A DOLLAR COST COMPARISON OF SOVIET AND US DEFENSE ACTIVITIES, 1968-78 (SR 79-10

Created: 1/1/1979

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A Dollar Cost Comparison of Soviet and US Defense

A Research Paper

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A Dollar Cost Comparison of Soviet and US Defense

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A Dollar Cost Comparison of Soviet and US Defense

The mililary establishments of the USSR and the United States are difficult to compare because they differ so much in missions, structure, andAny common denominator used for comparative sizing is imperfect, and ils limitations must bein interpreting such comparisons. The approach taken here is to compare the defense activities of the two countries in resource terms. The commonis dollar cost.

This paper presents estimates of what it would coil to produce and man in the Unitedilitary force of ihe same size and with the same weapons inventory as that of the USSR and to operate that force as the Soviets do. It then compares these estimates with US defense outlays. This approacheneral appreciation of the relative magnitudes of the defense activities of the two countries. Dollar cost data alsoeans of aggregating dements of each country's military program into comparable categories and thus can show trends and relationships between the two defense establishments that arc difficult to discern and measure in other ways.

Definitions

The defense activities used in this comparisonthe following:

National security programs that in the United States would be funded by the Department of Defense.

Defense-related nuclear programs such as those funded in the Uniied Slates by tbe Department of Energy.

Selective Service activities.

The defense-related activities of the US Coast Guard and Soviet Border Guards.

The following activities are not included in ihis comparison:

Mililary retirement pay, which reflects the cost of past rather than current military activities.

Space activities that in the United States would be funded by NASA.

Civil defense and mililary assistance programs, except for the pay and allowances of uniformed personnel engaged in such programs.

Veterans" programs.

Soviet Internal Security Troops (who essentially perform internal police functions).

US Data

US dollar cost data are in terms of outlays derived from Ihe US budget and The Five-Year Defense Program issued by the Department of Defense inhe US data have been converted to calendar year terms, and defense-related activities of the Department of Energy and the Coast Guard have been added. The US figures in this report, therefore, do not match actual budget authorizations or appropriations.

Estimates of Soviet Defease AaMties The dollar costs of Soviet defense activities are developed for the most part on the basisetailed identification and listing of Soviet forces and their support. The components that make up these forces and their support are multiplied by estimates of what ihey would cost in the Uniied States in dollars. The results are then aggregated by military mission and by resource category.

The reliability of the estimates depends on the

and accuracy of our estimates of the Soviet activities lad the cost factors applied to that data base We believe (hat the dollar cost estimate for total defense activities is unlikely to be in error by more thanercent in the current period or by more thanercent in the. This judgment, while aided by the use of statistical techniques, nonethelessa large subjective element. Moreover, the margin or error can be much wider for some of the individual items and categories. We arc more confident in the higher levels of aggregation than in the lower ones Within the lower levels, our confidence varies from category to category.

We place our highesthe estimate of personnel costs, which comprises aboutercent of the total estimated dollar cost of Soviet defense activities foreriod These manpower costs arc obtained by applying US factors for pay and allowances to estimates of Soviet mililary manpower

Wc also have substantial confidence in our estimate of total military investment, which represents aboutercent of the estimated total dollar cost. Thecategory includes procurement of weapons and equipment and construction of facilities. These dollur costs are based for the most part on detailed estimates of Soviet weapons production and characteristics that can be ascertained with reasonable confidence through intelligence methods.

W hile we are somewhat less confident in oar estimates of operations and maintenance costs, which are aboutercent of theollar estimate, wc nonetheless regard these estimates as substantially improved over previous years.

The estimated dollar costs for Soviet research,testing, and evaluationhich arc derived in ihc aggregateess certainshould be regarded as significantly less reliable than those for either investment or operating The level and trend of these estimates, however, arc consistent with the judgment, made with high confidence, that the Soviet military RDT AErge and growing

Dmilar Casts ami Military CataMilift US defense expenditures and our estimates of the dollar costs of Soviet defense activities are measures of ihc annual flows of resources devoted lo defense. Such measures can be used lo compare the overalland trends of the defense activities of the two countries in terms of resource inputs. They have an important advantage over many of the other inputas the numbers and type* ofthat theyommon denominator which permits us to make aggregativeollar cost valuations can take into account differences in the technical characteristics of military hardware, the number and mix of weapons procured, manpower strengths, and the operating and training levels of (be forces.

