Created: 1/1/1977

OCR scan of the original document, errors are possible

A Dollar Cost Comparison of Soviel and US Defense

ublkl,0onPrepared lor Ihrf US. Government oJllcwfa The format, coveiace and content! of ihe publico tiio are uViiimed to meet Ihc specific requlrementi of thoie visen US Government official! may obtainoplei of thii document directly or through Ji.iwn channel, from the Central Intelligent*

Non-US. Government men may obtain ibii alongnroiUi Cl, publ^ntWni onwbwription baiis byinquiriei to;

ciiting (DOCEX) Project Exchange and Gift) Diviiinn Library of Con are..

. Government men not iiMerected in th* roject *nbwnptiot> wrviw may pwchue ^production* ofon an individual basil

Fhotoduplicattoo Service library of


A Dollar Cost Comparison of Soviet and US Defense


t Presents estimates of the dollar costs ui defense activities and compares them with US defense outlays.

The military establishments of the Soviet Union and the US are difficult to compare because they differ considerably in missions, structure, and characteristics. The common denominator used here

X 3nf?;rC tht dS-fe"Se activities of the two countries is dollar cost. The approach is to estimate how much it would cost to produce and man in theilitary the same size and with the same inventory of

thC Soviots' and to operate that

do. These estimated dollar costs

are then compared year by year with US outlays

Such an approach caneneralof the overall magnitude of the defense activities in the two countries. Dollar cost data alsoeans for aggregating dissimilar elements of eachilitary programs into comparable categories and thus can show trends and relationships between the two defense establishments that are difficult toand measure in other ways.

Price Base. The data presented here are expressed in average calendar5 dollars. Constant dollar

e.USudtl>at trends in tnc cosC estimates rattJ- ,i anges in military forces and activities rather than the effects of inflation. The US data are for fiscal years, while the dollar costs of Soviet programs are for calendar years.

Comparisons. The definition of defense activities used in this comparison encompasses those activities

that in the US would be funded by the Department of Defense (less foreign militaryefense nuclear programs such as those funded in the US by the Energy Research and Development Agencynd the activities of the US Coast Guard and the Soviet militarized security forces (border guards and internal security troops). Excluded from this definition are space activities that in the US would be funded by NASA, civil defense except for the pay and allowances of uniformed personnel engaged in such programs, and veterans' programs.

US Data. US dollar cost data are in terms of outlays derived from the Total Obligational Authority (TOA) series in The Five-Year Defense Program issued by the Department of Defense inoast Guard and Selective Service outlays and ERDA outlays related to nuclear weapons and naval reactors are included. The US data have been converted to constant prices and have been adjusted to achieve accounting coverage comparable with tho dollar estimates made for the USSR. The US figures in this report, therefore, do not match actual budget authorizations or

Reliability. The estimates of the dollar costs of Soviet activities presented in this report should bo viewed asargin of error which could be substantial for some items. Our confidence is highest in the aggregate totals but is considerably less at the lower levels of aggregation. Moreover, the reliability of our dollar cost estimates varies from category to category, depending on the reliability of our estimates of the size and characteristics of Soviet military forces and on the accuracy of the cost factors applied to those estimates.

We place our greatest confidence in the investment category-procurement of weapons and equipment and construction ofmakes up ahout one-third of the total, estimated dollar costs of Soviet defense activities for tlie period.

Manpower costs, comprising about AO percent of the total estimated dollar costs of Soviet activities, are the largest and most reliable component in thecategory. For other operating costs, repre-


senting someercent of the total dollar cost of defense activities, both the quantity and quality of information arc less reliable.

The estimated dollar costs for Soviethould be regarded as significantly less reliable than those for either investment or operating.

On balance, we believe that the overall dollar cost estimate for Soviet defense activities is unlikely to be in error by more thanercent. This judgment, while informed, is nonetheless subjective and not the result of statistical measurement.

Limitations. Because of the problems of comparingparate activities, the uncertainties of the Soviet data, and the organization of the US data, the comparisons in this paper should not be considered precise measurements. Any common denominator used for comparative sizing is imperfect, and itsmust be understood in interpreting such Any conclusions drawn from this dollar cost analysis must be tempered by an appreciation of what it does not do:

It cannot be used alone to draw inferences about the relative military effectiveness or capabilities of US and Soviet forces. Other data, such as the size and technicalof the forces, the geographicalof the two countries, their allies' capabilities and requirements, strategic doctrine and tactical concepts, morale, command and control capabilities, and other information must also be considered for such judgments.

It docs not measure actual Soviet defense ^expenditures or their burden on the Soviet economy. These questions are addressed by different analytical techniques yielding estimates of the ruble costs of Sovietprograms.

.It does not reflect the Soviet view of the distribution of the USSR's defense effort. The price structures in tho two countries are


substantially different. Additionally, neither the system of accounts nor the structuring of expenditures by military mission is the same for the Soviet Ministry of Defense and the US Department of Defense.

