PRESS DIGEST- Financial Times - Sept 28
Sept 28 The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy.
WASHINGTON Aug 1 The U.S. military on Thursday downplayed concerns it could cancel the F-35 fighter and a new stealth bomber, after leaked documents from a budget review suggested the programs might be eliminated as one way to deal with deep budget cuts.
Defense Secretary Chuck Hagel said on Wednesday that finding $500 billion in budget cuts required by law over the next decade, on top of $487 billion in cuts already being implemented, required tough trade-offs between the size of the military and high-end weapons programs.
Pentagon briefing slides shown to various groups mapped out those tradeoffs in stark terms, indicating that a decision to maintain a larger military could result in the cancellation of the $392 billion Lockheed Martin Corp F-35 program and a new stealthy, long-range bomber, according to several people who saw the slides.
Defense officials later stressed there were no plans to kill either program, noting that dismantling the F-35 program in particular would have far-reaching consequences for the U.S. military services and 10 foreign countries involved in the program, which is already in production.
"We have gone to great lengths to stress that this review identified, through a rigorous process of strategic modeling, possible decisions we might face, under scenarios we may or may not face in the future," Pentagon Spokesman George Little told Reuters in an email when asked about the slides.
"Any suggestion that we're now moving away from key modernization programs as a result of yesterday's discussion of the outcomes of the review would be incorrect," he said.
Analysts said Hagel and other Pentagon officials appeared to be leaning toward the option that would emphasize high-end weapons programs over force size.
Mackenzie Eaglen, an analyst at the American Enterprise Institute, said suggestions that the F-35 program "was being targeted was either an oversight or a scare tactic, but it wasn't a serious proposition that the entire program would be cancelled under any circumstances."
She said failure by Congress to reverse deep budget cuts could result in the F-35 program being slowed or scaled back, but outright cancellation was unlikely given the huge investment already made in the new warplane, which is designed to replace over a dozen planes in use around the world.
One defense official, who was not authorized to speak publicly, said the budget document had sketched out a worst-case scenario that was highly unlikely to occur.
"Cancelling the program would be detrimental to our national defense," said the official, noting that the U.S. Air Force, Navy and Marine Corps needed to replace aging fleets of fighter planes that were increasingly expensive to maintain.
Loren Thompson, chief operating officer of the Lexington Institute, cited estimates that it would cost four times the amount needed to buy new F-35s to keep the current force flying. And cutting the planned bomber would generate very little savings since the program - which could eventually cost around $30 billion - is in the early stages at this point, he said.
"You have to view these options as analytical excursions rather than serious proposals because they're not consistent with what the administration has said it wants to do," he said.
Pentagon acquisition chief Frank Kendall and top U.S. military officials have repeatedly underscored their commitment to the F-35 program in recent months.
On Thursday, Admiral James Winnefeld, vice chairman of the Joint Chiefs of Staff, told a House Armed Services Committee that early work to develop a new long-range bomber was on track, and the new bomber would be a vital part of the U.S. nuclear deterrent and potential future warfare concepts.
But he said deepening budget cuts under the Budget Control Act (BCA) of 2011 could threaten the ambitious schedule for the new bomber, which Air Force officials want to field by 2025 -- and potentially the whole program.
"It could impact that program in terms of timing," Winnefeld told lawmakers. "It also would depend a little bit on whether you emphasized capacity or capability in terms of how many you might buy or - or whether you would do the program."
Details are classified, but industry officials and analysts said Lockheed, Northrop Grumman Corp, and Boeing Co have been awarded small-scale study contracts to start working on possible bomber designs, with a formal acquisition process to begin in coming years.
The Air Force requested $400 million in its fiscal 2014 budget request for what it is trying to keep an affordable program. It plans to spend up to $550 million each to buy 80 to 100 new bombers in coming years, with an eye to fielding them in the mid-2020s, said spokesman Ed Gulick.
Jim Thomas, vice president at the Center for Strategic and Budgetary Assessments, said the two options of a smaller military or sharp cutback in weapons programs represented a false dichotomy.
"This is almost one reasonably attractive option and a straw man that looks pretty unattractive," he said. "I don't think we're going to end up at either of these corners on the map. I think that you're going to get a hybrid solution."
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