Annual Savings							Five-Year
Savings from			(Millions of dollars)		Cumulative
the 1997 Plan		1998	1999	2000	2001	2002	Total

Budget Authority	404	547	499	397	484	2,331

Outlays			196	416	484	440	448	1,984

NOTE: Savings relative to the Administration's 1998 plan appear in Appendix A.

The Strategic Defense Initiative, which President Reagan started in 1983, focused solely on protecting the United States from a deliberate large-scale attack by Soviet ballistic missiles. The Bush Administration added an effort to protect U.S. troops and allies' civilian populations from attack by shorter-range "theater" missiles such as the Scuds used in the Persian Gulf War. The Clinton Administration--citing the urgency of the threat posed by theater ballistic missiles and the end of the Cold War--has reoriented the program to give priority to developing theater missile defenses (TMDs). It has also de-emphasized the effort to develop so-called national missile defenses, delaying indefinitely a decision to deploy defenses to protect the United States against longer-range missiles. To reflect those changes, it has renamed that effort the Ballistic Missile Defense (BMD) program. This option would make cuts in theater missile defenses.

According to its 1997 plan, the Administration will spend about $15.5 billion for all BMD efforts from 1998 through 2002--an average of roughly $3.1 billion a year. About $2.1 billion of that amount will be spent by the Ballistic Missile Defense Organization on TMD each year. The remaining $1 billion will be spent each year on research and technology development for national missile defenses, management and support, and missile defense activities funded by the military services.

Under its restructured TMD program, the Administration will deploy a core package that includes both point defenses (which can protect relatively small targets like airfields or command facilities) and area defenses (to protect areas a few hundred kilometers in diameter). Specifically, the Army will deploy a point defense called the Patriot Advanced Capability 3 (PAC-3) and an area defense called Theater High- Altitude Area Defense (THAAD). The Navy will develop a sea-based point (or lower-tier) defense using the Standard missile that it deploys on its Aegis destroyers and cruisers.

In addition to the core systems, the Administration plans to continue developing three advanced-capability theater defenses: a Navy sea-based area defense; a mobile Army point defense formerly called the Corps Surface-to-Air Missile (Corps SAM) and now known as the Medium Extended Air Defense System; and an Air Force airborne laser designed to destroy missiles early in their flight, before they can dispense submuni-tions and decoys that might overwhelm ground-based defenses.

To increase the area that THAAD and the Navy's area defense can protect, the Administration is developing space-based sensors, a constellation of satellites called the Space and Missile Tracking System (also known as Brilliant Eyes). The Administration will also develop a battle management system to enable the TMD systems to function effectively together. Finally, the Administration plans to continue paying for much of Israel's effort to develop the Arrow missile as an area defense system.

Some Members of Congress have expressed concern about the cost of developing so many apparently redundant systems, including both land- and sea-based point and area defenses. Some Members also question why the United States should bear all of the cost to develop area defenses like THAAD that will be used primarily to protect the civilian populations of other nations. Other critics are concerned that the Brilliant Eyes space-based sensor, the Navy's upper-tier defenses, and the airborne laser proposed by the Administration will violate the terms of the Anti-Ballistic Missile (ABM) Treaty.

This option would save money by developing only the Administration's original three core TMD programs (PAC-3, the Navy point defense, and THAAD) and a battle management system. The three advanced- capability systems and Brilliant Eyes would be canceled. This option would continue all other TMD research and non-TMD programs at the Administration's planned level but would eliminate funding for Israel's Arrow missile. Relative to the Administration's plan for 1997, those actions would save $196 million in 1998 and nearly $2 billion over five years. Relative to the 1998 plan, total savings would be higher by $125 million in 1998 and $1 billion through 2002. The Administration increased funding for the airborne laser, the Navy's area defense, and the Space and Missile Tracking System--three of the systems this option would cancel.

By canceling the Navy's upper-tier defense system, this option would reduce the flexibility of U.S. commanders during a crisis. Although sea-based defenses are limited to defending coastal regions, they can be deployed to a region quickly and do not require access to secure airfields to be airlifted into the theater--a limitation of land-based systems like THAAD if they are not already deployed in the region. The United States can also deploy sea-based defenses without having to obtain basing rights in another country, a process that could cause domestic political difficulties for some friendly governments. This option would preserve the capability to defend small areas such as ports or amphibious landings from the sea with the Navy's lower-tier point defense. But without the Navy's upper-tier system, the United States would not be able to defend larger areas such as cities until THAAD could be deployed. Nor could it use forward-based ships to defend large areas of Europe or Japan against attack from the Middle East or North Korea, respectively. The Congress is sufficiently impressed with the potential of the Navy's upper-tier system that it asked the Administration to make that system a core program immediately.

Changes under this option would also limit the area that could be defended by the remaining systems. Canceling Brilliant Eyes would limit the area that THAAD could defend because ground-based sensors would take longer to detect and track incoming missiles, thereby reducing the range at which those missiles could be intercepted. Canceling Brilliant Eyes could also affect the capability of a future national missile defense system, if the United States eventually chose to deploy one. In addition, terminating the airborne laser program would halt work on a system that has the potential to be effective against missiles armed with nuclear or chemical warheads, if technical problems can be overcome. Finally, cutting off funding for Israel's Arrow area defense missile would jeopardize a critical program for one of the United States' closest allies, which currently faces a real threat from ballistic missiles.

Notwithstanding those disadvantages, under this option the United States would still deploy capable land- and sea-based point defenses, a land-based area defense, and a battle management system, all according to the schedule proposed by the Administration. By eliminating all TMD funding beyond the core systems, this option would halt several programs early in their development phase. In addition to the savings over the next five years, those actions could save significant sums beyond 2002, when Brilliant Eyes and one or more of the advanced TMD systems would have entered full-scale development and production. This option would also eliminate payments to Israel to support development of the Arrow missile. In this period of tight budgets, it may be inappropriate to spend U.S. funds to develop a foreign system that the United States has no intention of buying.

In addition to lowering costs, this option would address critics' concerns that several of the planned TMD systems would violate the ABM treaty. Many ABM supporters argue that by effectively substituting for ABM radars, Brilliant Eyes would significantly increase the area that THAAD or the Navy's upper-tier system could defend and thus would violate the treaty. The contractor building THAAD has stated that the system's capability does not depend critically on Brilliant Eyes and that such sensors are needed only to defend the large areas required for national missile defenses. Since the Administration has delayed indefinitely a decision to deploy national missile defenses, space-based sensors such as Brilliant Eyes may not be required for many years, if at all. Terminating the Navy's upper-tier defense would address concerns about its ability to defend large areas against intercontinental missiles--concerns that have been heightened by the Navy's claims that Aegis ships could indeed defend the United States against a limited ballistic missile attack. Halting the development of the airborne laser would also address concerns about its compliance with the ABM treaty.