September 12, 1981

After extensive discussions, President Reagan this afternoon sent a directive to the Secretary of Defense and the Director of the Office of Management and Budget regarding future defense outlays. The President's decision calls for a reduction in defense outlays of $13 billion over fiscal years 1982 through 1984. Based upon initial analyses, Secretary of Defense Caspar Weinberger reported this afternoon that those outlay reductions are likely to result in reductions in total obligational authority of some $21 to $22 billion over the 3-year period.

The Secretary indicated that those figures are preliminary. The final reductions in obligational authority -- and I would stress the difference between obligational authority and outlays; the outlay figure of $13 billion is firm -- will depend upon the ultimate choice among specific, programmatic, and management alternatives for achieving the outlay reductions.

In the discussions that have occurred over the past several days, the President and his advisers have also considered the defense budgets for fiscal years 1985 and 1986, as previously submitted. The President decided that he would not seek any reductions in those budgets.

After signing this directive at Camp David this afternoon, the President reemphasized that his decision reflects his continuing commitment to two major goals of his administration -- a strong economy and a strong national defense.

These changes in the defense budget are, of course, the first reductions on plans previously announced by the President to identify savings in the overall spending that will help to bring the Federal budget into balance by 1984 and, in the process, achieve economic recovery. I might note that this is the defense increment with regard to those reductions. The reductions with regard to other departments will be those that will be forthcoming in the near future. In other words, this is the defense portion of those additional savings that were to be identified.

At the same time, as he reemphasized at Camp David this afternoon, the President believes that it is essential to the security of the nation to embark upon a major, long-term buildup in American defense forces. The President's decision today is intended to ensure that as the nation moves toward a sounder economy, we also restore the margin of safety for the United States.

Note: Mr. Gergen read the statement to reporters at a briefing in Room 450 of the Old Executive Office Building, which began at 5:55 p.m.

Mr. Gergen also announced that the President had met in the Oval Office on September 11 with Secretary of Defense Caspar W. Weinberger and David A. Stockman, Director of the Office of Management and Budget. A tentative decision as to the size of the defense budget outlays was reached at that meeting. The President telephoned Secretary Weinberger and Mr. Stockman after making his final decision on September 12.