But dollar valuations are still input rather than output measuresobviously related lo capabilityshould not rx used aloneefinitive measure of the relative effectiveness of US and Soviet forces. Assess-menis of capability must also take into account strategic doctrine and battle scenarios; the tactical proficiency, readiness, and morale of the forces; the numbers and effectiveness of their weapons: logistic factors;ost of other consideration*

Like the other input measures, dollar valuations are probably more instructive as general indicators of changes in the military capabilities of the forces over lime than as indicators of the comparative capabilities of the forces. That is. trends in resource inputs (for example, costs of manpower, values of weaponsand costs of operations and maintenance) generally suggest changes in the capabilities of the forces: growth in military inputs should result in growth in capability,ecline id inputs usually results in stable or declining capabilities.

Dollar Cats and Soviet Perceptions Estimated dollar costs do not measure actual Soviet defense expenditures Or their burden on the Soviet economy These questions are addressed by different analytical techniques that yield estimates of the ruble costs of Soviet military programs.

Similarly, dollar cost analysis docs not reflect the Soviet view of the distribution of the USSR's defense effort. Neither the system of accounts nor theof expenditures by military mission is the same for the Soviet Ministry of Defense and the USof Defense. In addition, the sharp differences between the relative prices of various defense activities in the United States and the USSR affect the distribution of defense expenditures significantly. How the Soviets view their own defense effort is best inferred from ruble, not dollar, estimates.'

Price Base

The data presented here are expressed in constant dollars so that trends in cost estimates will reflect real changes in military forces and activities raiher than the effects of inflation. This paper uses prices which represent the purchasing power of the dollar for defense goods and services at

Dollar Cost Comparisons Aggregate Defense Cms

Foreriod, the cumulative estimated dollar costs of Soviet defense activities exceeded US outlays by more thanercent. The trends of the defense activities of the two countries differed more markedly. Estimated in constant dollars, Sovietactivities increased at an average annual rateercent. While growth rates fluctuated somewhat from year toprimarily the phasing of major procurement programs for missiles, aircraft, andpattern was one of continuous growth throughout the period. Evidence on weapon systems currently in production and development, continuing capital construction at major defense industries plants, and the increasing costs of modern weapons indicates that the long-term growth trend in Soviet defense activities will probably continue into.

In contrast, the irend in US defense outlays in constant dollars has been downward for most of the period. US

1 For onr Utctt estimate in mbtetiimatttl .Soviet Drfenit'ttds and Pratgecil.

outlays declined continuously from ihe Vietnam peakhey increased slightly7 and grewcrceni8 as increases in procurement andffset ihe continuingin personnel costs.

esult of these diverging trends, ihe estimated dollar cost of Soviet defense activities caught up with US defense outlays1 and exceeded ihem bya widening margin8 the Soviet total was6 billion, nearlyercent higher than the US outlay of SIillion.

If uniformed personnel costs arc excluded from both Sides, the estimated dollar costs of Soviet defense activities exceed US outlays8 by aboutercent bui are approximately the same as US outlays foreriod. Ifosts (for which estimates are considerably less reliable than those for Olher activities) are subtracted from each side, the estimated Soviet dollar cost total is aboutercent higher than the US total8 andercent higher for the period.

The Index Number Problem

Evaluating the defense activities of both countries in dollar termsasic measurement problem common to all international economic comparisons and known to economists as the index number problem. Because of thisomparison will yield different results depending on which country's prices arc used. Given different resource endowments and technologies, countries tend to use more of the resources that are relativelyless of those that are relativelya givenomparison drawn in terms of the prices of one country thus tends to overstate the relative value of the activities of the other. This tendency is morethe greater the disparity between the economies

The degree of overstatement of Soviet defenserelative to those of the United States inherent in the dollar cost comparison cannot be measuredAn appreciation of the magnitude of the index number problem can be obtained, however, bythe otheris. by computing ihe ralio of Soviet to US defense activities measured in

total us and soviet defense activities

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ruble cost terms, which overstates US activities relative touble cost comparison shows Soviet defense aclivites8 to be aboutercent larger than comparable US activities,ollar cost comparison shows them to be aboutercent larger.

Economic Impact of Defense Activities Although no Single measure accurately describes the economic impact or burden of defense activities, defense spendinghare of GNP is often used for this purpose. This analysis uses each country's own prices to reflect relative scarcities and efficiencies in production. Measured0 rubles and calculated at factor cost, the Soviet defense activities defined in our dollar cost estimates accounted for someoercent of Soviet GNP overeriod. Defense activities in the Uoited Slates8 accounted forercent of total GNP.

Forces Opposite China

Both countries structure their forces not onlyajor East-West war but also for olher possible conflicts. For example.aboutercentof the estimated dollar cost of Soviet defense activities is for forces that we believerimary mission against China. (Some of these forces probably could be used to meet other contingencies,imilar analyses could be made of US outlays.

