* Murtha was a member of the House since 1974
* He had great influence on defense issues
* He was a hawk, but called for Iraq pullout in 2005
* Democrats may have trouble retaining seat (Adds impact on defense industry; Gates; other reaction, edits)
By Susan Cornwell
WASHINGTON, Feb 8 (Reuters) - U.S. Democratic Representative John Murtha, chairman of the House of Representatives defense appropriations subcommittee who exercised enormous influence on defense issues, died on Monday.
Murtha, 77, died peacefully at Virginia Hospital Center in Arlington with his family by his side, a statement from his office said. He had been hospitalized recently with complications related to gallbladder surgery.
As the top Democrat on the House panel that oversaw defense appropriations, Murtha wielded big clout in the Democratic-majority Congress, making decisions affecting billions of dollars in Pentagon spending.
But he also stunned his fellow hawks in 2005 by urging a U.S. withdrawal from Iraq, transforming the debate over the 2003 invasion launched during the administration of former President George W. Bush and making opposition to the war a respectable conservative position.
Murtha, a former Marine, had served in the House since 1974, when voters in working-class Johnstown, Pennsylvania, made him the first Vietnam war veteran elected to the chamber.
He was a close associate of House Speaker Nancy Pelosi, and his impact on U.S. military matters was noted on Monday by President Barack Obama and Pentagon chief Robert Gates.
But analysts said his party could have problems retaining the seat in November’s election now that Murtha is gone.
“This is going to be a difficult hold for Democrats,” said David Wasserman with The Cook Political Report. The district is closely divided between Democratic and Republican voters, “but it has been moving in the Republican direction,” he said.
A social conservative, foreign policy hawk and classic old-school politician, Murtha was chummy with lobbyists.
The gruff pro-labor Democrat worked to funnel defense projects to his district and those of his friends in the House, a practice that got him dubbed “King of Pork” in the media.
But this nickname did not seem to bother him much. He once reportedly referred to proposed ethics reforms as “total crap.” Earlier, in 1980, he was an unindicted co-conspirator in an FBI corruption sting known as Abscam; a House ethics committee cleared him of any wrongdoing.
His death increases the chances that the Obama administration could succeed in killing two weapons programs that Murtha helped Congress to resurrect last year -- the Boeing C-17 transport plane and a second engine for the Lockheed Martin F-35 fighter.
“There’s no question that Jack Murtha was an institution and it’s going to take time to adjust to his passing,” said Loren Thompson, defense analyst with the Virginia-based Lexington Institute.
Thomson said major defense companies might not be able to lean as heavily on Murtha’s likely successor on the defense spending panel, Norm Dicks, a Democrat from Washington state, although Dicks is a strong backer of defense programs.
The Standard & Poor's Aerospace & Defense Index .GSPAERO fell 1.1 percent on Monday as major defense company shares were mixed.
Obama, in a statement, said Murtha had been a “respected voice” on issues of national security. Gates said he had worked with Murtha for over 20 years, “starting back in the Reagan administration when I was at CIA.
“I will always remember and be grateful for Congressman Murtha’s personal efforts on behalf of the Afghan resistance fighting the Soviets - efforts that helped bring about the end of the Cold War,” Gates said in a statement.
Back then Murtha worked with congressman Charlie Wilson to secretly provide funding for the CIA to supply arms to Afghan fighters against the Soviet Union, Murtha’s website said.
House Appropriations Chairman Dave Obey said Murtha was a friend to the military who “understood the misery of war.”
Last year Murtha, Obey and several other influential Democrats urged a surtax to pay for the continuing conflict in Afghanistan. Murtha said that war was exhausting the U.S. military, along with the years spent in Iraq.
Murtha was unable to parley his ties with Pelosi into a top leadership role. He was soundly beaten by Maryland Democrat Steny Hoyer in the race for House majority leader in 2006.