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FY 1976 - 12/10/74 - International Programs, Selective Service (2)
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Department of State. 9/1789-
Department of State. Agency for International Development. Bureau for Private and Development Cooperation. Office of U.S. Foreign Disaster Assistance. (1978 - 10/1/1979)
Export-Import Bank of the United States. 3/13/1968-
Selective Service System. 6/22/1948-
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The original documents are located in Box 8, folder "FY 1976 - 12/10/74, International
Programs, Selective Service (2)" of the White House Special Files Unit Files at the Gerald
R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
7f. Thailand-Military
Aid
CONFIDENTIAL
33
FOREIGN ASSISTANCE
1976 Budget
Issue#7f: Military Assistance to
Thailand
Statement of Issue
What are the minimum amounts of grant military assistance required in 1976,
1977, and thereafter to retain rights to bases and intelligence sites in
Thailand?
1974
LIBRARY
Alt. #1
Alt. #2
Alt. #1
Alt. #2
FORD
Budget
Est.
Reg.
OMB Rec.
Req.
OMB Rec.
($ millions)
GERALD
Grant MAP
32.5
60
10
30
20
25
10
FMS Credit
-
-
-
15
15
20
20
Total
32.5
60
10
45
35
45
30
Background
Grant military assistance is furnished to Thailand primarily as an implicit
quid pro quo for the use of air bases and intelligence sites. U.S. forces
stationed in Thailand have been drawn down to under 25,000. There are no
final decisions on future reductions below the current level or on the
residual U.S. military presence.
Thai decision-making is complicated by the fact that a caretaker government
has been in power since October 1973. The pressure within Thailand for
further U.S. force reductions will not be clear for some time. Thailand's
economic position continues to improve with foreign exchange reserves stand-
ing at $1.5 billion now, up from $1.2 billion a year ago. Militarily, the
Thai have more equipment than they need to effectively combat the insurgent
movement.
During the period 1967-1972, .$60 million in MAP was considered the level
needed as the quid for the bases. The budget has included $60 million each
of the three years 1973-75, but allocations after congressional cuts have
been $38 million and $32.5 million, while in 1975 it is estimated at $10
million.
Alternatives
#1. Gradually phase down grant materiel with no termination date in the
expectation that base rights issue can be avoided (State/DOD req.).
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
By AND NARS, Date 6/27/85
PANEINENTIAL
CONFIDENTIAL
34
#2. Phase out grant materiel in two years, meeting Thai demands for
base rights quid with FMS credit if necessary (OMB rec.).
Analysis
The alternatives differ on the rate at which grant MAP should be phased
out:
Grant Military Assistance
LIBRARY
FORD
1976
1977
1978
1979
1980
($ millions)
State
30.0
25.0
20.0
15.0
10.0
OMB
20.0
10.0
1.6a/
1.6a/
1.6a/
Training only
Alternative #1 is the safe course vis-a-vis the Thai, but does not
adequately take into account Thai capabilities to pay for military
equipment through FMS credit or cash sales. The thesis that the Thai
will threaten our base structure if grant military assistance is reduced
rapidly is untested. The Thai would be risking a great deal, including
$150-200 million annually in spending associated with bases in Thailand,
a free air defense system, and a degree of positive U.S. commitment to
Thai interests. The small amount of grant military assistance involved
is insufficient to drive Thai decision-making. The most important factor
may be the degree of anti-U.S. base sentiment which develops in the
next few months during the Thai election campaigns.
The NSC supports the State recommended levels as the minimum needed to
assure continued U.S. access to bases in Thailand. The bases are
essential to U.S. long-term objectives in Indochina, and continued
access will be needed for the indefinite future. Defense also supports
the Alternative #1 approach but recommends even higher MAP levels
($35 million) in 1976 and 1977.
Agency Request: Alternative #1 -- gradual phase down with $30 million in
MAP and $15 million FMS credit in 1976; $25 million in MAP and $20
million FMS credit in 1977; no specific termination date for MAP.
NSC concurs.
OMB Recommendation: Alternative #2 -- $20.0 million in MAP and $15
million FMS credit in 1976; $10 million MAP and $20 million FMS credit
in 1977; no grant MAP after 1977.
CONFIDENTIAL
7g. Latin-America
Military Aid Grants
CONFIDENTIAL
35
FOREIGN ASSISTANCE
1976 Budget
Issue#7g : Grant Military Assistance
to Latin America
Statement of Issue
Should grant materiel programs in Latin America be phased out?
LIBRARY
1974
1975
1976
1977
Alt. #1
Alt. #2
Alt. #1
Alt. #2
FORD
Budget
Est.
Req.
DOD/OMB Rec.
Req.
DOD/OMB Rec.
&
076839
($ millions)
Materiel
5.6
8.9
.9
9.7
3.8
7.5
-
Training
8.5
10.3
10.1
11.5
11.5
11.2
11.2
Total
14.1
19.2
11.0
21.2
15.3
18.7
11.2
Background
Grant materiel assistance to Latin America has been declining for several
years. In 1974 it was $5.6 million, of which $2.5 million went to Bolivia,
with the balance parceled out in amounts averaging $0.4 million per country.
Despite the $8.9 million request for 1975, actual levels are likely to be
lower in view of congressional cuts and higher priorities elsewhere.
Alternatives
#1. Continue to request small amounts of grant materiel totalling $9.7
and $7.5 million to Latin American countries in 1976 and 1977 (State
req.).
#2. Terminate all grant materiel programs in Latin America by the end
of 1976 (DOD/OMB rec.).
Analysis
Despite original support by State's Bureau of Inter-American Affairs for
phasing out the remaining grant materiel programs in nine Latin American
countries (Bolivia, Dominican Republic, E1 Salvador, Guatemala, Honduras,
Nicaragua, Panama, Paraguay and Uruguay), State proposes to continue
them indefinitely. The NSC believes that U.S. interests are well served
DECLASSIRED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
CONFIRENTIAL
By AMP NARS, Date 6/27/85
CONFIDENTIAL
36
by the very modest grant military aid programs in Latin America and that
the benefits are considerably greater than the small cost would suggest.
Accordingly, it supports the State request.
These are the lowest priority programs worldwide. No country is receiving
grants sizable enough to affect its security or is unable to purchase
the amount of materiel being provided. The value of graduating nine
countries from the MAP as part of a congressional strategy outweighs
any diplomatic value from continuing to offer miniscule amounts of grant
materiel assistance to Latin America. Defense concurs.
Agency Request: Alternative #1 -- set no termination date for Latin
American grant materiel programs and request $9.7 and $7.5 million for
Latin America in 1976 and 1977. NSC concurs.
OMB Recommendation: Alternative #2 -- provide $3.8 million in grant
materiel to Latin America in 1976 and terminate such assistance there-
after. Defense concurs.
LIBRARY
FORD
&
GERALD
CANCITI
8. Latin America-
Military Credit Sales
CONFIDENTIAL
37
FOREIGN ASSISTANCE
1976 Budget
FORM
Issue#8 : Level of Foreign Military Credit Sales
(FMS) for Latin America
Statement of Issue
What should be the total amount of FMS credit requested for Latin America
in 1976 and 1977?
1974
1975
1976
1977
Alt. #1
Alt. #2
Alt. #1
Alt. #2
Budget
State Req.
DOD/OMB Rec.
State Req.
DOD/OMB Rec.
($ millions)
118.2
200
202
200
246
200
Background
FMS credit is offered in Latin America to enable U.S. arms suppliers to
remain competitive and to make it possible for poorer countries to meet
their needs for military equipment. In the 1970-73 period, Argentina
and Brazil, for example, committed over $800 million to military purchases
from non-U.S. suppliers because of (1) a lack of concessional U.S. credit,
(2) U.S. restrictions on the sale of sophisticated weapons, some of which
are still in effect, and (3) the availability of more suitable items,
especially ships, at better prices elsewhere. Few Latin American arms
purchases involve significant amounts of cash, making credit terms a
significant factor in choosing a supplier.
Alternatives
#1. Provide $202 million in 1976 (including $17 million for Venezuela)
and $246 million in 1977 (including $13 million for Venezuela) (State Req.).
#2. Provide $200 million in 1976 and 1977, specifically excluding
Venezuela (DOD/OMB Rec.).
Analysis
Although State's 1976 FMS request continues the 1975 request level, it
increases to $246 million in 1977 due to sizable increases for Argentina
and Brazil and State's desire to continue credit to Venezuela.
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
By DAW NARS, Date 6/27/85
CONFIDENTIAL
38
Venezuela is the source of over 1/4 of all U.S. oil imports and supplies
large amounts of iron ore to the U.S. Over $3 billion of private
American money is invested in Venezuela and that country is the 12th
largest market for U.S. exports. In this light, State argues that FMS
credit for Venezuela should not be terminated, particularly if its
regional rival, Colombia, continues to receive FMS credit.
LIBRARY
The NSC believes that State's requested FMS credit levels are required
to cover Brazil's planned purchases of materiel. NSC believes that,
FORD
because FMS credit has loomed so important in Venezuelan eyes up to now
and has been the catalyst for resolution of disputes between us, Vene-
&
zuela should continue to receive FMS credit despite its oil earnings.
GERALD
Economically, there is no reason to offer any FMS credit to Venezuela.
In light of increasing oil revenues, accumulating foreign reserves, and
sizable third country purchases, Venezuela is capable of purchasing
its military needs without concessionary U.S. credit. If necessary,
the balance between Venezuela and Colombia can be maintained by export
license controls over the sale of U.S. arms.
In the rest of Latin America, on the other hand, FMS credit is necessary
in reasonable amounts. In 1977 Argentina and Brazil would be the bene-
ficiaries of most of the $44 million increase State proposes.
Maintaining the $200 million level in 1977 should insure U.S. competi-
tiveness. Because of higher quality and proximity of maintenance, spares,
and training, U.S. arms enjoy an advantage in Latin American markets.
Argentina should be able to pay cash or find commercial credit for an
increasing share of its military needs. Brazil is experiencing a foreign
exchange reserve crunch at a time when foreign debt is quite high and
consequently will probably not require high FMS credit in the near
future.
Agency Request: Alternative #1 -- $202 million in FMS credit in 1976
and $246 million in 1977, including $17 million and $13 million for
Venezuela in 1976 and 1977. NSC concurs.
OMB Recommendation: Alternative #2 -- $200 million in FMS credits in
1976 and 1977 and no FMS credit for Venezuela after 1975. Defense
concurs.
CONFIDENTIA
9. Morocco-Military
Credit Sales
CONFIDENTIAL
39
FOREIGN ASSISTANCE
1976 Budget
Issue#9 : Military Credit Sales to Morocco
Statement of Issue
Should Foreign Military Credit Sales (FMS) for Morocco be increased to
$30 million?
LIBRARY
1974
1975
1976
1977
FORD
Alt. #1 Alt. #2 Alt. #1 Alt.#2
Budget Est.
Req. DOD/OMB Rec Req. DOD/OMB Rec.
