November 10, 2010 / 9:23 PM / 9 years ago

Lockheed F-35 fighter in US deficit panel's sights

WASHINGTON (Reuters) - The United States should cut 15 percent of its arms purchases and slash Lockheed Martin’s F-35 fighter jet program to help balance the federal budget, the heads of a presidential commission said in a draft proposal on Wednesday.

The F-35, also known as the Joint Strike Fighter, is the Pentagon’s costliest weapons purchase at up to $382 billion over the next two decades.

The panel co-heads’ suggestions included canceling the F-35’s Marine Corps version and substituting Lockheed’s older F-16 and Boeing Co F/A-18E for half of the U.S. Air Force’s and Navy’s planned F-35 purchases.

Going with such a revised mix of F-35s and other fighters would save an estimated $9.5 billion through fiscal 2015, according to the co-chairmen, Erskine Bowles and Alan Simpson.

Fourteen of the panel’s 18 members are supposed to approve a final report for President Barack Obama containing recommendations to balance the budget. In the absence of any such consensus, the full commission is unlikely to embrace such austerity moves on arms purchases.

The House of Representatives’ incoming Republican majority generally supports sustained spending on weapons programs, making it even less likely that such cuts will come to pass. Lawmakers from both parties also are keen to bring home the jobs that arms programs create in their districts.

Killing the F-35’s Marine Corps version, which has been troubled by technical problems, would save $17.6 billion for fiscal 2012 through 2015, the panel co-chairmen said.

Lockheed Martin, the Pentagon’s No. 1 supplier by sales, did not immediately respond to a request for comment. Under current plans, a total of 2,443 F-35s are due to be purchased by the United States.

Eight countries have joined the United States to co-develop the radar-evading F-35 — Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.

Lockheed’s chief executive, Robert Stevens, has said the F-35 program would account for more than 20 percent of the company’s revenues and profits when full production kicks in, perhaps in five years.

The deficit panel’s co-chairmen called for ending procurement of the Textron landing craft that the draft recommendation valued at $15.6 billion.

Overall, the co-heads said a 15 percent cut in arms spending would save $20 billion in fiscal 2015, bringing arms procurement spending to $117.5 billion. They said this was slightly below the average for the past 10 years including war-related funding when adjusted for inflation.

Contractors like Lockheed, Boeing, Northrop Grumman Corp, General Dynamics and Raytheon Co have been working closely with the military in the hope of staving off deep cuts to weapons programs.

The panel co-heads’ draft said the United States also should cut military personnel stationed in Europe and Asia by one-third. Such a move would save about $8.5 billion in 2015, according to recommendations on creating “a leaner, more efficient” U.S. Defense Department.

Editing by Eric Walsh

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