Mililary Mission Comparisons US accounts array defense authorizations by Ihe missions they are designed lo support. The mission definitions in this paper follow the guidelines in the Defense Planning and Programming Categories (DPPC) issued by the Department of Defense In

Strategic Forces, This mission includes all forces assigned to intercontinental and peripheral attack, strategic defense, and strategic command, control, and warning. Overeriod, the level of Soviet activity for strategic forces (exclusive of RDT&E) measured in dollars was twoalf times that of the United States. Soviet activitieslight dip in theith the completion of third-generation ICBM deployment programs, but rose sharply in theith the deploymem of fourth-generation systems. US activities declined

Steadilyhen they began growinglow rate.esult,8 ihe Soviet level was about three times that of Ihe United Stales.

Within the strategic forces mission, Soviet forces for intercontinental attack accounted Tor abouterceni of the total dollar cost estimate for theS outlays for intercontinental attack forces, while only iwo-thirds of the estimated dollar cost of the Soviet forces, accounted for slightly more thanercent of US strategic force outlays for ihe period.

Peripheral attack forces, for which the United States has no counterpart, accounted for abouterceni of the total dollar cost of the Soviet strategic mission. (Peripheral attack forces include medium- andballistic missiles, medium bombers, and some older ballistic missile submarines. These forces arc assigned strategic targets on the periphery of the' Soviet Union.)

The cost estimates for intercontinental attack forcesubstantial difference in the mix of weapons in the Soviet and US forces. During the period, ICBM forces accounted forercent of the estimated dollar cost of Soviet intercontinental attack forces, compared with only aboutercent of US outlays for this category. On ihe other hand, bomber forcesaboutercent of the US total for the category but accounted for lessercent of the Soviethile the Soviets exceeded the US level of activities for ICBMs in every year of the period and that for ballistic missile submarines in all but one, US outlays for bombers were higher in every year.

' Because ol difference* in the US and Soviet pricehe dollar con (hares presented acre and beio- are aot Dccettarily the same as those that -ouW remitaWe valuation or* Soviet defcrw activities.

' Baddire aircraft assigned to Long Raw Aviation are included in pen poem] mack forces, and those assigned to (he Navy arc included in general purpose forces.

US and Soviet Forces for Strategic Offense

3

Companion ot US Outlari With tjtlmateO

Oollai Coal* ot Soralhe US

Purpose Forces. This mission includes all land, lactical air. navy, and mobility (airlift and sealift) forces.dollar costs of Soviet activities for general purpose forces (exclusive of RDT&E) have exceeded comparable US outlaysnd the gap widened every yearoreriod, the Soviet total for this mission was aboutercent higher than the US total.

Within both the Soviet and the US general purpose forces, land forces accounted for the largest share of the dollar cost. The estimated dollar cost of Soviet land forces increased steadily throughout the period. Outlays for US land forces fell sharply from the Vietnam peak8 but have grown8 the Soviet level of activity for theseeasured in dollar terms, was over twoalf times that of the United States.

The dollar costs of general purpose naval forces (excluding attack carriers and their associatedwhich by DoD definition are included in tactical air forces) were relatively constant for both countries over the period.stimated dollar costs of the Soviet activities were aboutercent higher than US outlays, and overeriod they exceeded US outlays for these forces by more thanercent. (If the costs of attack carriers and land- and sea-based Navy and Marine aircraft were included, US outlays would be aboutercent higher than Soviet dollar costs8 andercent higher than the Soviet total for the entire period).

The US outlays for tactical air forces (including attack carriers and their associated aircraft) were twice the estimated dollar costs of comparable Soviet forces foreriod. The trends for the two countries, however, were quite different. The US outlays fell steadily4 but have grown moderately since then. Estimated Soviet activities grewery rapid rate (aboutercent perthan any other mission)onsiderable effort by the USSR to expand its tactical air force.2

US and Soviet General Purpose Forces

in

estimated dollar cost of Soviet tactical air forces stabilized at the new higher level until the last year of theip8 reflected the completion of some major aircraft procurement programs, It does not appear to represent the startownward trend; we expect the introduction of new aircraft to raise procurement costs9If land- and sea-based Navy and Marine aircraft and attack carriers were excluded, US outlays would be only slightly higher than estimated Soviet dollar costs8 and for the periodhole.)

