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June 1 9,1 981

MX Un d er Fire
In early July, Defense Secretary Weinberger
plans to announce the Administration's position with regard to the M X missile project,
following receipt of an independent panel's
report on the subject. The decision presumably will involve two major policy issues: 1)
whether the Administration will support continued development and eventual full-scale
production of this new generation missile,
and 2) if so, which system it favors for basing
and deployment of the new nuclear weapon.
The decision will have enormous implications for the nation's long-term security posture. It also could have momentous
economic, environmental and social consequences for the two regions which are being
considered as possible base sites: Utah/
Nevada and Texas/New Mexico.
Security argument
Although it is now reviewing all options, the
Reagan Administration to date has apparently
conti nued its predecessor's support for development and testing of the M X missile. It
included in its proposed fiscal 1982 budget
the $2.9 billion requested by the Carter Administration to continue engineering development and to begin launch-site construction. But the Administration thus far has been
unwillingto commit itself to a specific basing
mode for the MX. In fact, even some of the
staunchest critics of a land-based system of
deployment favor the missile's development
on national-security grounds, although with
some other basing method.
The nation's strategic nuclear-deterrent
forces consist of a three-part land-sea-air
arsenal. This " Triad" includes land-based intercontinental ballistic missiles (ICBM's),
submarine-launched ballistic missiles
(SLBM's) and long-range bombers. The landbased I C B M portion of the Triad consists of
1 ,000 Minuteman and 54 Titan missiles
housed in fixed underground silos.
Until recently, most U.S. defense officials
considered the nation's strategic nuclear

forces to be invulnerable to a preemptive
(first) Soviet attack. They believed that those
forces could absorb a surprise first-strike attack and still retain a sufficient number of
deliverable warheads to inflict unacceptable
retaliatory damage on the attacking nation.
They believed also that the Soviet Union was
similarly invulnerable. Thus, according to the
concept of mutual deterrence, if both sides'
strategic nuclear forces remained mutually
invulnerable, then no rational government
wou Id be tempted to start a nuclear war.
But during the past several years, the Soviet
Union has been developing a force of large,
more accurate ICB M's, each capable of carrying several powerful nuclear weapons
(mu Iti pie warheads). As a resuIt of these technological improvements-introduced
by the
United States but more widely implemented
by the Soviets-U. S. military officials fear
that the Soviet Union will soon be capable of
destroying 90 percent of the present u.s.
land-based missile force.
The loss of the Minuteman force would not
mean the loss of the entire U.s. retaliatory
capability, in view of the strength of the seaborne and airborne components of the Triad.
But both Congress and the Administration
fear the growing vulnerability of the Minuteman force. Both branches apparently are
committed to the development and eventual
production of a new generation missile. The
MX's first flight test is scheduled for 1 983,
with regular production of the missile
scheduled to begin in 1 986. But this leaves
unresolved the question of where to base the
individual missiles, each of which will measure 92 inches in diameter and 71 feet in
length, and weigh 1 92,000 pounds.

land-base option
The Carter Administration (and the Air Force)
favored the multiple protective structure
(MPS)concept, which would call for the construction of 200 linear grids or roadways.

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around 1 986, an estimated 30,000 persons
would be directly employed as construction
workers, equipment-assembly personnel,
and operating-base workers. About 13,000
permanent workers would operate the bases
after completion of the construction phase.
During construction a total of about 52,000
jobs would be created, directly and indirectly, as a result of project spending and
procurement from local suppliers. Consequently, the region could expect a decline
in unemployment, wage escalation, and
worker shortages. In the same fashion, as
many as 1 9,000 long-term jobs might be
created directly and indirectly in the postconstruction phase. Clark County, Nevada
(site of the larger base) would experience the
greatest impact. In both Clark County and
Beaver County, Utah (site of the smaller
base), an expanded demand for services and
a large increase in land values would accompany rapid growth.

Accessible from each roadway would be 23
concrete shelters, housing one genuine M X
missile and 22 high-quality facsimiles. The
system altogether would include 4,600
shelters, each capable of housing and protecting a single missile launcher-which
means that any potential enemy wou Id have
to use at least 4,600 warheads to destroy the
real 200 M X missiles.
Official esti mates place the cost of the system
at around $50 billion in 1 980 dollars-by far
the biggest public-works project in history.
Each shelter would be a reinforced-concrete,
steel-lined cylinder buried under five feet of
earth, with exposed concrete and steel doors.
Concrete enclosures for electrical power,
communications, control and other equipment would be buried adjacent to each shelter. The system thus would require
400,000 tons of steel and about 1.5 million
tons of cement, plus about 8,500 miles of
new road construction. The construction
phase would cover roughly eight years, beginning in early 1982.

Population: Even without construction of the
M X system, population growth would probably accelerate in the 1 2-county impact area,
to about a 3.2-percent annual rate in the
1 983-87 period, reflecting Utah's high birth
rate and the strong expansion of mineral and
energy activities within the region. With M X,
in contrast, the growth rate could reach 4.5
percent annually during the 1 983-87 period,
and then fall to a 1 .1-percent rate from 1 98891. But the rural communities near the
operating bases could experience annual
growth rates as high as 45 percent during the
construction period, followed by a steep
decline.