&
074830
($ millions)
FMS Credit
3
14
14
30
14
30
14
Background
The Morocco FMS credit program in the past decade has ranged from $3
million to $12 million. The primary justification has been that
credits were necessary to facilitate continued U.S. use of the Keneitra
naval communications station. The request was increased to $14 million
in 1975, because Secretary Kissinger was pleased with the warm recep-
tion and useful talks he had on his October 1973 visit to Morocco.
The 1976 request results from a subsequent visit of Secretary Kissinger.
King Hassan believes that he received a commitment from the Secretary
for a substantial increase in credit assistance to finance a force
modernization program involving the formation and equipment of two
infantry brigades. The Moroccan economy is doing extremely well because
of the large rise in the price of phosphates, a major Moroccan export.
Alternatives
#1. Provide $30 million a year in 1976 and 1977 (State req.).
#2. Provide $14 million a year in 1976 and 1977 (DOD/OMB rec.).
Analysis
Alternative #1 would provide sufficient funds over a five-year period to
equip one infantry brigade. State contends that this level would please
King Hassan, and support Secretary Kissinger's statements to the King
that the United States would assist in its military modernization effort.
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
MINCINENTIAL
By AAD NARS, Date 6/27/85
CONFIDENTIAL
40
The NSC recommends $30 million FMS credit for Morocco on the grounds
that we want to retain our Defense Communications Station there and want
Hassan's help in negotiations in the Arab world. Hassan places a high
premium on improvement of his Armed Forces, and we have agreed to help.
NSC believes that to do less would likely sacrifice the political lever-
age we gain from this modest program, particularly with the elimination
of economic aid. NSC notes that to accommodate this level, either Morocco
must be eliminated from the statutory ceiling on military aid to Africa,
or the Africa ceiling removed.
Alternative #2 would continue the 1975 program of $14 million. This
level, higher than that of previous years, was itself a political gesture
to the King. Morocco is economically strong and should continue to be
a beneficiary of the phosphate shortage and accompanying price rise.
Because of its strong economic position, Morocco is able to obtain
commercial loans or use cash to supplement FMS credit to finance its
military purchases.
Agency Request: Alternative #1 -- $30 million in FMS credit, more than
doubling the 1975 amount. NSC concurs.
OMB Recommendation: Alternative #2 -- $14 million in FMS credit, a
continuation of the 1975 level. Defense concurs.
CONFIDENTIAL
10.Greece-Military
Credit Sales
CONTRATIAL
41
FOREIGN ASSISTANCE
1976 Budget
Issue# 10: Military Credit Sales to Greece
Statement of Issue
What Foreign Military Sales (FMS) credit level should be requested for
Greece?
LIBRARY
1974
1975
1976
1977
FORD
Alt. #1
Alt. #2
Alt. #1
Alt. #2
Budget Est.
Req.
DOD/OMB Rec.
Req.
DOD/OMB Rec.
GERALD
($ millions)
FMS Credit
71
71
71
105
90
110
90
Background
By statute (Hays Amendment), grant and credit assistance to Greece cannot
exceed $71 million. Congressman Hays has proposed that this amendment
be repealed now that democracy has been restored in Greece. The pending
House Committee bill contains a repeal provision.
Alternatives
#1. Provide $105 million in 1976 and $110 million in 1977 (State req.).
#2. Provide $90 million in each year (OMB rec.).
Analysis
Last summer Greece purchased aircraft totaling $403 million. They have
also indicated a desire to purchase substantial quantities of other major
items on an expeditious basis.
Greek disillusionment with NATO and particularly the United States over
the Cyprus issue is reflected in its decision to withdraw from NATO: The
Greeks blame the United States for "tilting" toward Turkey. Whether or
not this is a valid charge, there is no longer any question that Greek,
as well as Turk, acquisitions are related primarily to the threat from
each other.
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
By AND NARS, Date 6/27/85
CANFIRENTIAL
NTIAL
42
The NSC supports State's requests for 1976 and 1977. Potential sales
contracts will at least equal these levels. NSC believes our agreement
to them will accommodate moderate Greek military modernization, help
protect important U.S. base and facility rights, and encourage Greece
to move closer to resuming full military participation in NATO.
Both alternatives are substantially higher than previous levels, thereby
indicating our approval of the restoration of democracy. The issue is
whether any political benefits accruing from the additional $15 million
are sufficient to offset (1) the risk that, relative to Alternative #2,
the additional amount might be perceived as contributing to a Greek-Turk
arms race and (2) the additional budgetary cost.
Agency Request: Alternative #1 -- $105 million in 1976 and $110 million
in 1977. NSC concurs.
OMB Recommendation: Alternative #2 -- $90 million yearly in 1976 and
1977. DOD concurs.
FORD R.FORD VIBRARY
CONFIDENTIAL
P.L. 480
lla. 1975 P.L. 480
Food Aid
CONFIDENTIAL
43
DEPARTMENT OF AGRICULTURE
1975 Budget
Issue 11: P.L. 480 Food Aid for 1975
Statement of Issue
What should be the level and composition of the P.L. 480 food
aid program for 1975 in view of tight U.S. food supplies and
budget constraints, on the one hand, and humanitarian and
foreign policy needs on the other.
LIBRARY
P.L. 480 Outlays
FORD
1975
1974
Budget
Alt.#1
Alt.#2
Alt.#3
Alt.#4
038870
($ millions)
Commodity Costs
Title I
568
703
741
878
947
1155
Title II
283
176
352
352
352
352
Subtotal
851
879
1093
1230
1299
1507
Freight Costs
112
103
134
136
140
147
Receipts (-)
324
240
274
274
274
274
Total
639
742
953
1092
1165
1380
Grain Equivalent
3.1
4.3
3.8
4.1
4.5
5.3
(Million Metric
Tons)
Background
In September the President decided to increase the amount spent
for P.L. 480 above the dollar level in the 1975 budget but to
defer decisions on the ultimate size of the full-year program
until December. In October, an interim program, designed to
keep options open for a final decision, was approved and is
now being implemented.
Since the September/October decisions, several events have oc-
curred which will affect the size and cost of the food aid
program:
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
CONFIDENTIAL
reto
NARS, Date
6/27/85
By
CONFIDENTIAL
44
Supplies are lower and demand higher than earlier
anticipated, resulting in higher prices of wheat
and rice.
Secretary Kissinger made commitments to Egypt,
India and Chile which exceeded the approved
interim program.
The World Food Conference intensified foreign and
domestic pressures on the Administration to in-
LIBRARY
crease food aid.
FORD
Several Congressmen have introduced legislation
calling for more food aid, particularly for
humanitarian purposes.
A decision on the full year P.L. 480 program is required now
if any substantial additional amount of commodities is to be
shipped before the end of the year and if the 1976 budget is
to reflect accurately the 1975 program levels. An inter-
agency group -- State, Agriculture, Treasury, AID, NSC, CIEP,
CEA and OMB - - have developed four program alternatives.
Alternatives
#1. $953 million in outlays (2.7 million tons of wheat and
.7 million tons of rice). A minimum program consistent
with the President's decision to increase food aid and
meet existing commitments. It is within USDA commodity
availabilities.
#2. $1,092 million (2.7 million tons of wheat, 1.0 million
tons of rice). The increase is targeted on humanitarian
needs and is within the USDA commodity availabilities.
#3. $1,165 million (3.1 million tons of wheat, 1.0 million
tons of rice). The increase is targeted on countries of
foreign policy interest and exceeds USDA wheat availa-
bilities.
#4. $1,380 million (3.7 million tons of wheat, 1.15 million
tons of rice). The increase fulfills both humanitarian
and foreign policy requirements and exceeds USDA avail-
abilities for both wheat and rice.
CONFIDENTIAL
CONFIDENTIAL
45
Analysis
(1) Commodity Situation. The impact of P.L. 480 on food
prices and supplies is difficult to predict because of the
unprecedented commodity price fluctuations in the current
short supply situation. In addition, an indeterminate
amount of P.L. 480 may substitute for expected commercial
export sales and thus have no price impact. There is sub-
stantial interagency disagreement over commodity availa-
bilities, and availability projections have fluctuated
widely during the last six months.
By Law, the Secretary of Agriculture determines commodity
availabilities according to a formula which requires him
to provide first for domestic use, commercial exports and
"adequate carryover." The remainder, if any, is available
for P.L. 480 or additional stocks. Approval of Alternatives
#3 or #4, which exceed the official USDA estimate of wheat
available for P.L. 480 by 400,000 and 1 million tons respec-
tively, would require a determination by the Department of
Agriculture either to lower its estimate of "adequate carry-
over" or revise its forecast of domestic and commercial export
demand. The Secretary of Agriculture's current determination
of wheat available for P.L. 480 is attached.
Feedgrains and vegetable oil. A11 agencies agree that these
commodities are in very tight supply and that only small ad-
ditional amounts can be made available only for humanitarian
programs.
Wheat. The determination that 2.7 million tons of wheat are
available for food aid this year assumes a nine percent drop
in domestic consumption, a ten percent reduction in year-end
stocks and a 12.5 percent increase in average farm prices
form last year.
Treasury argues that P.L. 480 wheat availabilities
LIBRAT
are too high given other demand and would prefer a
2.1 million ton wheat program. Current high feed
FORD
grain prices are causing a decpitalization of our
livestock industry; increased P.L. 480 shipments would
further increase grain prices with the result that red
GERALD
meat prices are likely to rise again in late 1975 and
in 1976.
State and NSC believe that the program should be in-
creased to the Alternative # 4 level of 3.7 million
tons, noting the substitution of some food aid for
commercial sales and pointing out the uncertainty
surrounding commodity projections.
CONFIDENTIAL
46
OMB is concerned about the current low level of
stocks, and argues that any additional demand
created by P.L. 480 would further reduce this
cushion against unexpected commercial demand and
could increase the likelihood of export controls
and domestic price increases.
USDA/CEA calculations indicate that raising shipments from
2.7 to the 3.7 million tons in Alternative # 4 could raise
farm prices of wheat from the currently estimated $4.50 per
bushel to the $4.80 to $5.10 range (6-13 percent). This would
be as much as 27 percent above last year's average. These
price projections are only illustrative, however, because
individual estimates run from virtually no price impact to
the possibility of runaway prices.
These estimates illustrate the price pressures which suc-
cessively higher levels of food aid place on food prices,
thereby increasing the risks of adverse political reaction
from affected domestic groups. Although the pressure for
export controls seems to have abated, the higher levels of
food aid under Alternatives #3 and # 4 also create a greater,
although undetermined, risk of reviving domestic pressure for
such controls because of the impact of higher wheat prices on
domestic users and consumers.
Rice. Because of a record harvest USDA projects a rice avail-
ability of at least 1 million tons. This assumes a return of
year-end stocks to comfortable levels and a 17 percent drop
from last year's extremely high prices. Alternative #1
(690, 000 tons) is well below this level and would probably
further ease prices, but would also generate strong producer
pressures to ship more rice under P.L. 480. Alternative # 4
(1.15 million tons) could raise prices as much as ten percent,
LIBRARY
but might not be feasible to ship because of logistical limi-
tations.
