us joined him with reference to the $400 million that went to the Department of Defense for us to assist the Soviet people in governments in dismantling some of their nuclear armaments, $400 million. I supported that incidentally, and $100 million right after that approved here in the Senate, adopted in the House, Senator Boren's amendment. Almost everyone supported that also.

Now, frankly, I am very concerned because I have a little tiny piece of a potential acquisition of some Soviet technology that was supposed to already have arrived in the city of Albuquerque to go into a laboratory to be used for research by two national laboratories and two universities. A facility has been built, because a year and 1 month ago, the U.S. Government joined in a conference on space power and said it would be good to bring an unfueled Soviet TOPAZ II reactor into the United States. Doing so would permit research that would save a lot of money.

I wrote to you on December 20, 1991, because it is not a very expensive program. The TOPAZ II reactor has been sitting in the former Soviet Union, with all its attendants, ready to come to America. The Soviet Union is not going to get wealthy on this one. Everybody said it was a good idea-until they got around to providing the $10 million for bringing TOPAZ over.

On December 20 of last year, I wrote to you, Mr. Secretary, and asked you what was going on, and why the delays. I regret to tell you, unless my mail staff are terribly incompetent, which I do not believe they are, I have not heard from you yet. That is not terribly offensive to me. It seems like you could have had somebody, maybe a clerk or someone, get on the phone and give me a call. Having said that, let me just ask you, why should we believe that we are going to be able to put anything together with the Soviet Union, through the Defense Department for technology exchange? Technology exchange will be difficult if we cannot even make a decision about a $10 million piece of equipment that nobody, to my knowledge, has concluded is dangerous to anyone.

It was purely to find out if they were advanced or not. They may not be. My guess is, they are not as much as some people think, but maybe you could answer that for me.

Mr. ATWOOD. The answer is complex, but let me approach it from this standpoint. The program that you are referring to was one that was being considered by the SDI Organization, and it was to study a technology beyond that which is required for implementation of the present SDI program. Two factors played into this.

No. 1, a great concern by many of us, probably yourself included, about the disposition of the technologists and the technology within the former Soviet Union. A number of us visited their high-technology centers over there and found there was a preoccupation by them to sell their technology anywhere in the world; a preoccupation by them to make sure that they preserved a way of life which exists within those technology centers. That is not like the United States, as you know.

They have a technology center for advanced electronics just outside of Moscow. It is where all of their high-technology work exists, and the people live in a little city there, so there is a tendency on their part to continue as they have been doing and selling this

technology worldwide. The concern that we have is we do not want to do something that encourages them to continue to do that.

Within the administration, there has been a lot of discussion leading to the establishment of this technology institute. We and other nations of the free world would put money into the institute directed toward specific research and development programs. In those technology centers is a way of coordinating it, as opposed to allowing every country in the world go in there and try to buy something, and that was point one.

I think point No. 2 is the fact that within the Department of Defense we are putting great emphasis on coordinating our own research and development dollars into new technology. As I tried to describe early on, I am worried about the Soviets going in all directions at the same time.

We have gone through a major organizational change_by strengthening the role of the Director of Defense Research and Engineering. When that program came to my attention, I assigned it to him to evaluate as head of all advance technology for the Department. He is doing so, and if we should go ahead with that, and I am not saying we will or we will not, I want it under control so that we in the Department do not appear to be diffused with our activities.

Those are the two elements to that story. It is being evaluated as of now, and I would hope that we do, through this technology institute, more directly funnel the activities of those technology centers, and those technologists in the Soviet Union.

I would make another observation, and this comes from my own trip there. We visited an advanced optics laser technology center just outside of St. Petersburg and we visited a space center just outside of Moscow. They need, if democracy is going to survive in the Soviet Union, to divert their efforts to the basics of life.

They do not need a space booster. They do not need an intercept. What they need are rudiments of food processing, improved agriculture, pharmaceuticals, basics of life. They talked to us about buying fiber optics. They do not need fiber optics, they need a hand-crank phone with a switchboard that works. They need basic transportation, and I think one of the jobs that we have is to help them direct their efforts into those basics so that there is an improvement in their standard of living, and so that democracy will have a chance of surviving.

