Obama proposes defense cut after decade of growth

WASHINGTON (Reuters) - The 2013 U.S. defense budget that President Barack Obama sent to Congress on Monday includes funding for a shift in strategic focus to the Asia-Pacific even as it slashes spending on weapons and personnel to reduce costs by $487 billion over the next decade.

The president's spending plan calls for a Pentagon base budget of $525.4 billion, about $5.1 billion, or 1 percent, less than approved in 2012. The cost of U.S. wars abroad would fall 23 percent, to $88.5 billion from $115 billion, primarily due to the U.S. withdrawal from Iraq and a drawdown in Afghanistan.

The lower war costs assume U.S. force levels in Afghanistan in 2013 will remain at 67,500, the number they are expected to reach this fall once the Pentagon withdraws the troops it sent to the war zone in 2010 to counter Taliban advances.

Obama's budget request for intelligence activities, both civilian and military, was $71.8 billion. Of that amount, Director of National Intelligence James Clapper, who oversees the CIA, National Counterterrorism Center and other agencies, requested $52.6 billion.

The Pentagon's budget begins to add flesh to the bones of its new defense strategy, which puts greater focus on the Asia-Pacific as the United States tries to hedge against China's growing influence in the region.

The Pentagon plans to spend at least $2.8 billion on new weapons needed as part of that shift, including $300 million toward a new long-range bomber. The Pentagon plans to spend $6.3 billion to develop the nuclear-capable aircraft over the next five years and eventually will purchase 80 to 100 of the planes.

The budget invests in several other high-priority initiatives, including $10.4 billion on special operations forces, $3.4 billion on cyber capabilities, $9.7 billion on missile defense and $11.9 billion on science and technology.

"This budget plan represents a historic shift to the future, recognizing that we are at a strategic point after a decade of war," Defense Secretary Leon Panetta said. "The plan is aligned to strategic priorities we have identified to keep America safe and maintain the strongest military in the world."

'DIRECT HIT' ON AEROSPACE INDUSTRY

The spending plan drew mixed reactions from business, lawmakers and analysts. Marion Blakey, president of the Aerospace Industries Association, called it "a direct hit" on the industry. She said 350,000 civilian jobs could be lost unless Congress blocks new defense cuts due to take effect next year.

Republican lawmakers said Obama's budget failed to do anything to prevent the additional $600 billion in defense cuts. Senators John McCain and Lindsey Graham, of the Senate Armed Services Committee, urged Obama to "stop leading from behind" and work to stop the cuts.

But Adam Smith, the top Democrat on the House of Representatives Armed Services Committee, praised the process of building the budget around a strategy, saying it "enhances national security by spending taxpayer dollars more wisely."

Andrew Krepinevich, head of the Center for Strategic and Budgetary Assessments think tank, said the investments being made due to the U.S. strategic shift would be "highly prized" given threat trends in the Western Pacific and Middle East.

The requested cut in defense spending follows a decade of growing Pentagon budgets, driven by U.S. wars abroad and rising personnel costs.

With the country facing continuous budget deficits and a ballooning $15 trillion national debt, Congress and the president agreed in August to cut projected defense spending by $487 billion over the next decade.

The defense budget slashes personnel costs by $6.7 billion as the military begins to cut its overall force size by about 100,000 troops over five years. The Army is to take the bulk of the reductions - about 72,000 soldiers.

CUTTING FORCES, AND BUREAUCRACY

The budget assumes an overall active duty force of 1.4 million troops, down about 21,000 from the current fiscal year. Military reserve force strength would be 387,000, down about 10,000.

The Army is expected to shrink by eight combat brigade teams; the Marines are to eliminate six battalions and four tactical air squadrons; the Air Force is to cut six tactical air squadrons and the Navy to retire seven of its older cruisers.

The Pentagon said force structure cuts would save about $50 billion over five years. Cutting the Pentagon bureaucracy would save about $60 billion over the same period.

The budget for the 2013 fiscal year, which begins on October 1, slashes spending to develop and buy new weapons systems to $178.8 billion, a drop of 7.5 percent.

It requests $9.17 billion for the Pentagon's biggest weapons program, Lockheed Martin's F-35 Joint Strike Fighter, down slightly from $9.25 billion requested in fiscal 2012. But it restructures the program to slow procurement, reducing spending by $15.1 billion over five years.

The budget also would delay development of the Army's ground combat vehicle, saving $1.3 billion over five years, and reduce the Navy's shipbuilding program, for savings of $13.1 billion.

The spending plan terminates one version of the Global Hawk unmanned surveillance drone, a defense weather satellite system and the C-27A transport plane for total savings of $9.6 billion over five years.

The budget would maintain basic pay raises for military personnel through 2014 but begin to slow them thereafter. It also proposes new or increased fees on healthcare for military retirees. Proposed spending on military pay and benefits would drop by $29 billion over five years, Pentagon documents show.

The budget also asks Congress to begin two new rounds of base closures, one in 2013 and one in 2015, a proposal that has already drawn sharp criticism from lawmakers whose districts would be hurt.

(Additional reporting by Andrea Shalal-Esa; editing by Mohammad Zargham)