FORD
&
GERALD
(2) Budget Considerations. A11 of the proposed alternatives
would significantly exceed the original 1975 budget outlay
estimate of $742 million and fulfill the President's commit-
ment to increase the amount we spend on food aid.
CONFIDENTIAL
CONFIDENTIAL
47
Alternative
#1
a $ 211 million increase; 28 percent.
YORD
# 2
a $350 million increase; 47 percent.
#3
a $423 million increase; 57 percent.
076833
# 4
a $638 million increase; 86 percent.
Unless offsetting rescissions or deferrals are made in other
programs, each alternative would require an increase in the
USDA outlay ceiling.
Country Program Considerations
Countries receiving U.S. food aid may be divided into five
major groups. There is little interagency dispute about
three of these groups.
South East Asia. A11 alternatives provide Vietnam
and Cambodia with the full amount of P.L. 480 com-
modities that they require. As much as $58 million
programmed for Vietnam may not be needed if its crops
are good and stocks remain high, and thus may become
a reserve for contingencies.
Middle East. A11 alternatives provide sufficient
food aid to support U.S. peace efforts in Egypt,
Israel, Syria and Jordan.
Title II Programs. These people-to-people feeding
programs for humanitarian purposes, conducted by the
U.S. Voluntary agencies (CARE and Catholic Relief
Services) and through the UN World Food Program are
being continued at about last year's levels under
all alternatives.
Most of the variation among the alternatives occurs in the
other two groups of countries.
Traditional Recipients. Indonesia and Pakistan in the past
have been recipients of large scale food aid to reinforce
political ties with the U.S., but these countries are now
relatively well off economically. Korea, which would be one
48
of the largest P.L. 480 recipients under Alternatives #3 and
#4, would receive food as a quid-pro-quo for voluntary textile
export restraints. The needs of Chile are substantially met
under all options.
South Asia. Because Bangladesh, India and Sri Lanka have
been hit by a combination of domestic crop shortfalls and
high import prices for food and oil, much of the recent pub-
lic and Congressional pressure for more food aid has centered
on meeting the needs of these countries. India, however, has
some foreign exchange available for food purchases and may be
prepared to buy more wheat commercially. Bangladesh faces
problems of internally distributing any large food imports.
Summary of Alternatives
Alternative #1. This alternative would ship the full 2.7
million ton availability of wheat and 690,000 tons of rice.
It would:
Provide 500,000 tons of wheat to India but limit
MORARY
shipments to Bangladesh to 350 tons of grain and
not assist Sri Lanka.
Provide 70,000 tons of rice to Korea, and 100 tons of
rice to Pakistan but nothing for Indonesia.
At $953 million outlays, the alternative would be $211 million
above the budget. Pressure on wheat prices would probably
be minimal unless the Treasury analysis of the wheat situa-
tion is correct. Rice prices could decline slightly. Despite
the increase in wheat above the 1.9 million tons originally
planned in the budget, the alternative falls short of meeting
humanitarian needs and would lead to criticism that the United
States is ignoring the world food crisis. Insufficient food
would be provided to meet the expectations of the traditional
recipients, possibly creating political problems with these
countries. Congressional pressures would intensify to in-
crease rice shipments to 1 million tons.
Alternative #2. This alternative would raise rice shipments
by 310,000 tons over Alternative #1 to 1 million tons. Both
wheat and rice would be programmed at USDA availability levels.
Under this alternative:
CONFIDENTIAL
49
Virtually all of the increment would go to South
Asia except for $15 million set aside as a con-
tingency reserve.
Traditional recipients would be held to the
Alternative #1 level.
Outlays would rise by $350 million over the budget. There
would probably be no significant increase in rice prices
above current levels. While the shipments to South Asia
would constitute a substantial response to humanitarian needs,
the recipients and food aid proponents in the United States
would probably push for even higher levels.
Alternative #3.
This alternative would add 400,000 tons of wheat above the USDA
availability level bringing total wheat to 3.1 million tons. It
would:
Reduce the volume of shipments to South Asia slightly
LIBRANT
below Alternative #2. (There would be a greater de-
FORD
cline in dollar terms because of the substitution of
the low cost wheat for high cost rice.).
03
Come close to meeting the expectations of traditional
recipients by providing large scale rice shipments.
Outlays in 1975 would increase by $423 million. The wheat
shipments may increase wheat prices and arouse domestic re-
sentment.
Alternative #4.
This alternative would further increase wheat shipments to
3.7 million tons and raise rice shipments to 1.15 million
tons, going above the USDA availability levels for both com-
modities. It would meet all major requirements in South Asia
and satisfy traditional recipient expectations. Budget out-
lays would rise by $638 million over the original 1975 figure
or by 87 percent. The wheat increase could put very sub-
stantial pressures on prices. While the rice price rise
might be small there could be logistical difficulty in moving
the additional 150,000 tons of rice.
CONFIDENTIAL
50
Agency Positions
State, AID, and NSC staffs recommend Alternative #4. They
believe that a response of this magnitude is necessary in
order to meet the pressing humanitarian needs which all
recognize and at the same time to achieve our foreign policy
goals. They recognize that there may be some risk of higher
prices, perhaps in the extreme case leading to some recon-
sideration of the need for export controls. But they believe
that this risk can be minimized through careful management and
implementation of the program.
The Agriculture Department supports Alternative #3. Despite
the increase in wheat shipments above the availability level,
USDA believes the minimum carryover for wheat could be ad-
justed to accommodate Alternative #3 without significantly
distorting the domestic economic situation with regard to
wheat price or availability.
LIORARY
FORD
CIEP recommends Alternative #2. While recognizing the need
for budget restraint consistent with Alternative #1, they
believe that for a relatively small dollar increment the
$
0763
Administration could enhance its image worldwide and win
domestic support by the additional humanitarian shipments.
They also believe that higher rice levels could increase
support for the Administration's proposed commodity legis-
lation for rice at no inflationary risk. They are very
concerned about tight wheat supplies and strongly oppose
Alternatives #3 and # 4 because of their inflationary poten-
tial and the risk of stimulating export controls.
CEA recommends Alternative #1 as being the least inflationary
course.
The Treasury Department does not support any of the four
alternatives. They recommend a P.L. 480 program which
includes not more than 2.5 million tons of wheat and 1 mil-
lion tons of rice. They prefer the country distribution
shown in Alternative 3.
OMB Recommendation: OMB believes that the current budget
policy and the threat of continuing inflationary pressures
in the food sector require holding the budget increase to
the Alternative #1 level. Should some further increase be
judged necessary, OMB prefers Alternative #2 over Alterna-
tive #3. The high Alternative # 4 would incur unacceptably
high risks of price increases, conflict with current budget
policy and contrast adversely with the nine percent, $339
million reduction in food stamps which has just been pro-
posed.
CONFIDENTIAL
CONFIDENTIAL
51
P.L. 480 1975 FUNDING ALTERNAITVES
AND COUNTRY PROGRAMS
($ millions)
Alt. #1
Alt. # 2
Alt. #3
Alt. # 4
TITLE I COMMODITIES
Southeast Asia:
Cambodia
158
158
158
158
Vietnam
101
101
101
101
Subtotal
259
259
259
259
Middle East:
Egypt
88
88
88
88
Israel
9
9
14
26
Jordan
4
4
5
7
Syria
32
32
32
32
Subtotal
133
133
139
153
Traditional Recipients
Chile
53
53
53
65
Korea
30
30
106
124
Indonesia
-
-
30
43
Pakistan
18
18
44
53
Subtotal
101
101
233
285
Asian Subcontinent:
Bangladesh
98
171
138
191
India
88
116
88
169
Sri Lanka
-
11
11
11
Subtotal
186
298
237
371
Other Countries and Carry-In:
Other Countries
9
19
27
35
Carry-In
53
53
53
53
Reserve
-
15
-
-
Subtotal
62
87
80
88
TOTAL TITLE I COMMODITIES
741
878
947
1,155
TITLE II COMMODITIES
352
352
352
352
TOTAL COMMODITIES
1,093
1,230
1,299
1,507
Freight Costs
134
136
140
147
Deduct: Receipts
-274
-274
-274
-274
PUBLIC LAW 480 - TOTAL
953
1,092
1,165
1,380
CONFIDENTIAL
12/7/74
SONFIDENTIAL
52
SUMMARY COMPARISONS
OF P.L. 480 ALTERNATIVES
1975
1975 Alternatives
Budget
#1
#2
#3
# 4
Commodities a/
(tons, millions)
Wheat
1.9
2.7
2.7
3.1
3.7
Rice
1.0
.7
1.0
1.0
1.2
FORD LIBRARY
Feedgrain
1.4
.4
.4
.4
.4
Outlays ($ millions)
742
953
1,092
1,165
1,380
Increase over
1975 budget
-
(+211)
(+350)
(+423)
(+638)
a/
Current USDA "availabilities"
Wheat
2.7
Rice
1.0
Feedgrain .4
CONFIDENTIAL
12/7/74
U.S. Supply/Distribution
Wheat
53
In millions of bushels and thousands of metric tons
:
1972/73
:
1973/74
:
1974/75
ITEM
:
:
Bu.
MT 1/
Bu.
A. Supply
:
:
MT 1
1. Carryin
:
439
11,948
:
249
6,777
2. Production
1,711
46,566
:
1,781
48,471
3. Imports
4
109
1
27
4. Total
:
2,154
58,622
:
2,031
55,275
:
:
B. Disposition
:
1. Domestic Use
757
20,602
:
688
18,724
2. Exports
:
(a) Commercial
1,089
29,638
:
1,000
27,216
(b) P.L. 480
59
1,606
:
100
2,722
(c) Total Exports
1,148
31,243
:
1,100
29,937
3. Total Use
1,905
51,845
1,788
48,661
4. Carryover
249
6,777
:
243
6,613
:.
C. Prices
:
1. Season Average
:
$4.00
$4.50
Loan Rate
1.25
1.37
D. Calculation of P.L.
480 Availability
1. Domestic Use &
:
Comm'l Exports
1,846
50,240
1,688
45,940
2. Adequate Carryover
:
:
249
6,777
:
243
6,613
3. Total Requirements
2,095
57,017
1,931
52,553
:
:
4. Excess Supply to
Projected Require-
:
ments (A4-D3)
59
1,606
100
2,722
:
:
5. Recommended for
:
P.L. 480 Availability:
:
59
1,606
:
100
2,722
1/ All MT figures converted. directly from corresponding bushel figures, and may not add
due to rounding.
FAS/PL480/PPD: 11/29/74
Revised 12-4-74
FOR OFFICIAL USE ONLY
GERALD FORD LIBRAND
1lb. 1976 P.L. 480
Food Aid
CONFIDENTIAL
54
DEPARTMENT OF AGRICULTURE
1976 Budget
Issue 11b: P.L. 480 Food Aid Program for 1976
Statement of Issue
What should the level and composition of food aid be in 1976
in view of uncertainties in commodity availabilities and con-
tinuing pressures for a sizable increase in the U.S. food aid
program particularly for humanitarian purposes?
LIDRARY
P.L. 480 Outlays
FORD
1974
1975
1976
Alt.#1
Alt.#4
Alt.#1
Alt.#2 Alt. # 3
AID
OMB.
