Panetta to unveil review to guide defense cuts

WASHINGTON Tue Jan 3, 2012 5:30pm EST

A U.S. Air Force version of the F-35 Lightning II flies at Naval Air Station Fort Worth Joint Reserve Base, Texas, in this April 20, 2010 file photo.  REUTERS/US Air Force/Lockheed Martin/Handout/Files

A U.S. Air Force version of the F-35 Lightning II flies at Naval Air Station Fort Worth Joint Reserve Base, Texas, in this April 20, 2010 file photo.

Credit: Reuters/US Air Force/Lockheed Martin/Handout/Files

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WASHINGTON (Reuters) - Defense Secretary Leon Panetta will this week unveil the results of a strategic review of security interests which will guide billions of dollars in military spending cuts over the next decade, officials said on Tuesday.

The review is expected to include a recommendation that the United States abandon its long-held goal of being able to fight and win two wars simultaneously, an Obama administration official said.

Instead, the United States should aim to fight and win one major war while still being able to meet and "spoil" any aggressive designs by a second adversary, said the official, speaking on condition of anonymity.

Panetta and General Martin Dempsey, chairman of the Joint Chiefs of Staff, will hold a news conference on Thursday to offer details of the review, initiated last year after President Barack Obama asked defense officials to cut some $400 billion in planned spending over 12 years.

The spending reductions, while not yet set in stone, are expected to trim the number of military and civilian defense personnel, delay or cut back on some high-profile weapons systems like the radar-evading F-35 Joint Strike Fighter and take steps to control spiraling health-care costs.

The Pentagon and White House declined to discuss the contents of the strategic review ahead of Thursday's news conference. But White House spokesman Jay Carney said Obama had been "deeply involved" in the process, meeting Panetta, Dempsey and others, including top combat commanders.

Carney said the strategy recognized "that we are at a turning point after a decade of war, with new challenges and opportunities that call for a reshaping of our defense priorities."

The results of the strategic review come as the Pentagon begins a broad discussion of spending issues ahead of the official February 6 release of President Barack Obama's budget for the 2013 fiscal year, which begins in October.

Panetta decided to preview the strategic review early in the year to give lawmakers ample time to absorb and digest it ahead of the formal budget announcement, one defense official said.

NO 'BLOODBATH'

Former Defense Secretary Robert Gates made a similar move last January and Pentagon leaders felt it was "a good way of doing it," the defense official said.

A second senior defense official said Panetta would unveil some details affecting major weapons programs but added that he did not expect a big number of program cancellations or the kind of "bloodbath" Gates announced in April 2009, when he killed or cut back on many weapons systems.

Major U.S. defense contractors like Lockheed Martin, Boeing and Northrop Grumman have been anxiously awaiting news about any major program cuts in the new budget.

The senior defense official, who spoke on condition of anonymity, said the cuts were "not going to be without pain for industry."

Gates launched the strategic review last summer to guide decisions on where the Pentagon could best cut personnel, weapons programs and other spending without jeopardizing U.S. strategic interests.

Since then Obama and Congress, in an effort to get control of the government's huge deficits, agreed on a budget deal that could cut projected defense spending by more than $1 trillion over the next decade.

The first round of cuts will reduce spending by $350 billion to nearly $500 billion, depending on whether it is compared to Congressional Budget Office projections or the Pentagon's own projections of defense spending.

The Defense Department is facing a second round of across-the-board cuts that could reduce spending by another $600 billion after a so-called congressional "super committee" failed to agree on alternative ways to reduce the budget.

It was unclear whether senior congressional leaders had been briefed yet on the final details of the strategic review, but one committee staffer said Panetta had met with eight top lawmakers late last year.

"We would be surprised if any announcement he made this week strayed too far from that conversation," the staffer said on condition of anonymity.

The staffer said he expected Panetta's review to show that cuts to Pentagon spending would be "deep and real" and would "highlight how damaging and dangerous" it would be to allow the second round of defense budget cuts to go through.

(Additional reporting by Caren Bohan and Laura MacInnis; editing by Todd Eastham)

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