DOD's Budget Status

GAO reviewed the status of the Department of Defense's (DOD) 5-Year Defense Program.

GAO found that: (1) DOD was unable to submit a plan with its 1990 budget, since decreased international tensions necessitated an additional $167 billion in reductions for 1990 through 1994; (2) the plan that DOD submitted in 1989 reflected a $147-billion shortfall, resulting from overly optimistic inflation and funding projections; (3) $45 billion in reductions adjusted from the 1989 budget will result in a total 1990-1994 reduction of $212 billion; (4) DOD has made an estimated $74.1 billion in reductions, but still needs to reduce the budget by $137.9 billion to make its plan consistent with the presidential budget; (5) the presidential budget for fiscal year 1991 details 1990 and 1991 reductions totaling $4.2 billion and $22.4 billion, respectively; (6) DOD has outlined planned reductions for 1992 through 1994 totalling $22.8 billion and has also reported anticipated savings of $39 billion for 1991 through 1995 from a new defense management initiative; (7) DOD adjusted its inflation estimates in the January 1990 budget, which added $51.6 billion to its 1989 budget projection for 1990 through 1994; and (8) applying Congressional Budget Office inflation estimates, the present 5-year defense budget would cause a funding shortfall of about $3 billion.