USDA
GRANTO
Req.
Rec.
Req.
($ millions)
Title I Commodity
Costs
568
741
1155
921
662
617
Title II Commodity
Costs
283
352
352
326
283
262
Subtotal
851
1093
1507
1247
945
879
Freight Costs
112
134
147
180
151
138
Receipts (-)
324
274
274
246
235
235
Total
639
953
1380
1181
861
782
Grain Equivalent
3.1
3.8
5.3
6.2
4.7
3.8
(million metric
tons)
Background
Members of Congress, the public and foreign governments will be
watching the level of food aid planned for in 1976 compared with
that chosen for 1975 as an indication of U.S. intentions regarding
the future of food aid. In that context, the commodity level of
food aid chosen for 1975 sets a minimum for the 1976 program if
the Administration is to signal its responsiveness to continuing
pressures for large scale food aid.
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
CONFIDENTIAL
By
Date
NARS,
Date
6/27/85
CONFIDENTIAL
55
USDA plans no acreage limitations on P.L. 480 commodities in
1976. Thus, with normal weather conditions, supply is expected
to ease and prices to fall below current levels by roughly 20%.
However, major uncertainties remain regarding commodity avail-
abilities and prices as well as the likely needs abroad for
food aid in 1976.
Alternatives
#1
Undertake a large scale food aid program of
$1,181 million (State /AID Req.)
LIBRAT
#2
Provide for a program of $861 million (OMB
FORD
Rec.)
#3
Mount a P.L. 480 program of $782 million
078833
(USDA Req. )
Analysis
The Level
The major focus of recent public and Congressional pressures
to increase food aid has been largely on expanding commodity
levels; comparisons between the levels of food aid in 1975
and 1976 are likely to be on the same basis. An additional
element in considering the level for 1976 is fulfillment of
the U.S. pledge at the World Food Conference to participate
in providing ten million tons of grain for food aid; the
U.S. share in the global commitment, to be negotiated in
early 1976, is likely to be about 40% or four million tons.
P.L. 480 Levels
1976
State/
1975
USDA
OMB
AID
Alt. Alt. #2 Alt.#3 Alt. # 4
Req.
Rec.
Req.
Commodity Levels
3.8
4.1
4.5
5.3
3.8
4.7
6.2
(million metric
tons of grain)
Budget Outlays
953
1092
1165
1380
782
861
1181
The higher grain level per dollar in 1976 reflects the lower USDA
price estimates for that year.
CONFIDENTIAL
56
Program Composition
Only the State/AID request and the OMB recommendation for 1976
include proposed program composition by country. They both:
Provide full needs for Southeast Asia.
Provide substantial food aid for possible needs in
LIBRARY
South Asia and for five smaller country programs.
FORD
Provide the full request level for Chile and a
sizable worldwide reserve for contingencies.
The OMB recommendation differs from the State/AID request by:
Eliminating the program for Korea. The Korean program
is the largest single program proposed for 1976. The
tight commodity situation in 1974 and 1975 has pre-
vented fulfillment of the U.S. commitment to provide
large scale food aid to Korea in exchange for limi-
tations on Korean textile exports to the U.S. If
the supply situation for P.L. 480 commodities should
ease in 1976, pressures will increase to resume large
scale food aid. However, by contributing to upward
pressures on prices of food and textiles in the United
States and so contributing to inflation, the Korean
textile agreement no longer serves U.S. interests.
Moreover, a $150 million program for Korea--neither
one of the neediest LDC's nor among those most
seriously affected by rising oil prices - - may pro-
voke public and Congressional criticism and lead to
efforts to restrict food aid to largely humanitarian
purposes.
Eliminating programs for Egypt, Syria, Jordan, and
Israel. The Middle East program for 1975 in large
part serves as an immediate and visible signal of
U.S. support for Syrian and Egyptian willingness
to take steps toward settlement while large dollar
appropriations are pending in Congress. These
funds are expected to be made available later this
fiscal year, to be disbursed in part in 1976. With
the availability of other funds from 1975 appropria-
tions and from appropriations or a Continuing Resolu-
tion in 1976 (which would include funds for the Middle
East at the level appropriated in 1975) food aid should
no longer be required for these countries.
COMFIDENTIAL
57
Reducing Title II for countries able to assume the
burden of financing their own nutrition programs.
Agency Requests
The State/AID request, Alternative #1, of $1181 million in
outlays, would continue large programs for Korea and the
Middle East. It would also be consistent with increasing
food aid over any of the 1975 alternatives and would pro-
vide 6.2 million tons of grain, well over the four million
tons of grain likely to be the U. S. contribution to the
ten million ton worldwide level of food aid.
The USDA request, Alternative #3 of $782 million in outlays
would provide only 3.8 million tons of grain, below the ex-
pected U.S. contribution to the worldwide level of food aid
and below commodity levels of all the 1975 alternatives
except Alternative #1.
The OMB Recommendation. Alternative # 2 of $861 million in
outlays, would eliminate programs in Korea and the Middle
East while planning commodity levels above those of Alterna-
tives #1, 2, or 3 for 1975 but would fall below that of
Alternative #4. It would also enable the United States to
provide 4.7 million tons of grain, more than enough to meet
a four million ton world food aid commitment.
CONFIDENTIAL
CONFIDENTIAL
58
PROPOSED COUNTRY
DISTRIBUTION OF P.L. 480
FUNDING LEVELS FOR
1976
($ Millions)
AID
OMB
Req.
Rec.
Country Programs
Southeast Asia:
Cambodia
86
86
Vietnam
112
127*
Indochina Reserve
15
15
Subtotal
213
228
Middle East:
Egypt
LIBRARY
81
--
Israel
Jordan
FORD
3
:
20
--
Syria
&
20
--
Subtotal
GERALD
124
--
Traditional Recipients:
Chile
65
65
Korea
150
--
Pakistan
28
28
Subtotal
243
93
Asian Subcontinent:
Bangladesh
111
111
India
138
138
Sri Lanka
18
18
Subtotal
267
267
Other Countries and Reserve
Other Countries
24
24
Worldwide Reserve
50
50
TOTAL TITLE I COMMODITIES:
921
662
Title II Donations
326
283
TOTAL COMMODITIES
1247
945
Freight costs
180
151
Deduct: Receipts
246
235
PUBLIC LAW 480 - TOTAL
1181
861
*
The larger figure in the OMB Rec. for Cambodia reflects a shift of
commodities from Title II to Title I. The total level of commodities
for Cambodia remains the same in both options.
CONFIDENTIAL
CONFIDENTIAL
54
DEPARTMENT OF AGRICULTURE
1976 Budget
Issue 11b: P.L. 480 Food Aid Program for 1976
Statement of Issue
What should the level and composition of food aid be in 1976
in view of uncertainties in commodity availabilities and con-
tinuing pressures for a sizable increase in the U.S. food aid
program particularly for humanitarian purposes?
LIBRARY
P.L. 480 Outlays
STATE
1974
1975
1976
Alt.#1 Alt.#4
Alt.
Alt.#2 Alt. # 3
AID
OMB.
USDA
770630
Req.
Rec.
Req.
($ millions)
Title I Commodity
Costs
568
741
1155
921
662
617
Title II Commodity
Costs
283
352
352
326
283
262
Subtotal
851
1093
1507
1247
945
879
Freight Costs
112
134
147
180
151
138
Receipts (-)
324
274
274
246
235
235
Total
639
953
1380
1181
861
782
Grain Equivalent
3.1
3.8
5.3
6.2
4.7
3.8
(million metric
tons)
Background
Members of Congress, the public and foreign governments will be
watching the level of food aid planned for in 1976 compared with
that chosen for 1975 as an indication of U.S. intentions regarding
the future of food aid. In that context, the commodity level of
food aid chosen for 1975 sets a minimum for the 1976 program if
the Administration is to signal its responsiveness to continuing
pressures for large scale food aid.
DECLASSIFIED
E.O. 12356, Sec. 3.4 (b)
White House Guide Lines, Feb. 24, 1983
By
AND
NARS, Date 6/27/85
CONFIDENTIAL
55
USDA plans no acreage limitations on P.L. 480 commodities in
1976. Thus, with normal weather conditions, supply is expected
to ease and prices to fall below current levels by roughly 20%.
However, major uncertainties remain regarding commodity avail-
abilities and prices as well as the likely needs abroad for
food aid in 1976.
Alternatives
#1
Undertake a large scale food aid program of
$1,181 million (State /AID Req.)
# 2
Provide for a program of $861 million (OMB
Rec.)
#3
Mount a P.L. 480 program of $782 million
(USDA Req. )
Analysis
The Level
The major focus of recent public and Congressional pressures
to increase food aid has been largely on expanding commodity
levels; comparisons between the levels of food aid in 1975
and 1976 are likely to be on the same basis. An additional
element in considering the level for 1976 is fulfillment of
the U.S. pledge at the World Food Conference to participate
in providing ten million tons of grain for food aid; the
U.S. share in the global commitment, to be negotiated in
early 1976, is likely to be about 40% or four million tons.
P.L. 480 Levels
1976
State
/
1975
USDA OMB
AID
Alt. #1 Alt. # 2 Alt. #3 Alt. # 4
Req.
Rec.
Req.
Commodity Levels
3.8
4.1
4.5
5.3
3.8
4.7
6.2
(million metric
tons of grain)
Budget Outlays
953
1092
1165
1380
782
861
1181
The higher grain level per dollar in 1976 reflects the lower USDA
price estimates for that year.
56
Program Composition
Only the State/AID request and the OMB recommendation for 1976
include proposed program composition by country. They both:
Provide full needs for Southeast Asia.
LIBRAR
Provide substantial food aid for possible needs in
South Asia and for five smaller country programs.
Provide the full request level for Chile and a
sizable worldwide reserve for contingencies.
The OMB recommendation differs from the State/AID request by:
Eliminating the program for Korea. The Korean program
is the largest single program proposed for 1976. The
tight commodity situation in 1974 and 1975 has pre-
vented fulfillment of the U.S. commitment to provide
large scale food aid to Korea in exchange for limi-
tations on Korean textile exports to the U.S. If
the supply situation for P.L. 480 commodities should
ease in 1976, pressures will increase to resume large
scale food aid. However, by contributing to upward
pressures on prices of food and textiles in the United
States and so contributing to inflation, the Korean
textile agreement no longer serves U.S. interests.
Moreover, a $150 million program for Korea--neither
one of the neediest LDC's nor among those most
seriously affected by rising oil prices -- may pro-
voke public and Congressional criticism and lead to
efforts to restrict food aid to largely humanitarian
purposes.
Eliminating programs for Egypt, Syria, Jordan, and
Israel. The Middle East program for 1975 in large
part serves as an immediate and visible signal of
U.S. support for Syrian and Egyptian willingness
to take steps toward settlement while large dollar
appropriations are pending in Congress. These
funds are expected to be made available later this
fiscal year, to be disbursed in part in 1976. With
the availability of other funds from 1975 appropria-
tions and from appropriations or a Continuing Resolu-
tion in 1976 (which would include funds for the Middle
East at the level appropriated in 1975) food aid should
no longer be required for these countries.