Now, that is not why I stopped the Topaz, but it happens to be a deep conviction as we approach these scientists. The first reason-to repeat, the first reason was to coordinate the activities of their high-technology work and not send the wrong signal that anyone anywhere can come in and buy it. Second, to coordinate our activities within the Department of Defense. I have given you more answer than perhaps your question, Senator.

ASSISTANCE FOR FORMER SOVIET UNION

Senator DOMENICI. Not at all. Frankly, Mr. Secretary, much of our relationship with the Soviet Union during this transition, whether we like it or not, is going to be between the Defense Department of the United States and Russia. A lot of people do not think that is going to be the case, but it is inevitable. I was more

pleased with the way you answered my question, except for Topaz, that I think you can handle it ad hoc.

I at least heard some very broad language, broad words about the nature of this problem in the Soviet Union. I would not have thought that you all were as concerned as you just expressed, and I am glad to hear it because it is one dynamite problem. We can run around here saying no foreign aid, no assistance, and that the people of America do not want it, but we have to have some leadership, saying the Soviet Union has to be helped in some way.

We do not know how to solve it, but we cannot sit on the sidelines, after winning the cold war, to let them go another way in a revolution and say those turkeys over there, they led us to democracy and we all starved. That is not a good end to the cold war it seems to me. Now having said that, let me move to another issue.

PEOPLE LEAVING THE ARMED FORCES

First, I believe the young men and women in the military, more than any others that are going to be affected by this builddown deserve our assistance. We've been experiencing a weak economy for about 22 years. They happen not to understand the nature of it. It is not as deep as others, but it is just persistent and consistent. I frankly believe we owe the men and women in the military a plan to minimize the risk they are going to be put in, in being let out having nothing to do and nothing to show for having served us. I do not think we ought to be miserly about that.

There are probably ways to help them get new training where they can go into public-type jobs if nothing else, and they would be good ones. Many of these men and women would be good at that and I do not think we ought to wait any longer. Somebody ought to come up with it and it ought to be in next year's budget, not studied for 2 years by someone, just do it. Start training them to be policemen if police forces want them. Teachers, teachers aids, all kinds of things where they can at least have something to do, and probably give them some extended credit for it in terms of their military service, but we had better do something like that. I do not expect an answer, I just say, it has to be done.

Mr. ATWOOD. Could I take the opportunity, because I concur in your concern, as do the armed services, to point out what is happening that is not getting the visibility that perhaps it should.

No. 1, and I was going to respond to Senator Stevens, but I will do it now, in a sense. We are taking and offering to those who are leaving or want to leave, those volunteers who leave the service, a voluntary separation incentive plan approved by Congress which entitles those people to 25 percent of their final base pay times the number of years service. So that if someone was here for 10 years, they would in effect get-2.5 percent is what I should have said, per year of service.

They get 22 times the 10 years, they get 25 percent of their base pay for a period up to twice the number of years they are in the service. And that is a fairly extensive and expensive proposition. Alternatively, in working with Congress an option was developed which allowed them to cash that out immediately so that they had the option of taking that in cash up front. I believe a large number of them are doing that. A bigger percentage of them are doing that,

taking the cash up front. It is significant cash, but it is intended if they want to go into a business.

That is one set of benefits. The second set is something that every one of the services are following. And that is, as people approach the time when they are going to come out, 2 to 4 to 6 months before they leave, we have centers, and I urge you visit one that is out at Fort Myer, where we call these young people in, we interview them, and we say what would you like to do.

And it is amazing to get down to the grassroots of this with these individuals. What would you like to do when you leave the service, allow them to tell you. And ask them what are their shortcomings, what kind of training do they not have, and offer them the opportunity in the remaining months an early out to get that kind of training, which fills out their brochure on what they can do so it is in consonance with what they want to do.