Support Forces. The support mission includesspace programs, the US Coast Guard. Soviet Border Guards, major headquarters, all logisticactivity, military personnel assigned to civil defense and military assistance programs, as well as all other activities normally considered support. Overeriod the US level of support activities

exceeded that of the Soviet Union by approximatelyercent when measured in dollar terms, but whereas the US level was more than twice the estimated Soviet level at the beginning of the period, it was only slightly greater at the end. Support activities comprisedercent of total US defense outlays and someercent of the total estimated dollar cost of the USSR's defense activities for the entire period.

Resource Comparisons

Soviet and US defense activities can also be compared in terms of major resource categories: militaryoperating costs, andosts,

* The investment category covers the dollar cost of activities to modernize or expand forces through the procurement of equipment, including major spare parts, and the construct ion of facilities. Investment costs represent (he How of equipment and facilities into the defense establishment. They are not an indication of the size of the force in any given year.

ating costs are those associated withcurrent forces, including personnel costs. They are directly related to the size of the forces and to their level of activity.

- Dollar costs fof RDTAE arc those foe activity devoted to exploring new technologies, developing advanced weapon systems, and improving existing systems.

Military Invcstsnent. Tbe trends in military investment followed closely those for total defense costs in both countries overeriod. The US investment figure fell continuously85 and then increasedlow rate before lumping substantiallyhe Soviet investment estimate showed an upward trend but displayed cycles in annual growth rates that were related to the phasing of major procurementthose for missiles and aircraft. The estimated dollar cost of Soviet investment programs was fairly constant during the. rose in the, and declined slightlyhis dip occurred because several major procurement programs have ended or art nearing completion New systems are expected to enter production in tbe next year or so. however, resulting in another cyclical iocrease.

The result of these trends is that tbe estimated dollar cost of Soviet military investment exceededUS spending by aboutercentnd by aboutercentor the entire period it wasercent higher.

Operating Costs. Measured in dollar terms, operating costs made up the largest share of the total defense costs for bothS outlays declined rapidly8 until Ihe, reflecting the scaling

na partly became relatively high US pay rain arc viae in rauautiot ixUr opeonnt emu lor ihe USSR it tablet irt wad loauad of oul Ian. umauncaL not opniiim cuau, conttitnui ihe lantcst ihire.

down and eventual termination of the VietnamSince that time, the increase in operationi and maintenance costs have offset the continued decline of personnel costs so that operating costshole have remained relatively constant. Estimated Soviet dollar costs in this category grew continuously during the period, reflecting growing force revels, and exceeded those of the Uniied Statesidening margin8 they wereercent above comparable US outlays.

. Estimates of the dollar cost of reproducing Sovietctivities are derived in the aggregateess certain methodology and are less reliable than the other estimates in this paper Nonetheless, it is clear from the number and increasing complexity of the weapon systems that the Soviet activities were both large and growing during the period under review. US outlays for RDT&E. on the other hand, declined steadily over the period before turning upesult, Sovietctivities8 werelarger than those of the United States

Military Minpo-cr

Tbe Soviets historically havearge standing force thatroader range ofthan does the US military. The uniformed personnel strength of Soviet forces8 was estimated totwice the US level. The Soviet figure includes the five armed service* of the Ministry of Defense and the Soviet Border Guards, which is subordinate to the Committee for State Security but has some military responsibility. The half million men in the internal security forces of the Ministry of Internal Affairs and in railroad and construction troop units are not included in Ihe comparison, because they do not fill what in the United States would be considered national security roles

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Military manpower itcnds paralleled ihosc for total costs in the two defense establishments. Estimated Soviet military manpower grew by moreen8he largestin the ground forces. The air force* experienced tbe greatest percentage growth, however, averaging nearly two and one-half percent per year overeriod. These two services accounted for nearlyercent of the manpower increase. By contrast, the level of US military manpower has fallen steadily since the peak of the Vietnam buildupillion menillion.

Comparison with Pretious Estimates

Estimates or the dollar costs of Soviet defense activities are revised each year to take into account new information and new assessments of ihe size, composi-lion, and technical characteristics of the Soviet forces and activities as well as improvements in costing methodologies. The US data used for comparative purposes are similarly revised each year to take into account changes in The Five-Year Defense Program and the Defense Planning and ProgrammingBoth the Soviet and US data are updated annuallyeflect the mosi recent price base.

The net effect of this year's revisions is that in real terms the estimates for the period are slightly higher than those published last year. For example, ihe new estimate7 iserceni higher. The major changes coniributmg to this increase were improved estimates of aircraft maintenance costs, an upward revision in our estimate of Soviet manpower, and an improved methodology for applying US pay rates lo ihe Soviet force structure. This year's eslimate7 isabouterceni higher than lasi year's estimate, reflecting, in addition to ihe real changes mentioned above, the effects of US price inflation.

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