57
Reducing Title II for countries able to assume the
burden of financing their own nutrition programs.
Agency Requests
The State/AID request, Alternative #1, of $1181 million in
outlays, would continue large programs for Korea and the
Middle East. It would also be consistent with increasing
food aid over any of the 1975 alternatives and would pro-
vide 6.2 million tons of grain, well over the four million
tons of grain likely to be the U. S. contribution to the
ten million ton worldwide level of food aid.
The USDA request, Alternative #3 of $782 million in outlays
would provide only 3.8 million tons of grain, below the ex-
pected U.S. contribution to the worldwide level of food aid
and below commodity levels of all the 1975 alternatives
except Alternative #1.
The OMB Recommendation. Alternative # 2 of $861 million in
outlays, would eliminate programs in Korea and the Middle
East while planning commodity levels above those of Alterna-
tives #1, 2, or 3 for 1975 but would fall below that of
Alternative #4. It would also enable the United States to
provide 4.7 million tons of grain, more than enough to meet
a four million ton world food aid commitment.
LIBRARY
FORD
is
CONFIDENTIAL
58
PROPOSED COUNTRY
DISTRIBUTION OF P.L. 480
FUNDING LEVELS FOR
1976
($ Millions)
AID
OMB
Req.
Rec.
Country Programs
Southeast Asia:
Cambodia
86
86
Vietnam
112
127*
Indochina Reserve
15
15
Subtotal
213
228
Middle East:
Egypt
LIBRARY
81
--
Israel
Jordan
FORD
3
:
20
--
Syria
20
--
Subtotal
GERALD
124
:
Traditional Recipients:
Chile
65
65
Korea
150
--
Pakistan
28
28
Subtotal
243
93
Asian Subcontinent:
Bangladesh
111
111
India
138
138
Sri Lanka
18
18
Subtotal
267
267
Other Countries and Reserve
Other Countries
24
24
Worldwide Reserve
50
50
TOTAL TITLE I COMMODITIES:
921
662
Title II Donations
326
283
TOTAL COMMODITIES
1247
945
Freight costs
180
151
Deduct: Receipts
246
235
PUBLIC LAW 480 - TOTAL
1181
861
*
The larger figure in the OMB Rec. for Cambodia reflects a shift of
commodities from Title II to Title I. The total level of commodities
for Cambodia remains the same in both options.
Smaller Agencies
STATE DEPARTMENT
THE WHITE HOUSE
WASHINGTON
December 6, 1974
GERALD FORD VIDRAET
MEMORANDUM FOR: THE PRESIDENT
FROM:
Roy L. Ash
SUBJECT:
1976 Budget decisions: State Department
The State Department requests and my recommendations with
respect to 1976 budget amounts are presented in the attached
tabulation (Tab A). Four issues have been identified for
your consideration (detail at Tab B). We have not yet had
an opportunity to discuss my recommendations with the
Department.
I. Operating expenses
The Department requests a $69 million increase over the
1975 level of $356 million. Half of the increase is for
mandatory expenses, primarily the effect of inflation abroad
on overseas operating costs. The discretionary increase
($35 million) is for 400 additional employees and improving
communications and other logistical support services.
OMB recommends all of the mandatory cost increases. We
believe, however, that the Department should continue to
meet essential new personnel requirements by reprogramming
lower priority positions, and that one third of the request
for logistical improvements will allow the important needs to
be met. We recommend a total increase of $45 million.
Decision: Approve agency request
Approve OMB recommendation
me?
II. Exchange of persons
State requests a large increase to $80 million from the
1975 level of $53 million in the belief that American
2
political, economic, scientific, educational and cultural
contacts with foreign societies must be broadened, especially
with Latin America, Eastern Europe and the Near East. OMB
believes budget policy and management limitations make a 50%
increase inappropriate. Our $58 million recommendation
continues the program slightly above the current level by
covering mandatory cost increases and modest bicentennial
activities.
Decision: Approve agency request
FORD & LIBRARY
Approve OMB recommendation
ARM
III. Japan-U.S. Exchange Program
State proposes no appropriation at this time to fulfill a
Nixon 1973 commitment to reciprocate a Tanaka $10 million
gift to U.S. universities for Japanese studies. The Depart-
ment prefers first compromising with Senator. Javits on his
bill authorizing a special $32 million appropriation for grants
to American, as well as Japanese, institutions for Japanese
and American studies.
Our recommendation to seek an appropriation of $15 million
of U.S. -owned yen earmarked for exchange programs would ful-
fill the Nixon commitment, not add to the budget deficit, and
avoid a compromise with Senator Javits which would result in
larger appropriations and a new independent agency (which
Javits desires) to administer the program.
Decision: Approve agency request
Approve OMB recommendation
IV. Soviet refugees to countries other than Israel
Since 1973 the Congress has initiated appropriations to
aid Russian Jewish refugees. Most have been going to Israel,
but recently more have been coming to the United States and
this trend is expected to continue. The House Foreign Affairs
Committee has reported that the Congressional appropriation
should be used only for refugees going to Israel. The Depart-
ment agrees but has not yet decided how to aid refugees
coming to the United States and has made no budget request.
The OMB recommendation would include $13 million in the
regular State refugee appropriation to aid refugees going to
countries other than Israel. The only other alternatives are
3
to ignore Congressional objections and use the Congressional
appropriation or to make transfers of AID funds which,
however, are limited to $10 million and should be reserved
for unforeseen refugee problems in other areas which regularly
occur.
Decision: Approve agency request
Approve OMB recommendation
FORD is LIBRAND RATA
Attachments
TAB A
DEPARTMENT OF STATE
(Excluding International Boundary and Water Commission)
1976 Budget
Summary Data
(In millions)
Employment, end-of-period
Budget
Full-time
authority
Outlays
Permanent
Total
1974 actual
763
718
22,325
23,642
1975 January budget
787
758
23,059
24,663
current estimate
840
807
XXXX
XXXX
supplementals recommended*
39
37
XXXX
XXXX
OMB recommendation
879
844
22,873
24,489
1976 planning ceiling
815
825
XXXX
XXXX
agency request
975
974
23,279
24,895
OMB recommendation
937
937
22,873
24,489
Transition period
agency request
420
378
23,279
24,895
OMB recommendation
406
365
22,873
24,489
1977 OMB estimate
1,028
1,000
22,873
24,489
GERALD
P.
*
$30 UN forces in Middle East and $9M pay increase
FORD
LIBRARY
TAB B
Issue Paper
Department of State
Issue #1: Operating Expenses
Statement of Issue
Should the Department increase its employment and improve its logistical support
services and facilities?
Background
Since 1967, State has reduced its employment by 16%, while absorbing new requirements
such as additional visa workloads and new diplomatic installations in China, the Middle
East, and Africa. In the same period, however, the operating costs of the Foreign Service
abroad and the Department in Washington have increased 75%, largely because of salary
increases, overseas inflation, and the devaluations of the dollar.
The last several budgets have requested funds for mandatory cost increases -- e.g., con-
tinuing inflation abroad -- and modest increases in logistical support ($4 million last
year). Although the Department sought personnel increases in these years in its budget
requests to OMB, the Presidential Budget allowed none, on the grounds that essential new
staff requirements could continue to be absorbed by reprogramming existing staff.
For 1976, OMB recommends $34 million in mandatory increases requested by the Department,
largely for increased foreign national salaries and overseas operating costs resulting from
inflation abroad. The question is the extent to which additional personnel and discretion-
ary increases in logistical support should be permitted.
Alternatives
#1. Provide fairly substantial increases in personnel and logistics (Agency req.).
GERALD
#2. Allow no additional personnel, but provide a modest increase in logistics (OMB rec. )
:
FORD
LIBRARY
Analysis
1974
1975
1976
Budget Authority/Outlays
BA
O
BA
O
BA
O
($ Millions)
Alt. #1 (Agency req.)
325
329
356
356
425
416
Alt. #2 (OMB rec.)
325
329
356
354
401
395
Agency Request: Alternative #1. The Department requests about 400 additional personnel
and $11 million for additional overseas installations, export promotion activities, and
scattered staff increases. The Department also requests $24 million for logistical support
(new automated systems, equipment, furnishings, and facilities), including $9 million to
improve its communications. The total discretionary request of $35 million is three times
that sought from OMB last year.
OMB Recommendation: Alternative #2. No additional personnel would be allowed, on the grounds
that the Department can continue to reprogram low priority positions to meet essential new
requirements. Only one third of the requested non-salary costs of new installations would
be financed, since the opening of most of the requested new overseas posts is uncertain.
About a third of the other logistical increases would be provided, with the Department
selecting the highest priority items. The total recommended discretionary increase is
$11 million, almost three times the amount requested of the Congress for 1975.
Issue Paper
Department of State
1976 Budget
Issue #2: Exchange of Persons
Statement of Issue
Should the exchange of persons program be sharply increased to significantly broaden
personal and institutional contacts with foreign societies.
Background
The program's basic objective is to improve communication between key elements of
American society and foreign societies so that the environment for U.S. political, economic,
military and cultural relations may be improved. Emphasis in recent years has been on
political, economic, media, cultural and scientific exchanges, although academic exchange
remains the largest element. More specific objectives are difficult to define and results
are hard to measure. In view of today's overwhelming private commercial, academic, scientific,
cultural and media interchange with many countries, the Department has been trying to tailor
its program more toward places and types of exchanges that do not receive much private
attention. The program is carried out by binational commissions abroad, academic committees
in the United States, and about 130 non-governmental, non-profit institutions receiving
contracts or grants.
Alternatives
#1. Provide sharp increases in institutional support and the number of grants ($80
million - agency req. )
#2. Continue 1975 level by providing $4 million mandatory cost increases and $1 million
for special bicentennial activities ($58 million - OMB rec.).
GERAIN
FORD
LIBRARY
Analysis
1974
1975
1976
Budget Authority/Outlays
BA
O
BA
O
BA
O
($ Millions)
Alt. #1 (Agency req.)
51
47
53
52
80
70
Alt. #2 (OMB rec.)
51
47
53
52
58
55
Benefits and costs of the program are difficult to ascertain in the short-run. Over
the long-run the Department is convinced the program results in foreign understanding of
American society, government and institutions that serves us well. Determination of program
and budget levels are largely a matter of judgment based on faith in future benefits,
administrative feasibility, and budget policy.
Agency Request: Department leadership believes a quantum increase is important and that it
should be sustained over the next five years. Secretary Kissinger reportedly wants the
program to broaden American contacts and relationships, especially in Latin America, Eastern
Europe and the Near East.
OMB Recommednation: OMB believes budget policy and management limitations warrant denial of
a 50% program increase. A $5 million increase, covering $4 million of mandatories and
$1 million for bicentennial activities would be in line with recent modest budget increases.
This "hold the line" approach would be reasonable in terms of current budget policy. The
program could continue some modest development and improvement.
