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This Congressional Budget Office (CBO) Staff Memorandum analyzes the longer-term effects on budgets--mostly in the 1990s--of a commitment to deploy a Strategic Defense System (SDS). It is too soon to estimate these future costs with confidence. Nonetheless, a notion of potential budget requirements can be developed if certain assumptions are made.

The Administration has estimated the total costs of developing and deploying the first phase of an SDS. But the Administration has also stated that, because its goals for an SDS would be only partially met by deployment of this first phase, it intends to develop follow-on phases at the same time it deploys the initial phase of the SDS. Thus, budget estimates must consider not just the cost of the first phase, but also the cost of parallel development and deployment of several phases of an SDS. Administration estimates of the costs of follow-on phases are not available. The assumption could be made that these follow-on phases will cost at least the same amount as the first phase. Under these assumptions (referred to as Case 1), costs could be substantial. Annual costs in some years in the 1990s could exceed the total funds now devoted to all strategic nuclear forces.

This analysis also considers the effects of alternative assumptions: Cases 2 and 3 explore the effects on budget requirements of delays in the pace of development and deployment of follow-on phases of an SDS, and lower costs for these follow-on phases. If the assumptions in Case 2 or Case 3 prove correct, annual costs for an SDS could be significantly lower than those estimated in Case 1.

There are important limitations associated with these three alternative budget estimates. The results relate only to costs and do not examine other questions such as the cost-effectiveness of an SDS. Moreover, the wide range of Administration estimates for the cost of the initial phase of an SDS emphasizes the uncertainty associated with the current estimates, and assumptions about costs of follow-on phases are even more speculative. Nor do cost estimates in this analysis consider the effects that an SDS could have on requirements for and costs of other military forces, including costs of strategic offensive forces, which may be lower, or costs of defenses against weapons such as bombers and cruise missiles, which may be higher. Numerous other assumptions that permit estimates of annual costs are specified for each case in the following analysis.

This document is available in its entirety in PDF.