U.S. aims to cut defense budget and slash troops
WASHINGTON (Reuters) - The United States plans to cut $78 billion in defense spending over five years, including a reduction of up to 47,000 troops, in a politically contentious move that would trim the government's growing budget deficit.
The proposed cuts, unveiled at a somber Pentagon briefing on Thursday, follow increased White House and congressional scrutiny of military spending, which has doubled in real terms since the September 11, 2001, attacks.
They are in addition to a $100 billion cost-savings drive that Defense Secretary Robert Gates kicked off last year to eliminate waste, cut poorly performing weapons programs and redirect the money to other priorities.
Congress ultimately controls the Defense Department's budget, and lawmakers often block administration efforts to cut military spending that provides jobs in their home districts.
But Gates said the military had to play its part in getting U.S. finances in order.
"As the biggest part of the discretionary federal budget, the Pentagon cannot presume to exempt itself from the scrutiny and pressure faced by the rest of our government," Gates said.
The annual budget request for the Pentagon will be submitted to Congress as part of the overall federal budget around February 14. Industry sources and analysts say the Obama administration will ask for $554 billion in military spending in fiscal 2012, not counting overseas fighting, $12 billion less than it initially intended.
Shares of major defense contractors rose. Lockheed Martin Corp and General Dynamics Corp have programs that would be hit by the reshuffle but were spared from deeper cuts that some investors feared.
Gates, in a half-hour address, said the Pentagon would cope with the belt-tightening by freezing civilian pay, changing economic assumptions and reducing troops starting in 2015, among other items.
That will allow defense spending to keep growing modestly through 2014 before leveling off in 2015 and 2016, Gates said.
He said calls from some in Congress for deeper cuts would be "risky at best and potentially calamitous," citing global tensions that require a strong, modern U.S. military.
Mitch McConnell, the top ranking Republican in the Senate, said on Thursday he believed no U.S. government department was off-limits from belt-tightening.
Other Republicans offered a swift rebuke of the plans, in a sign that the proposed cuts may not be realized despite growing pressure to rein in U.S. government spending.
"I'm not happy," House Armed Services Committee Chairman Howard McKeon told reporters. "This is a dramatic shift for a nation at war and a dangerous signal from the Commander in Chief."
TROUBLED PROGRAMS AXED
McKeon and other critics took issue with Gates' plans to cut up to 47,000 troops from the Army and Marines starting in 2015, which would represent the first cuts for those services since before the September 11 attacks.
Analysts said the announcement was politically dicey for President Barack Obama, with U.S. troops still at war in Iraq and Afghanistan. Earlier on Thursday, the Pentagon announced a new deployment of more Marines to Afghanistan.
"The land force end-strength cuts are just shocking," said Thomas Donnelly, at the American Enterprise Institute, a conservative think tank.
But Gates said the reductions would take place four years after U.S. troops are set to leave Iraq, and that 2015 was also the year U.S. war planners aim to hand over responsibility for Afghan security to local forces.
"The numbers that we're talking about are relatively small," Gates said.
Gates announced cuts or cancellations of troubled weapons programs, including a $13 billion Marine Corps landing craft, designed by General Dynamics.
The Arca index of defense stocks closed up 0.8 percent, a sign of relief that financial fallout from the Pentagon's spending overhaul was not worse than what had already been speculated.
"The bear argument about significant cuts has been taken off the table," said Peter Arment, an analyst with Gleacher & Co.
The plan also calls for cancellation of a ground-launched missile built by Raytheon Co, and includes the second overhaul in a year of the Pentagon's largest weapons program: Lockheed Martin's F-35 Joint Strike Fighter.
The Lockheed restructuring will cost the company 124 planes over the five years.
"Gates has announced the continued dismantling of the greatest military the world has ever known," said J. Randy Forbes, a Republican lawmaker.
But some of the Pentagon's cost-savings will be reinvested in similar big-ticket programs, including a new long-range nuclear bomber, more ships for the Navy and beefed up missile defense capabilities. Boeing will win a potential $2 billion-plus order for 41 more F/A-18 fighters.
(Additional reporting by Kim Dixon, Tabassum Zakaria in Washington and Karen Jacobs in Atlanta; Editing by Tim Dobbyn and Peter Cooney)
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