BERALD
LIBRARY
Issue Paper
Department of State
1976 Budget
Issue #3: Japan-U.S. Exchange Program
Statement of Issue
Should a special appropriation of $15 million of U.S.-owned yen be sought to fulfill
the Nixon commitment to make grants to Japanese institutions for American studies to
reciprocate the Japanese Government's $10 million of grants made in 1973 to American
institutions for Japanese studies programs?
Background
When Prime Minister Tanaka in 1973 announced $10 million in grants to ten American
universities for Japanese studies, President Nixon responded by indicating that he would
soon seek appropriation of the remaining $15 million of yen balances in a post-war account
(GARIOA) held by the U.S. "to strengthen Japan-U.S. cultural and educational exchanges.'
Earlier in 1973, Senator Javits had introduced legislation: (a) authorizing a $32 million
trust fund, the income and principal of which would be available for grants to Japanese and
American institutions for Japanese-American studies, and (b) establishing a joint con-
gressional-executive-public member commission, (i.e., a new independent executive agency of
doubtful constitutionality) to administer the trust fund and the grant program.
Because of major problems presented by the Javits bill, State prepared an alternative
Administration bill that limited appropriations to the remaining GARIOA yen balances, placed
administrative responsibility in the Secretary of State, and substituted a public advisory
commission for an operating commission. The Senate Foreign Relations Committee did not
accept the Administration's bill, and the Senate passed the Javits bill without debate.
There has been no action taken on either the Javits bill or the Administration's bill by the
House Foreign Affairs Committee, and there is little likelihood of action yet this session.
LIBRARY
The Department desires to fulfill the Nixon commitment but believes a compromise must
be worked out with Javits first. Such a "compromise" would authorize appropriation of
both the $15 million of yen and the $32 million in the Javits bill, initiate grants to
American institutions, and probably result in a new, independent agency. Javits has
indicated that he does not desire to compromise.
Alternatives
#1. Attempt to reach a compromise with Senator Javits.
#2. Seek a $15 million yen appropriation in 1976 (OMB rec.)
Analysis
1976
Budget Authority/Outlays
BA
O
($ Millions)
GNO4
Alt. #1
17
11
LIBRARY
Alt. #2 (OMB rec.)
15
10
Alternative #1 would result in increased budget costs, would initiate a State program
of support grants for American academic institutions, and would likely result in a new
independent agency.
Alternative #2 fulfills the Nixon commitment to reciprocate Prime Minister Tanaka's
1973 grants to American institutions, simply and directly by seeking an appropriation.
It precludes State from initiating support grants to American educational institutions.
Alternative #2 does not require basic authorizing legislation, since there is already
sufficient authority in the Fulbright-Hays Act. However, a 1976 appropriation authorization
would have to be sought.
Agency request: None at this time. The Department prefers to try to compromise with Javits
rather than pre-empting his initiative and risking his opposition. The Department would
seek a 1976 supplemental appropriation later based on that compromise.
OMB Recommendation: Alternative #2. Key members of the Senate Foreign Relations and House
Foreign Affairs Committees and the appropriation committees would have to be told that the
President personally wants the yen appropriation to fulfill this commitment and no more.
Issue Paper
Department of State
1976 Budget
Issue #4: Soviet Refugees to countries other than Israel
Statement of Issue
Should a $13 million appropriation be sought to aid in the resettlement of Soviet
refugees migrating to countries other than Israel, primarily the United States?
Background
In 1973 and 1974, Congress initiated $50 million and $36 million appropriations to aid
the resettlement of Soviet refugees in Israel and other countries. Most of these amounts
were granted to an American Jewish voluntary agency to transport refugees to Israel, con-
struct housing and aid in their resettlement in that country. In 1973 only 300 Soviet
refugees sought resettlement outside Israel, but in 1974 this increased to about 3,000, most
coming to the United States, and $3 million was granted to other Jewish agencies both to
maintain the refugees in Europe until a permanent home was found for them and to aid in their
resettlement here. The number of refugees going to countries other than Israel is expected
to increase to 12,000 in calendar years 1975 and 1976 now that an understanding on emigration
has been worked out with the U.S.S.R.
No request was made in the 1975 budget to cover any costs of Russion refugees on the
assumption that the Congress would initiate another appropriation. Congress has authorized
an appropriation of $40 million expected to be included in the foreign aid appropriation
act. However, the House Foreign Affairs Committee, at the behest of some Jewish leaders, has
instructed that the $40 million be used largely only for refugees going to Israel. In the
interim, $5 million of AID appropriations has been been transferred to State to meet the
urgent needs of the increased numbers of refugees not going to Israel.
TORU
The Department has made no budget request for the estimated 1976 requirement of $13
million. Department staff are now seeking the Secretary's approval to seek congressional
agreement that the expected $40 million appropriation be used to cover 1975 needs with the
understanding that an appropriation will be sought for 1976 needs.
Alternatives
#1. Seek nothing for 1976 and rely on Presidential transfers or anticipated appropria-
tion to be initiated by the Congress.
#2. Seek $13 million for 1976 in recognition of a firm requirement.
Analysis
1975
1976
Budget Authority/Outlays
BA
O
BA
O
($ Millions)
Alt. #1
5
5
-
I
Alt. #2 (OMB rec.)
5
5
13
11
Alternative #1 reflects past practice which is now opposed by some important American
Jewish leaders and Members of Congress who want all aid to go to Israel. Not requesting an
appropriation in 1976 may lead to congressional demands that AID transfers (limited to
$10 million) finance aid for refugees going elsewhere than Israel or result in a larger
appropriation initiated by Congress to cover the need.
Alternative #2 recognizes a requirement that has regularly been financed by the U.S.
Government. It also is consistent with the recent Administration understanding with the
Congress and the USSR which is expected to result in sharply increased flows of refugees to
the United States. Furthermore, it will free-up the limited $10 million transfer authority
SO that the President can utilize it for other, currently unforeseen refugee emergencies.
Agency Request: None at this time. Staff are recommending that the Secretary seek a 1976
appropriation.
OMB Recommendation: Alternative #2.
Export-Import Bank
THE WHITE HOUSE
WASHINGTON
CESALS FORD LIBELEL
MEMORANDUM FOR: THE PRESIDENT
FROM:
Roy L. Ash
SUBJECT:
1976 Budget decisions: Export-Import Bank
of the United States
The agency request and my recommendations with respect to
1976 budget amounts for the Export-Import Bank are presented
in the tabulation attached (Tab A). We have not yet had an
opportunity to discuss my recommendations with the Bank.
One key issue has been identified for your consideration
(detail at Tab B).
Program Level
The Export-Import Bank recommends a $17.3 billion pro-
gram level, an 84 percent increase over the estimated 1975
level, in order to meet all potential new business.
OMB recommends a $10.4 billion program level, a 10
percent increase over 1975, in order to encourage greater
selectivity in lending and to moderate the federal govern-
ment's demand on the domestic credit market.
Decision: Approve agency recommendation
Approve OMB recommendation
Attachments
TAB A
TAB A
EXPORT-IMPORT BANK OF THE UNITED STATES
1976 Budget
FORD & LIBRARY QS8870
Summary Data
(In millions)
Limitation on
Program
Employment,
end-of-period
Program
Activity
Full-time
Activity /
at 100%
Permanent
Total
1974 actual
5,265
8,991
399
405
1975 January budget
6,403
13,570
420
425
enacted
b/
supplemental recommended
0
0
0
0
OMB recommendation
6,403
13,570
420
425
1976 planning ceiling
XXX
XXX
XXX
XXX
agency request
9,457
17,275
500
521
OMB recommendation
5,698
10,400
420
425
Transition period
agency request
2,364
4,319
500
521
OMB recommendation
1,425
2,600
420
425
1977 OMB estimate
5,698
10,400
420
425
/ Eximbank's statutory limitation includes guarantees and insurance
counted at 25 percent of face value.
b/
Congressional action is uncompleted.
TAB B
TAB B
EXPORT-IMPORT BANK OF THE UNITED STATES
1976 Budget
GERATO FORD LIBRARY
Statement of Issue
What level of Eximbank lending should be permitted in 1976?
Eximbank Program Levels
($ billion)
1974
1975
1976
Alt. #1
Alt. #2
Budget
Est.
Req.
OMB Rec.
Direct Loans
3.9
3.6
3.5
6.1
3.9
Discount Loans
0.9
2.0
1.3
2.3
1.4
Guarantees and Insurance
4.2
8.0
4.6
8.9
5.1
Total Program
9.0
13.6
9.4
17.3
10.4
Outlays*
1.2
1.3
1.3
1.8
1.1
Background
The Eximbank provides direct credits to support U.S. exports,
and refinances (discounts) and insures export loans by U.S.
banks and exporters. Direct loans are currently charged a 7 or
8 percent interest rate. The Bank normally provides credits for
30 to 45 percent of the value of an export transaction, the
balance being covered by a cash downpayment and commercial
financing.
The Bank has grown rapidly over the past five years. This has
been the result of its aggressiveness in seeking new business
and of the fact that its interest rate remained low as
commercial export credit rates were rising. With generous pro-
gram limits, there was no incentive for the Bank to be selective
in its use of funds. As a result, Exim has tended to become
the lender of first resort at the expense of private credit.
In 1974, the Bank for the first time in several years found
itself constrained by its budget ceiling. Forced to begin
restraining demand for its financing, Exim raised its interest
rates (from 6 percent to 7 and 8 percent) and began supporting
a smaller portion of export transactions. Nevertheless, the
Eximbank has continued to seek increases in its ceilings to
*
Eximbank outlays are excluded by statute from the Budget
totals.
allow it to extend credits to all comers regardless of
demonstrable need for subsidized financing.
The Eximbank's 1976 budget request of $17.3 billion represents
an increase of 92 percent over the 1974 level, 27 percent
over the 1975 Budget, and 84 percent over the estimated 1975
level. This growth is considerably higher than that of
SEAL FORD LIBRARY
exports as a whole. The budget request follows a pattern
established over the past few years: sizable increases in
the proportion of exports financed by the government and budget
limits that exceed the business which can actually be done by
the Bank without significantly relaxing loan criteria.
Alternatives
#1. $17.3 billion. Provide authority sufficient to meet the
demand for loans under current Eximbank lending policies
(Agency req.).
#2. $10.4 billion. Limit program growth to established growth
in exports thereby keeping pressure on Exim to limit its
program to priority uses (OMB rec.).
Analysis
The Eximbank request would result in Exim financing 22 percent
of the value of all nonagricultural exports in 1976, compared
with 12 percent in 1970, 14 percent in 1974 and an estimated
13 percent in 1975. The Bank argues that it must continue to
meet demand, especially since "our nation is facing the specter
of large outflows of payments for energy and raw materials"
over the next few years.
The request must be considered in terms of both its domestic
impact and its impact on the international economic position of
the United States. Domestically, Exim's subsidy diverts credit
from other priority uses such as homebuilding, business invest-
ment, and State and local governments. Also, because the goods
are exported rather than consumed at home, Exim's subsidy has
a less favorable effect on inflation and business activity than
an equivalent subsidy applied to production for domestic use.