Index Number Problem. Finally, dollar cost cal-culations tend to overstate Soviet military activities relative to the US becauseasic measurement problem common to all international economicand known to economists as the index number problem. If Soviet decisionmakers were confronted with the US dollar price structure that is used for our dollar cost analysis, rather than the ruble prices they in fact have to pay, they undoubtedly wouldifferent and cheaper (in dollar terms) mix ofand equipment. While we cannot measure the degree of overstatement that this considerationit clearly is not large enough to alter the basic conclusion that Soviet military activitiesare growing and currently are significantly larger than those of the US.

Dollar Cost Comparisons

Total Defense Costs

Foreriodhole, theestimated dollar costs of Soviet defenseand US defense outlays are about the sane. As shown in Figureowever, the trends of the defenseof the two countries are quite dissimilar. When expressed in constant US prices, which measure growth in real terms, the trend of tho dollar costs of Soviet defense activities is one of continuous growththe period, averagingear. Growth is evident in nearly all the major elements of the Soviet defense establishment.

The trend of US defense outlays is in sharp Despite increases in current dollar terms, US outlays in constant dollarsontinuous declinend2 they have been below6 level. This decline reflectsin nearly every major component since thebuildup of the late sixties.

esult of these diverging trends, thedollar costs of Soviet defense activitiesUS defense outlaysidening margin in every year Atillionrices) the estimated costs of Soviet6 are about one-third higher than total US defense outlays. If pensions are excluded from both

eurrent defenseestimated dollar costs of Soviet activities6 exceed those of the US by aboutercent.

If all personnel costs are removed from both sides, US defense outlays exceed tho estimated dollar costs of Soviel defense activities by aboutercent overuriodhole, although6 the Soviet level is aboutercent greater than the US. Alternatively, iffor which estimates areless reliable than those for other activities) and pensions are subtracted fron each sido, theSoviet figure6 is aboutercent higher than that of tho US, and the cumulative totals are about lhe same.

Figure 1

Total US and Soviet Defense

A Comparison of US Outlays and Estimated Dollar COS'S ol the Soviet Activities il Duplicated in the US



In*CKIIM*rap Olol

lira >ie"muni imi io,.nii'j bin

me mxl'Mim Mm.r. iht ixiw.

* ItwnalhfelMOJi.fln.td rti It*

mullnmiic->'rttioiiii mm

lrt US lIcIi laYI BttRl IVI'tvrJts on Crtwl*ttfl

- "rO'.il Awi.li-i.

in <u< i

Military investment

The trends in the cost of military investment--the procurement of weapons and equipment (exclusive ofosts) and the construction offollow closely those for total defense costs in both countries. The dollar costs of Soviet investmentcontinuously over the period, driven primarily by advanced weapons programs, particularly newand succeeding generations of missile programs. US military investment grew rapidly during the Vietnam buildup and has declined steadily Thus the dollar costs of Soviet investment exceed USby increasing proportionsnd6 are about twice the US level. Foreriod, the Soviet total is aboutercent greater than that for the US.

Operating Costs

Operating costs make up the largest share of the total defense figure for both countries. US outlays for operating military forces exceed the dollar cost of Soviet operating activities Since then the Soviet activity level has been higher in dollar cost terms. he estimated dollar cost of Soviet operating activities, exclusive of pensions, is aboutercent above US outlays.

Military Manpower

Military manpower trends parallel those for total costs in the two defense establishments. Estimated Soviet military manpower grows throughout the period, increasing by moreen6 Most of this is in the ground forces, although there are important increases in strategic forces es well. The level of US military manpower has fallen steadily since the peak of the Vietnam buildupnd6 is less than

The Soviets have historicallyarge military force whichroader range of responsi-bililio:; than the US military does. In Figure 3, the "USSR Total" line included border guards, internal

Figure 3

US and Estimated Soviet Active Military

an Ir-kJ


USSR Total"


tih ia'V! ipui indwaatst.*tr wHlcn iht m

4 i tt*t. *vn

mm i

security troops, and constructionfor which the US has no counterparts. These forces are excluded from the lower Soviet line, but oven so, Soviet, military manpower6 is about twice the US total for that year.

Military Mission Comparison

Another way to compare costs of militaryis by the mission they are designed to support. The mission definitions in this report accord with the guidelines outlined in the Department of Defense's Defense Planning and Programming Categories (DPPC).

Strategic Forces. Strategic forces include all those forces assigned to intercontinental and attack, strategic defense, and strategiccontrol, and warning, overeriod,

US and Soviel Forces for Strategic

A Comparison of US Outlays and Estimated Dollar Costs ol the Soviel Activities il Duplicated in the US.


Somber ' ICOM

VlU* I'l

the level of Soviet activity for strategic forces measured in dollars has been two and one-half times greater than that of the US. Estimated dollar costs for Soviet strategic forces have greatly exceeded US outlays throughout the period, with the difference growing he Soviet level is over three and one-half times that of the US.

Within the strategic force mission, Soviet forces for intercontinental attack account for aboutercent of the total foreriod. US outlays for intercontinental attack forces, while only half of the estimated dollar cost of the Soviet forces, account for aboutercent of USoutlays for the period. Soviet peripheral forces, for which the US has no comparable force, account for aboutercent of the total Soviet strategic mission.

