Defense budget contains $53 billion for new arms

Analysts divided over impact on industry's bottom line

February 02, 1999|By Greg Schneider | Greg Schneider,SUN STAFF

WASHINGTON -- Military contractors got a second straight year of good news from the Clinton administration yesterday, in the form of a $267 billion defense budget that includes extra money for buying new weapons.

But the plan's optimistic tone leaves some touchy questions unanswered.

For fiscal 2000, which begins in October, the Pentagon is asking Congress to authorize $53 billion for new weapons. That's up from the $49 billion being spent this year and marks the second straight increase after nearly a decade of decline in military purchasing.

However, the amount is $1 billion less than what the Clinton administration had hoped to request this year. Defense Secretary William S. Cohen said the difference is due to extra money being needed for military pay and other issues that keep troops ready to fight.

For 2001, he pointed out, the administration plans to leap to $61.8 billion in new purchasing and to keep climbing at higher-than-expected rates to levels unseen since the peaks of the Cold War.

For those levels to be sustained, however, Congress will have to enact two rounds of politically unpleasant military base closures, Cohen said.

While that may seem a remote possibility, some defense industry experts were pleased by the near-term prospect of having more money for weapons.

"The business base hasn't really looked this good since the mid-1980s," said Brett Lambert of the Washington defense consulting firm DFI International.

Others were decidedly more skeptical.

"I don't think there are many winners here," said Paul Nisbet, defense analyst with JSA Research.

Because much of the new money the Clinton administration is proposing to spend over the next five years hinges on such uncertain factors as inflation rates, fuel costs and unspecified program cuts, Nisbet said he has little faith that it will materialize as promised.

Here's how several selected programs fare in next year's proposed budget:

The F-16 fighter jet, built by Bethesda-based Lockheed Martin Corp. at its factory in Fort Worth, Texas, gets a boost with almost $441 million set aside for buying 10 new planes. At least another 20 are on the menu for coming years, as the Air Force seeks new models with advanced electronics.

The F-22 fighter jet, another Lockheed Martin product, gets full funding of $1.8 billion for six new planes and $1.2 billion for research and development.

The Pentagon failed to request any of Lockheed Martin's C-130J transport plane, but Nisbet pointed out that Congress is almost certain to add money to the politically powerful program regardless of what the military requests.

Boeing Co.'s C-17 airlifter gets more than $3.5 billion for 15 new aircraft.

Boeing also benefits from one of the most touted increases in the Pentagon's plan: an extra $6.6 billion for the National Missile Defense program, for which the Seattle company is prime contractor.

The Pentagon wants to spend $483 million on research and to buy one E-8C Joint STARS surveillance plane. Northrop Grumman Corp.'s sector in Linthicum builds the aircraft's radar system.

With full funding for three new Aegis-system destroyers and for continued development of a new class of submarines, "the Navy did very well under this budget," Lambert said.

Lockheed Martin is the prime contractor on the Aegis electronics system.

Pub Date: 2/02/99

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