U.S. pays a third more for defense as in 2001: analyst

US Army soldiers from Charlie company 4th platoon,1st brigade 3-21 infantry, patrol in the village of Chariagen in the Panjwai district of Kandahar province southern Afghanistan, June 22 , 2011.

WASHINGTON (Reuters) - The U.S. military has essentially the same size, force structure and capabilities as it did a decade ago but costs 35 percent more, an independent public policy think tank said on Monday in an analysis of the 2012 defense budget.

The Center for Strategic and Budgetary Assessments, in a 75-page report, also said the Defense Department had spent some $46 billion over the past decade developing weapons systems that were ultimately never fielded, either due to cost overruns or technical challenges.

As a result, a significant portion of the Pentagon's effort to modernize its weapons systems did not result in force modernization, a task that will now have to be undertaken at a time of shrinking defense budgets.

"This was the opportunity of the decade, to really recapitalize and modernize the military's equipment and that has been squandered," said Todd Harrison, who authored the report. "We're looking at the prospect of a declining defense budget over the next decade and we're not going to have the opportunity to do that again."

With the United States facing unsustainable trillion-dollar budget deficits, President Barack Obama has asked the Defense Department to cut some $400 billion in spending over the next dozen years. Some defense officials fear there may be a further request for additional cuts.

At the same time, the military faces significant capital equipment requirements in the coming years, from replacing aging aircraft carriers and building a new generation of submarines to fielding the F-35 Joint Strike Fighter and funding a new line of aerial refueling tankers.

"We still have all these needs, all of these things we were supposed to modernize over the last decade. We haven't done it, and now the funding is going to get tighter," Harrison said.

That puts the Pentagon in the position of having to make difficult choices about whether to cut force structure -- like the number of aircraft squadrons or carrier strike groups -- in order to free up money for modernization, he said.

RISING BUDGETS

The center's analysis said half of the growth in defense spending over the past decade was unrelated to the wars in Iraq and Afghanistan and was attributable instead to a rise in the Pentagon's base budget.

Personnel costs grew by 19 percent, even as overall personnel numbers remained relatively flat, the report said. The cost of peacetime operations rose 10 percent, even as the pace of operations declined. And acquisition costs rose 16 percent, even as the inventory of equipment aged and shrank.

"The base budget now supports a force with essentially the same size, force structure and capabilities as in FY (fiscal year) 2001 but at a 35 percent higher cost," the analysis found. "The department is spending more but not getting more."

Obama has asked for about $690 billion for military spending in the 2012 fiscal year beginning in October -- about $558 billion for the Pentagon's base budget and $118 billion for the wars in Iraq and Afghanistan. The remainder is for nuclear weapons programs and military construction.

The House of Representatives earlier this month approved a defense spending bill for next year that would trim Obama's request by about $8 billion. The Senate is still working on it's version of the measure. The two houses will have to work out their differences over military spending and approve a final bill before it can be sent to Obama for his signature.

(Editing by Paul Simao)