Within the respective intercontinental atlack forces, the differing emphasis on weapons isin the costs. Overercent of thedollar costs of Soviet activities are for the ICBM force, compared to only about ercent for

the US. On the other hand, outlays for the US bomber force comprise aboutercent, comparedoviet shareercent.* While the Soviets exceed the US level of activities for ICBMs and submarines in every year of the period, the US outlay for bombers is higher every year.

General Purpose Forces. General purpose forces include all ground, tactical air, naval, and mobility (airlift and sealift) forces. Overeriod, US outlays for general purpose forces exceed estimated dollar costs of Soviet activities by aboutercent. owever, the Soviet level is larger than that of thegreater

Within both the US and Soviet general purpose forces, land forces take the largest share of the cost. Outlays for US land forces decreaseowever, while the estimated dollar costs of Soviet activity increase steadily. he Soviet level of activity for these forces, measured in dollar terms, is about ercent greater than that of the US.

The second largest share for both countries, in terms of dollar costs, is for the naval forces. The costs of these forces remain relatively constant for both countries over the period. 6 estimated dollar costs of Soviet activities are aboutercent higher thon US outlays.

The US outlays for tactical air forcos (including naval attack carriers) are greater than the estimated dollar costs of comparable Soviet forces. Soviet activities are increasing, however, while US outlays have been decreasing US outlays6 are aboutercent greater than dollar costs of the Soviet force.

Support Porces. The support forces include those falling within the categories outlined in the DPPC as auxiliary forces, mission support forces, and central

Backfire aircraft assigned to Long Ranqe Aviation are included jd peripheral attack forces and those assigned to the Mavyeneral jiurpoat* forces.


support forces. Included are military space programs, the US Coast Guard, Soviet border guards, civilmajor headquarters, and all logistic support activity, overeriod, the US level of support activities exceeds that of the Soviets by aboutercent when measured in dollar terms.

For the US, support activities account for almostercent of total defense outlays during the period, while for the Soviets the share is aboutercent.

In absolute terms, the US level of activity for support has been declininghile the Soviet level has been rising throughouteriod. The Soviet level surpasses that of the US for the first time6 it is aboutercent greater.

Comparison With Previous Estimate

Estimates of the dollar costs of Soviet defense activities are revised each year to take into account


US Total Obligational Authority and Outlays for Investment





new information and new assessments of the size, composition, andcharacteristics of the Soviet forces as well as improvements inmethodologies. The US data used forpurposes is revised each year to Lake into account changes in The Five Year Defense Program. Both the Soviet and US data are updated annually to reflect the most recent price base possible. In addition to these usual changes, this year'scontains aofhange in

the basis of the US data from total obligational authority (TOA) to outlay terms.

Principal Changes

A number of important changes have been made in this year's comparisons on both the Soviet and US sides.

On the Soviet side:

The estimates of Soviet defense manpower were completely reexamined during the past year, resulting in an overall downward revision ofercent in the total manpower of the Soviet defense establishment, including civilians working for the Ministry of Defense. This resultededuction in estimated costs of about S3 billion per year.

To remove an element of double counting in previous estimates, costs for Soviettroops have been excluded frompersonnel costs. These costs are more properly captured in construction costs, which are estimated directly and carried under invest ment costs. This resulted in an estimated reduction of about S4 billion per year.

New intelligence information and improved costing methodologies have caused numerous changes in estimates of production and costs of Soviet military equipment. On balance, however, these changes had little effect on the total dollar cost estimates.

On the US side:

-- The price deflators used to convert US data from current to constant dollars have been refined. The use of new deflators has, on balance, raised the constant, price costs, with the largest effect in earlier years and almost no effect in recent years.

Coast Guard and Selective Service outlays have been included, adding about SI billion per year to achieve better comparability.


change from TOA to outlays makes the US data more compatible with the data used for estimating the dollar costs of Soviet Por the period of this report, outlays have averagedercent lower than TOA. The difference, however, fluctuates in any given year. Most of the difference is in the investment category because money authorized for investment in one year is generally spent over several years. Investment TOAor example, is S3 billion higher thanut investment outlays decline almost SI billion because some of the authorized amount will be spent7 and later. (See

Changes affecting both sides:

yoar the mission categories follow the definitions outlined in the DPPC. This revision provides mission categories that are more familiar to US planners then those used last year.

This year's comparison is in5 dollar prices instead4 prices. The change in base year results in an apparent, not real, overall increase in dollar costs for both sides throughout the period.

Effect of Changes on Comparisons

This years's comparisonomewhat smaller difference in recent years between the dollar costs of Soviet activities and those of the US. Last year we estimated dollar costs of Soviet defenseless militarybeercent greater than those of the USS. in this year'sthe difference is closer toercent., for the reasons noted above. Our general assessment remains tho same in its essential aspects,costs for the two countries for the period from the mid-sixties to the mid-seventies are essentially equal; tne Soviet level began to exceed that of the US in the early seventies; and the margin has increasedee.


Original document.

Comment about this article, ask questions, or add new information about this topic: