biden.

Senator BIDEN Aye.

The CLERK. Mr. Johnston.

Senator JOHNSTON. No.

The CLERK. Mr. Sasser.

Senator SASSER. No.

The CLERK. Mr. Hart.

Senator HART. Aye.

The CLERK. Mr. Metzenbaum.

Senator METZENBAUM Aye.

The CLERK. Mr. Riegle.

Senator RIEGLE. Aye.

The CLERK. Mr. Moynihan.

Senator MOYNIHAN Aye.

The CLERK. Mr. EXON.

Senator EXON. Aye.

The CLERK. Mr. Bellmon.

Senator BELLMON. Aye.

The CLERK. Mr. Domenici.

Senator DOMENICI No.

The CLERK. Mr. Packwood.

Senator PACKWOOD. Aye.

The CLERK. Mr. Armstrong.

Senator ARMSTRONG. No.

The CLERK. Mrs. Kassebaum.

Senator KASSEBAUM. Aye.

The CLERK. Mr. BOSCHWITZ.

Senator BOSCHWITZ. Aye.

The CLERK. Mr. Hatch.

Senator HATCH. No.

The CLERK. Mr. Pressler.

Senator PRESSLER Aye.

The CLERK. Mr. Chairman.

Chairman MUSKIE No.

The CLERK. Eleven ayes, 9 nays.

Chairman MUSKIE. With that, the motion prevails.

Senator BELLMON. Now I would like to make my motion that we approve the supplemental but delete $750 million out.

Mr. TILLSON. Senator, you have just done that. You have taken out $750 million from the defense budget.

Chairman MUSKIE I had indicated earlier that I had a package of deductions to suggest. I will ask the staff to distribute them.

Senator MOYNIHAN Mr. Chairman, may I make one statement?

Mr. Chairman, there are those of us who have sat through five days of this markup under very distinguished and thoughtful leadership.

We have reported an increase in the defense budget knowing we were cutting the jobs and the income out of poor persons and responsible purposes all across this budget. We did it because we thought the President had a case and we thought the Armed Services have a case.

Now we have seen the chief of Naval operations in a caricature of military mindlessness have us bail out the Shah of Iran.

Mr. Chairman, I cease at this moment to support to increase the defense budget any more in this budget. If the Defense Department is going to become the worst enemy of defense, then God help us all.

I would think the chief of Naval operations would be ashamed. I am sorry, Mr. Chairman, but I feel that strongly.

Chairman MUSKIE. This is the place to express your feelings.

Senator HOLLINGS. What are you all stirred up about?

Chairman MUSKIE. Pat, you just won a victory.

Senator HOLLINGS. You just gave the chief of Naval operations a boot in the behind. You just knocked out the ships by the vote.

Senator MOYNIHAN. I am glad I made that speech afterwards.

Senator BIDEN. Mr. Chairman, I was hoping no one would tell him.

Senator BOSCHWITZ. Maybe Mr. BIDEN would tell us about the Ayatollah in Africa now.

Chairman MUSKIE. Pat, I was delighted to hear the speech. You are always so civilized, it was good to hear you.

Senator HATCH. Uncivilized.

Senator MOYNIHAN. I withdraw my remark.

Chairman MUSKIE You shouldn't. It should be part of the permanent record.

I talked to several of you while we were on the floor about the need for someone to put together a package. Have you distributed this, Sid?

Mr. BROWN. Yes, sir.

Chairman MUSKIE That would enable us perhaps to see at a glance — you will have to take four glances at this — a proposal for additional cuts that would reduce the deficit in 1983, give us a balanced budget in '81, as had been mandated, as well as a balanced budget in '82.

These proposed cuts do that. They do not take big chunks out of anything, I don't think, although I may have read it wrong.