In terms of our international position, the United States must
export all it can, but artifically swelling the level of
exports through a subsidy does nothing to lower the real cost
to the economy of energy and raw materials imports. Further,
credit such as Exim provides does not get repaid for 8 to 15
years, causing a capital outflow until repayment occurs and a
weakening of the near-term balance of payments. Finally,
interest subsidies tend to give some foreign buyers an
advantage over their U.S. competitors. Pan Am and TWA have
recently complained of this in airline competition.
In our view, Exim is justified in providing below-market
interest rates only if necessary to meet foreign government
credit competition. Efforts are now underway to reduce this
competition among the U.S., Europe and Japan. In early
October, an agreement in principle was reached by these
countries not to provide official credits to support exports
to each other or to the oil-rich countries, although in practice
Exim disagreement with details of the agreement has made it
ineffective. Work on a more specific "gentlemen's agreement"
limiting official rates and maturities is now at an advanced
state. Continuing budgetary constraints would encourage Exim to
play a more positive role in these negotiations.
The OMB recommendation would provide such a constraint by
increasing Exim's program ceiling by the expected rate of growth
in U.S. exports. This will require added discipline on the
part of the Bank to restrain demand for its loans, perhaps by
increasing its interest rate or by developing a screening pro-
cedure to better identify transactions where commercial financ-
ing is unavailable.
Agency Request: Alternative #1, a $17.3 billion program.
OMB Recommendation: Alternative #2, a $10.4 billion program.
FOR
BRAR.
SELECTIVE SERVICE
SELECTIVE SERVICE SYSTEM
With the success of the All-Volunteer
Force it is appropriate to consider
placing the Selective Service System
in a deep standby posture. The
Selective Service System opposes any
GERALD FORD LIBRARY
reduction below their budget request
which maintains the system at current
full-scale levels.
($ in thousands)
Full-time
Budget
permanent
authority
Outlays
employment
1974 actual
54,251
59,505
2,333
1975 current estimate
45,003
47,000
2,176
1976 agency request*
44,151
46,661
2,176
1976 OMB recommendation*
29,000
29,000
200
Effect of OMB recommendation
on agency request
-15,151
-17,661
-1,976
Transition period
2,000
2,000
200
1977 estimate
8,000
8,000
200
*
Does not include up to about $6 million and 400 in
employment which will be provided in the President's
budget for support of the Reconciliation Service
Program.
SELECTIVE SERVICE SYSTEM
1976 BUDGET
Statement of Issue
What should be the posture of the standby draft maintained by the Selective
Service System?
Background
Based on a comprehensive interagency study, on March 16, 1973, President Nixon
directed the Selective Service System to move to a standby draft posture after 1974
that would eliminate local boards and state headquarters. In the 1975 budget, im-
plementation of this decision was deferred pending further demonstration of the
viability of the volunteer force and passage of legislation providing needed compen-
sation incentives. Both of these conditions have been met, and the remaining arguments
supporting an active standby draft posture focus on the time required to reconstitute
the full system and begin delivery of draftees in an emergency.
A standby draft system should be assessed on its cost and its ability to meet DOD
requirements for delivery of draftees in a full mobilization which are: (1) first in-
ductees delivered within 30 days of mobilization, and (2) 480 thousand inductees de-
livered within 180 days of mobilization. Under current processing procedures, only
the existing system meets these requirements. However, new procedures designed to
expedite the processing of non-resisting registrants, permit consideration of other
alternatives.
Alternatives
1. Maintain the current system intact. Eighteen year old males register within
30 days of their birthday and local boards classify about one-fourth of the
eligible pool. In addition to a national headquarters, 56 State headquarters
and 632 local board administrative sites are maintained (Agency req.)
GERALD
FORD
LIBRARY
2
2. Phase down local board operations through FY 1977. Develop and prove new
procedures for processing non-resisting draftees and standby reservists.
Implement and determine viability of annual registration. Defer standby
classification processing until induction authority is requested. Continue
to appoint local board members in order to minimize time required to recon-
stitute local board operations in a crisis. Successful implementation
of this alternative would deliver inductees in excess of minimum Defense
requirements (DOD recommendation).
3. Same as 2 but implement fully by end of FY 1976 on the assumption that annual
registration and the new procedures are viable.
4. Suspend State headquarters and local board operations, and defer all further
registration and classification activity. This alternative provides 411,000
of the DOD requirement for 480, by 180 days after mobilization. It would
meet the full requirement within another week. It assumes that full mobili-
zation is unlikely without some advance warning; given two months warning,
the alternative would meet the full DOD requirements. This alternative would
require amendments to the Selective Service Act and transfer of the Recon-
ciliation program to another agency, probably the Department of Labor.
CERALD
3
Analysis
Budget Authority/Outlays ($000) *
July 1-Sept 30
1974
1975
1976
1976
1977
1978
BA
0
BA
0
BA
0
BA
0
BA
0
BA
o
Alt. 1
54,251
59,505
45,003
47,000
44,151
46,661
11,100
11,100
44,000
44,000
44,000
44,000
Alt. 2
54,251
59,505
45,003
47,000
41,887
42,000
7,800
7,800
27,900
27,900
18,000
18,000
Alt. 3
54,251
59,505
45,003
47,000
38,854
39,000
4,500
4,500
18,000
18,000
18,000
18,000
Alt. 4
54,251
59,505
45,003
47,000
29,000
29,000
2,000
2,000
8,000
8,000
8,000
8,000
Total Employment - end of period
Alt. 1
2,469
2,319
2,319
2,319
2,319
2,319
Alt. 2
2,469
2,319
1,413
1,413
400
400
Alt. 3
2,469
2,319
400
400
400
400
Alt. 4
2,469
2,319
200
200
200
200
*
Not included above is up to about $6 million and 400 in employment which will be provided in
the President's budget for support of the Reconciliation Service Program under all alternatives.
Alternatives 2 and 3 fund a standby draft posture that ultimately costs $25 million less
to operate annually than does Alternative 1. Under the proposed processing procedure,
all three alternatives perform about equally well in terms of draftee and standby re-
servist inductions in a full mobilization crisis. Alternative 2 phasing reduces the
Alternative 3 performance risks associated with initial implementation of the annual
registration plus development of the recommended procedural changes.
FORD
LIBRARY
4
Relevant to this decision is the status of the Reconciliation Service Program. While
only some 300 people have been assigned to alternative service under the program thus
far, this number could increase by thousands in the two months remaining for enrollment.
An allowance of up to $6 million in the budget would provide for maximum enrollment with
the funds to be rescinded if enrollments continue at current levels.
The attached table shows phased manpower deliveries under each of the alternatives.
Agency Request
Alternative 1. The FY 1976 budget request submitted by Selective Service would con-
tinue to fund the existing posture as described in Alternative 1. In defense of their
position, they (a) cite Congressional reluctance to amend the Selective Service Act
action they feel is required under the alternative concepts of operations; (b) note
that Alternative 1 is the only posture that meets minimum DOD mobilization requirements
under existing processing procedures; (c) have serious doubts about the proposed pro-
cedural changes; (d) note that the alternatives fail to provide for the Reconciliation
program; (e) find Alternative 4 unacceptable because it would require major changes in
the law and would not meet minimum DOD requirements; (f) note that reducing the system
as proposed could lead to repeal of the act; and (g) feel the alternative staffing is
inadequate. The agency believes that over 2,500 manyears would be required under
Alternative 3, as compared to some 2,300 under the current system, in spite of the
reduced mission.
DOD Recommendation
Alternative 2 or 1. The Assistant Secretary of Defense (Manpower & Reserve Affairs)
has no objection to a plan which protects the Selective Service System capability to meet
DOD minimum manpower needs for draftees and standby reservists under an all-out mobiliza-
tion. The local board system should be maintained more or less in current form until any
new concepts or procedures have been tested and proven responsive. Recent studies of
manpower mobilization system requirements show that under modern conflict scenarios the
responsiveness of the manpower delivery system is particularly critical in the early
days and weeks of mobilization and deployment. A complete phaseout of local board
staffs should not be planned at this time in order to retain immediate local access
to the Selective Service System by trained personnel in the Standby Reserve.
5
OMB Recommendation
Alternative 4. Induction authority is assumed, in all the alternatives, to
coincide with mobilization date. If some advance warning is provided, as appears
likely, induction authority could be provided earlier and the full range of Defense
requirements would be met. This alternative reflects the President's decision of
March 16, 1973 to eliminate state headquarters and local boards.
GERALD
FORD
LIBRARY
ALTERNATIVE STANDBY DRAFT POSTURES
MANPOWER DELIVERY PERFORMANCE
First
Inductee
Total Manpower Deliveries By (000)
Alternative
Deliveries
M+30
M+60
M+90
M+180
1
M+25
691
691
766
767
2
M+25
655
655
735
756
3
M+25
655
655
735
756
4
M+62
- -0-
40*
97
411
DOD requirement
M+30
-
82
-
483
*
Constitutes draft induced volunteers. Comparable entries are included
in the deliveries under the other alternatives.
CRALUR.
FORD
LIBRARY
SELECTIVE SERVICE SYSTEM
With the success of the All-Volunteer
Force it is appropriate to consider
placing the Selective Service System
CORD LIBRATE
in a deep standby posture. The
Selective Service System opposes any
reduction below their budget request
which maintains the system at current
full-scale levels.
($ in thousands)
Full-time
Budget
permanent
authority
Outlays
employment
1974 actual
54,251
59,505
2,333
1975 current estimate
45,003
47,000
2,176
1976 agency request*
44,151
46,661
2,176
1976 OMB recommendation*
29,000
29,000
200
Effect of OMB recommendation
on agency request
-15,151
-17,661
-1,976
Transition period
2,000
2,000
200
1977 estimate
8,000
8,000
200
*
Does not include up to about $6 million and 400 in
employment which will be provided in the President's
budget for support of the Reconciliation Service
Program.
SELECTIVE SERVICE SYSTEM
1976 BUDGET
Statement of Issue
What should be the posture of the standby draft maintained by the Selective
Service System?
Background
Based on a comprehensive interagency study, on March 16, 1973, President Nixon
directed the Selective Service System to move to a standby draft posture after 1974
that would eliminate local boards and state headquarters. In the 1975 budget, im-
plementation of this decision was deferred pending further demonstration of the
viability of the volunteer force and passage of legislation providing needed compen-
sation incentives. Both of these conditions have been met, and the remaining arguments
supporting an active standby draft posture focus on the time required to reconstitute
the full system and begin delivery of draftees in an emergency.
A standby draft system should be assessed on its cost and its ability to meet DOD
requirements for delivery of draftees in a full mobilization which are: (1) first in-
ductees delivered within 30 days of mobilization, and (2) 480 thousand inductees de-
livered within 180 days of mobilization. Under current processing procedures, only
the existing system meets these requirements. However, new procedures designed to
expedite the processing of non-resisting registrants, permit consideration of other
alternatives.
Alternatives
1. Maintain the current system intact. Eighteen year old males register within
30 days of their birthday and local boards classify about one-fourth of the
eligible pool. In addition to a national headquarters, 56 State headquarters
and 632 local board administrative sites are maintained (Agency req.)
GERALD
FORD
2
2. Phase down local board operations through FY 1977. Develop and prove new
procedures for processing non-resisting draftees and standby reservists.
Implement and determine viability of annual registration. Defer standby
classification processing until induction authority is requested. Continue
to appoint local board members in order to minimize time required to recon-
stitute local board operations in a crisis. Successful implementation
of this alternative would deliver inductees in excess of minimum Defense
requirements (DOD recommendation).
3. Same as 2 but implement fully by end of FY 1976 on the assumption that annual
registration and the new procedures are viable.
4. Suspend State headquarters and local board operations, and defer all further
registration and classification activity. This alternative provides 411,000
of the DOD requirement for 480,000 by 180 days after mobilization. It would
meet the full requirement within another week. It assumes that full mobili-
zation is unlikely without some advance warning; given two months warning,
the alternative would meet the full DOD requirements. This alternative would
require amendments to the Selective Service Act and transfer of the Recon-
ciliation program to another agency, probably the Department of Labor.
BERALD
0863
3
Analysis
Budget Authority/Outlays ($000) *
July 1-Sept 30
1974
1975
1976
1976
1977
1978
BA
0
BA
0
BA
0
BA
0
BA
0
BA
o
Alt. 1
54,251
59,505
45,003
47,000
44,151
46,661
11,100
11,100
44,000
44,000
44,000
44,000
Alt. 2
54,251
59,505
45,003
47,000
41,887
42,000
7,800
7,800
27,900
27,900
18,000
18,000
Alt. 3
54,251
59,505
45,003
47,000
38,854
39,000
4,500
4,500
18,000
18,000
18,000
18,000
Alt. 4
54,251
59,505
45,003
47,000
29,000
29,000
2,000
2,000
8,000
8,000
8,000
8,000
Total Employment - end of period
Alt. 1
2,469
2,319
2,319
2,319
2,319
2,319
Alt. 2
2,469
2,319
1,413
1,413
400
400
Alt. 3
2,469
2,319
400
400
400
400
Alt. 4
2,469
2,319
200
200
200
200
*
Not included above is up to about $6 million and 400 in employment which will be provided in
the President's budget for support of the Reconciliation Service Program under all alternatives.
Alternatives 2 and 3 fund a standby draft posture that ultimately costs $25 million less
to operate annually than does Alternative 1. Under the proposed processing procedure,
all three alternatives perform about equally well in terms of draftee and standby re-
servist inductions in a full mobilization crisis. Alternative 2 phasing reduces the
Alternative 3 performance risks associated with initial implementation of the annual
registration plus development of the recommended procedural changes.
BERALD
FORD
LISSARY
4
Relevant to this decision is the status of the Reconciliation Service Program. While
only some 300 people have been assigned to alternative service under the program thus
far, this number could increase by thousands in the two months remaining for enrollment.
An allowance of up to $6 million in the budget would provide for maximum enrollment with
the funds to be rescinded if enrollments continue at current levels.
The attached table shows phased manpower deliveries under each of the alternatives.
Agency Request
Alternative 1. The FY 1976 budget request submitted by Selective Service would con-
tinue to fund the existing posture as described in Alternative 1. In defense of their
position, they (a) cite Congressional reluctance to amend the Selective Service Act
action they feel is required under the alternative concepts of operations; (b) note
that Alternative 1 is the only posture that meets minimum DOD mobilization requirements
under existing processing procedures; (c) have serious doubts about the proposed pro-
cedural changes; (d) note that the alternatives fail to provide for the Reconciliation
program; (e) find Alternative 4 unacceptable because it would require major changes in
the law and would not meet minimum DOD requirements; (f) note that reducing the system
as proposed could lead to repeal of the act; and (g) feel the alternative staffing is
inadequate. The agency believes that over 2,500 manyears would be required under
Alternative 3, as compared to some 2,300 under the current system, in spite of the
reduced mission.
DOD Recommendation
Alternative 2 or 1. The Assistant Secretary of Defense (Manpower & Reserve Affairs)
has no objection to a plan which protects the Selective Service System capability to meet
DOD minimum manpower needs for draftees and standby reservists under an all-out mobiliza-
tion. The local board system should be maintained more or less in current form until any
new concepts or procedures have been tested and proven responsive. Recent studies of
manpower mobilization system requirements show that under modern conflict scenarios the
responsiveness of the manpower delivery system is particularly critical in the early
GERALD
days and weeks of mobilization and deployment. A complete phaseout of local board
staffs should not be planned at this time in order to retain immediate local access
to the Selective Service System by trained personnel in the Standby Reserve.
LIBRARY
5
OMB Recommendation
Alternative 4. Induction authority is assumed, in all the alternatives, to
coincide with mobilization date. If some advance warning is provided, as appears
likely, induction authority could be provided earlier and the full range of Defense
requirements would be met. This alternative reflects the President's decision of
March 16, 1973 to eliminate state headquarters and local boards.
ALTERNATIVE STANDBY DRAFT POSTURES
MANPOWER DELIVERY PERFORMANCE
First
Inductee
Total Manpower Deliveries By
(000)
Alternative
Deliveries
M+30
M+60
M+90
M+ 180
1
M+25
691
691
766
767
2
M+25
655
655
735
756
3
M+25
655
655
735
756
4
M+62
-0-
40*
97
411
DOD requirement
M+30
-
82
-
483
*
Constitutes draft induced volunteers. Comparable entries are included
in the deliveries under the other alternatives.
Other
ARMS CONTROL AND DISARMAMENT AGENCY
Comments
FORD LIBRARY & VERALD
Accommodation to agency reaction.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
8,065
8,894
156
1975 current estimate
9,410
9,155
167
1976 agency request
10,940
10,535
170
1976 OMB recommendation
10,690
10,300
167
Effect of OMB recom-
mendation on agency
request
-250
-235
-3
Transition period
2,760
2,600
167
1977 estimate
11,000
11,100
167
BOARD FOR INTERNATIONAL BROADCASTING
Comments
Issue paper attached.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
49,625
50,674
6
1975 current estimate
49,800
49,800
7.
1976 agency request
69,488
69,488
7
1976 OMB recommendation
62,540
62,540
7
Effect on OMB recom-
mendation on agency
request
-6,948
-6,948
--
Transition period
18,200
18,200
7
1977 estimate
61,300
61,300
7
FORD
Board for International Broadcasting
(In millions of dollars)
1976
1974
1975
Agency
Recommended
Actual
Curr. est.
request
budget level
Budget authority
49.6
49.8
69.5
62.5
Outlays
50.7
49.8
69.5
62.5
The Board for International Broadcasting makes grants to Radio
Free Europe (RFE) and Radio Liberty (RL) to broadcast in twenty-
four languages to Eastern Europe and the Soviet Union. The
Board evaluates the radios' adherence to U.S. foreign policy,
professional broadcasting standards, and economical administra-
tion. The Board accepts $4 million of the recommended
reduction, but one issue remains.
Question
Should the budget include funds for six new transmitters in
Germany?
Discussion
Transmitter Construction - RFE and RL request $3 million to
replace several old transmitters in Germany with six high
powered ones to (a) broadcast with a stronger signal the Baltic
languages, which soon will be initiated, (b) remove electrical
interference caused by old transmitters about which the Germans
are complaining, and (c) serve as a hedge against the possibility
of losing transmitter facilities in Portugal.
OMB recommends no capital improvements until the Board completes
its planned overall evaluation of the need for new facilities.
In the interim, Baltic languages can be handled by reducing
broadcasting in other marginal Soviet languages.
Decision
Approve agency recommendation
Approve OMB recommendation
COUNCIL ON INTERNATIONAL ECONOMIC POLICY
Comments
GERATE FORD LIBRARY
No change from agency request.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
1,376
1,480
27
1975 current estimate
1,600
1,575
31
1976 agency request
1,710
1,675
32
1976 OMB recommendation
1,710
1,675
32
Effect of OMB recom-
mendation on agency
request
--
--
--
Transition period
425
550
32
1977 estimate
1,720
1,720
32
FOREIGN CLAIMS SETTLEMENT COMMISSION
Comments
LIBRAST GERALD ? FORD
No change from agency request.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
947
5,630
43
1975 current estimate
1,244
2,214
67
1976 agency request
1,441
5,252
68
1976 OMB recommendation
1,441
5,252
68
Effect of OMB recom-
mendation on agency
request
--
:
:
Transition period
388
1,135
68
1977 estimate
882
1,692
20
INTER-AMERICAN FOUNDATION
Comments
No change from agency request.
RALD LIBRARY CHALD R. FOOD
Full-time
Program
permanent
limitation
Outlays
employment
(in thousands of dollars)
1974 actual
10,000
6,282
62
1975 current estimate
10,000
9,033
74
1976 agency request
10,000
10,000
75
1976 OMB recommendation
10,000
10,000
74
Effect of OMB recom-
mendation on agency
request
--
--
-1
Transition period
2,500
2,500
74
1977 estimate
10,000
10,000
74
SPECIAL REPRESENTATIVE FOR TRADE NEGOTIATIONS
Comments
FORD
No change from agency request.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
1,519
1,360
39
1975 current estimate
1,850
1,830
45
1976 agency request
1,978
1,938
45
1976 OMB recommendation
1,978
1,938
45
Effect of OMB recom-
mendation on agency
request
--
--
--
Transition period
510
560
45
1977 estimate
2,000
2,000
45
TARIFF COMMISSION
FORD & LIBRARY
Comments
Agency agrees.
Full-time
Budget
permanent
authority
Outlays
employment
(in thousands of dollars)
1974 actual
7,400
7,079
347
1975 current estimate
8,900
8,873
400
1976 agency request
10,054
9,999
400
1976 OMB recommendation
9,700
9,630
400
Effect of OMB recom-
mendation on agency
request
-354
-369
--
Transition period
2,500
2,500
400
1977 estimate
10,000
10,000
400
UNITED STATES INFORMATION AGENCY
Comments
Agency has not yet been advised
of OMB recommendation.
GERALD FORD (IBRAF,
Full-time
Budget
permenant
authority
Outlays
employment
(in thousands of dollars)
1974 actual
221,400
214,400
8,884
1975 current estimate
241,400
239,600
9,030
1976 agency request
289,400
278,800
9,068
1976 OMB recommendation
282,200
269,800
9,030
Effect of OMB recom-
mendation on agency
request
-7,200
-9,000
-38
Transition period
73,000
75,200
9,030
1977 estimate
295,800
290,200
9,030
OVERSEAS PRIVATE INVESTMENT CORPORATION
Comments
Agency has not yet been advised of OMB
recommendation.
GEBALO, FORD LIBRARY
Budget
Full-time
authority
Outlays
permanent
(in thousands of dollars)
employment
1974 actual
25,000
-20,600
108
1975 current estimate
25,000
-11,489
130
1976 agency request
--
-5,494
152
1976 OMB recommendation
--
-10,744
130
Effect of OMB recommenda-
tion on agency request
--
-5,250
-22
Transition period
--
-2,686
130
1977 estimate
--
-10,744
130