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Task force sees Pentagon cuts key to US budget fix

* Urge end of Lockheed F-35 fighter program

* Marine Corps vehicle, tiltrotor aircraft also targeted

* Proposals likely to face stiff resistance

WASHINGTON, June 11 (Reuters) - U.S. lawmakers and watchdog groups on Friday called for a dramatic revamp of the defense budget to reverse widening U.S. deficits, including termination of the $382 billion Lockheed Martin Corp LMT.N F-35 fighter.

Representative Barney Frank, one of the chief negotiators working on financial regulation reforms, convened a bipartisan task force that identified nearly $1 trillion in budget savings that could be culled from the Pentagon budget through 2020.

“We are looking down the barrel of record deficits that threaten our national security,” Laura Peterson, policy analyst with Taxpayers for Common Sense and a task force member, told a news conference. “There’s plenty of fat to cut from the military budget without compromising our safety.”

But many of the proposals seem set to face fierce resistance from the military services, the defense industry and lawmakers who fear a backlash from voters concerned about job losses.

The group called for cuts to the U.S. nuclear arsenal, a reduction of 200,000 military personnel, smaller U.S. military presence in Asia and Europe and fewer tactical Air Force fighter wings.

Other savings would come from shrinking the Navy to 230 ships from 287 currently, spending less on research, cuts or delays in big weapons programs, and higher health care premiums for the military.

The report comes as President Barack Obama and Defense Secretary Robert Gates press their own reforms in defense spending and concern rises over an estimated $300 billion in cost overruns on major arms programs.

Carl Conetta, co-director of the Project on Defense Alternatives, said many of the measures proposed by the group had already been raised but not implemented by Gates. He said lawmakers were more supportive of change than ever before.

Frank, a liberal Democrat, said he had joined forces with Republican lawmakers to insist that any national deficit reduction package also include cuts in military spending. Not cutting defense spending could lead to higher taxes and cuts in programs for the environment, highways and housing, he warned.

Frank said he and libertarian Representative Ron Paul, a favorite of the anti-Washington Tea Party movement, would encourage other lawmakers to vote against any deficit reduction package unless it also included cuts to defense spending.

Frank said cuts to nuclear weapons and missile defense were most likely to garner support, but a proposal to save $60 billion over the next decade by raising health care premiums paid by the military would never win congressional support.

He said the task force specifically avoided any cuts tied to current wars in Iraq or Afghanistan to avoid any appearance of undermining funding for U.S. troops.

Task force members conceded that it would be tough to convince lawmakers to scrap big-ticket weapons programs that employed thousands of people in their home districts without a philosophical shift in attitudes about U.S. defense spending.

“The answer is it’s not easy,” Frank told reporters, acknowledging that he himself had voted to continue funding for a second F-35 engine opposed by President Barack Obama, to ensure competition if the program continued.

But Frank said he would support eliminating the whole F-35 Joint Strike Fighter as part of an overall package of changes proposed by the task force, a move that could save $60 billion over the next 10 years. Instead, the military could buy more of the existing fighters built by Boeing Co BA.N and Lockheed.

The report said the Pentagon could also save up to $12 billion by ending the V-22 tiltrotor aircraft built by Boeing Co BA.N and Bell Helicopter, a unit of Textron Inc TXT.N, and up to $9 billion by canceling a new amphibious vehicle being developed by General Dynamics Corp GD.N for the Marine Corps.

Nearly $10 billion more could be saved by a five-year delay in procurement of a new aerial refueling plane, a deal worth up $50 billion deal for which Boeing and Europe's EADS EAD.PA are competing, the task force said.

Michael French, defense analyst with Morgan Joseph, said many of the proposed cuts made sense, but he questioned the proposal to cut the F-35 fighter because it would give the military improved aviation capabilities and would sustain the industrial base.

The full report is availablehere (Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)

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