The U.S. Air Force favors a 1 2-county area in
Nevada and Utah as the site for the M X
system. Under its "Proposed Action," it
would place a main operating base at Coyote
Spring Valley north of Las Vegas, Nevada,
and a smaller base near Milford, Utah. In its
environmental-impact report on deployment
area selection, however, the Air Force listed
six different basing options involving
Nevada/Utah sites (see map). A seventh alternative called for placing bases at Clovis,
New Mexico and Delhart, Texas. An eighth
option-the
"split-basing" alternativewould place one operating base in each region at Coyote Spring Valley, Nevada and
Clovis, New Mexico.

Housing: The environmental-impact statement assumes that construction workers
would live in a set of construction camps,
with barracks-type housing in remote !Jartsof
the impact area. But in addition, about
20,000 housing units would be needed for
their families and other workers. It further
assumes that over one-half of those latter
housing units would be located in Clark, Salt
Lake and Utah counties-metropolitan
areas
capable of providing those housing facilities

Impact of " ProposedAction"
Basing of the M X system in the Nevada/Utah
area would strongly affect the regional
economy according to the environmentalimpact statement.
Employment: At the peak of project activity
2

. _- - - - - - - - - - - - - - - - - _.
county "region of influence." Moreover, it
fails to take account of the high-growth activities already taking place in adjacent areas,
such as the development of synthetic fuels
and the development of new supplies of minerals and fossil fuels. Farmers and ranchers
also fear that their activities could be affected
by reduced water availability, withdrawals of
grazing land, and a consequent decline in
livestock production. Most of all, critics
charge that the report gives inadequate attention to the project's impact on the social and
natural-resource environment, including
education, health and public-safety, services,
transportation, air quality, soil erosion, vegetation and

with less stress than if they were built i'n the
rural areas closer to the bases. Even then, the
housing impact would be very significant for
certain areas; for example, housing growth in
Beaver County, Utah could triple by the peak
year of the project. The report also acknowledges that housing requirements
would drop after 1987, leaving a surplus. It
assumes that most surplus units would be
mobile homes that could be relocated out of
the region.

Groundwater
availability:The annual
recharge-groundwater capacity of most valleys in Nevada and Utah is now "fully appropriated," which means that the water
table would be reduced by the demands of
the M X construction project. Thus, the
Moapa Reservation's irrigation-water supply
near Coyote Spring Valley would be affected
unless water could be purchased and
pumped from Las Vegas or acquired from
other users. Water for the Mi Iford base probably would have to be purchased from existing agricultural users, which could remove
20,000 acres from irrigated farm use.

Most critics would prefer to see some other
basing method for the M X project, such as the
Smallsub Undersea Mobile (SUM) system.
This system would deplpythe M X from a fleet
of small non-nuclear submarines operating in
coastal waters off the continental United
Statesand Alaska, with an M X capsule attached outside the hull of each small sub.
(That program would benefit the shipbuilding
industry in the West.) Other alternatives
would include basing the M X in other types of
silos, on merchant ships, or on various types
of aircraft. But the Air Force argues that all
these options would jeopardize a fundamental principle of
strategy-the Triad. In
any event, a decision seems likely soon on a
project which will clearly affect the future
economy of the Intermountain West.

Criticism of project
The Air Force report has drawn a barrage of
criticism from state commissions and residents of Nevada and Utah -and recently
even from the Mormon Church leadership.
Critics charge that the report understates the
vast impact the M X project would have on
local communities, by concentrating on the
project's overall impact on the entire 1 2-

u.s.

Yvonne levy

POSSIBLE MX MISSILE DEPLOYMENT REGIONS AND OPERATING BASES

OREGON

I£!l eployment
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Regions
• Primary Sites
A Secondary Sites

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BANKINGDATA-TWELFTHFEDERAL
RESERVE
DISTRICT
(Dollaramounts millions)
in
Selected
Assets Liabilities
and
LargeCommercialBanks
Loans
(gross,
adjusted) investments*
and
Loans
(gross,
adjusted) total
#
Commercial industrial
and
Real
estate
Loans individuals
to
Securities
loans
U.s.Treasury
securities*
Othersecurities*
Demand
deposits total#
Demand
deposits adjusted
Savings
deposits total
Timedeposits total#
Individuals,
part.& corp.
(Large
negotiable
CD's)
WeeklyAverages
of Daily Figures
Member ank Reserve
B
Position
Excess
Reserves )/Deficiency- )
(+
(
Borrowings
Net freereserves )/Netborrowed( )
(+
-

• PPPt\i3N • oljPPI
puozPV' • P>jsPIV'

Amount
Outstanding
6/3/81
149,091
127,158
37,722
52,294
22,906
1,586
6,388
15,545
41,852
r
28,574
30,312
81,014
71,618
31,796
Weekended
6/3/81
n.a.
124
n.a.

Change
from
Change
yearago
from
Dollar
Percent
5/27/81
- 154
11,840
8.6
11,478
9.9
53
4,086
12.1
190
5,535
23
11.8
- 1,044
- 4.4
7
31
547
52.6
2.1
130
60
236
1.5
41
1,159
5.5
- 2,260
- 7.3
1,137
3,107
11.4
331
16,735
26.0
596
16,485
748
29.9
9,246
41.0
69
Weekended
Comparable
year-ago
periOd
5/27/81
n.a.
148
n.a.

82
10
72

* Excludes
tradingaccountsecurities.
# Includes
itemsnotshownseparately.
Editorialcomments
may be addressed the editor (William Burke) to the author.... Freecopies this
to
or
of
andother Federal
Reserve
publications beobtained callingor writingthePublicInfonnation
can
by
Section,
Federal
Reserve
Bankof SanFrancisco, Box7702,San Francisco
P.O.
94120.Phone
(415)544-2184.

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