Furthermore, we ask them where would you like to live, whether it is in New Mexico or Massachusetts or Arizona or Arkansas or even Michigan. And we provide lists of companies, private companies in those locales who are looking for uniformed people getting out of the service with given skills. Companies in every community of the country. And we match these individuals up with those companies and get them letters of introduction. This is not having gone around and saying look, will you hire somebody if they come out. Quite to the contrary, these are people who are looking for these people and we match them up and give them an opportunity.

So we do help them going out. And if you will pardon_the_comparison, that is not like it was when I got out in 1946. But I was kind of glad to get out then.

Senator DOMENICI. Well, some people compare it to 1946, but it is not comparable. They were all volunteers, there was a huge pent-up demand in the United States just waiting. One thing we did was the GI bill, which was extraordinary. But in terms of the rest of it, it does not compare. Even American industry did not have any difficulty assimilating, in maybe a year, year and a half.

PEACE DIVIDEND AND LONG-TERM ECONOMIC EFFECTS

Let me move to another issue, and I know the chairman wants to proceed and I apologize for taking so much time. My next question is just by way of an observation, and then perhaps your thoughts. First of all, everyone is talking about a peace dividend. Let me see if I could tell you where it is. Of the peace dividend, $170 billion went in the 5-year budget agreement. People forget about that.

That was a $170 billion cut in where defense was going to be on all the budgets. We took credit for it. And where was it, it was in that effort to move toward a balanced budget that has not yet reached anything like a reality. So there is $170 billion which people thought would fix America. Some thought everything that is wrong with America would get fixed with this.

Now, what do the best economists say about short-term defense cuts? I have not heard anyone say in the short term defense cuts are good for economic recovery, none. In fact, the next question is, what can we do in the short term to ameliorate and reduce the effects of the recession as we build down? Some suggest the best ap

proach is to spend the money somewhere else. Strangely enough, nobody suggests that will really work. In the short term, the recession will not get any better. As a matter of fact it is almost economic dogma that spending the peace dividend elsewhere will have no effect. If any, it will have a negative effect.

So the only remaining question, economicwise, is long term what effect? And interestingly enough, there are those, again, who think long term, you ought to double defense cuts. Somebody has a bill to take $425 billion out of defense over the next 6 years. Frankly, what most economists say is if you apply all or most of that to the deficit, you probably get the most significant positive long-term economic effect.

Now having said that, I wonder, with reference to a further builddown beyond that which is being recommended by the President, how long would it take you using this Defense Conversion Commission, if you were going to put it into effect? How long do you think it would take you to estimate the effect of that, and what ought to be done to ameliorate that kind of cut? Do you think you can have that sort of set of facts ready in 6 months, in a year? And I suggest to you if not, then there probably is not any reason to have a commission.

Mr. ATWOOD. I would think that that is a reasonable period of time in order to come up with a more judicious answer to the fundamental question you are asking. And that is, if I interpret it correctly, if we took additional cuts in the defense immediately, what would the impact be, not just in gross quantities, but what would it be specifically. I can give you the impression as an individual, and from my own experience what it would be.

First, because you would have to take troops down faster, you run a grave risk that you would have a morale problem, a reenlistment problem, a new enlistment problem, with people who would feel that we have broken faith with these young men and women that made a change in their careers to come into the Armed Forces. And I would be very concerned. I think the chairman will testify to that tomorrow, that he is deeply concerned that we not take these Armed Forces down too rapidly. And if there is a sudden precipitous drop that has to take place, I believe, sincerely so, it would have a serious consequence.

Senator DOMENICI. Mr. Secretary, what I mean is the name of this Commission is Defense Conversion Commission. And in my question I was asking for an assessment of what is required in the conversion.

Mr. ATWOOD. I understood your question and I gave you something I wanted to say anyway. I apologize.

As far as the conversion is concerned, No. 1, there is a deeper problem with conversion in this country than in a country like the Soviet Union. If you take a company which has been doing basically defense work and you suddenly terminate it and ask them to convert to a commercial product, it is difficult for two reasons.

One, there are not many products they can turn to in this country that do not have good qualified competitors already out there ahead of them. That is not the case in Eastern Europe. If you go into a plant in the Soviet Union that has being doing defense and say what can they make, there is almost nothing that they can