April 10, 2013 / 3:35 PM / 5 years ago

Pentagon's $526.6 bln budget asks Congress for unpopular cuts

WASHINGTON, April 10 (Reuters) - The Pentagon unveiled a $526.6 billion budget on Wednesday that calls for base closures, program cancellations and smaller pay increases, but which is still $52 billion higher than spending caps set by law, putting the department on a path toward another year of financial uncertainty.

The Defense Department request for the 2014 fiscal year beginning on Oct. 1 asks Congress to implement a series of politically difficult cuts, involving a new round of base closure proceedings, increased healthcare fees and slower military pay increases.

While seeking ways to reduce spending in the current tight fiscal environment, the Pentagon budget would continue to fund high-priority programs and initiatives, including the strategic pivot to the Asia-Pacific announced last year.

The budget includes $8.4 billion for continued development of the three variants of Lockheed Martin’s F-35 Joint Strike Fighter, the Pentagon’s most expensive procurement program.

It also includes $10.9 billion for new ship construction, $9.2 billion for missile defenses, $379 million for development of a new long-range bomber, $4.7 billion for cyberspace operations and $10.1 billion for space technologies.

“This budget made important investments in the president’s new strategic guidance - including rebalancing to the Asia-Pacific region and increasing funding for critical capabilities such as cyber, special operations and global mobility,” Defense Secretary Chuck Hagel said in a statement.

The budget is part of President Barack Obama’s spending plan sent to Congress. The president’s budget stands little chance of being enacted into law and is meant to serve largely as a negotiating tool with Republicans, who have outlined budget proposals of their own.

Obama’s budget seeks new taxes and spending cuts that aim to replace the automatic, across-the-board reductions known as sequestration that went into effect on March 1. The Pentagon’s share of the March 1 cuts is about $500 billion over 10 years, or about $50 billion a year.

The president’s budget proposal unveiled on Wednesday would replace that $500 billion cut under sequestration with a $150 billion reduction, most of it spread over a five-year period beginning several years from now, a U.S. official told Reuters.

Some $34 billion in cuts would be implemented over the next five years, the official said, noting that the proposal would depend on Congress agreeing to eliminate the sequestration budget cuts. The White House and Republicans have been trying for two years to reach a deal on sequestration, without success.

The Pentagon budget asks Congress to begin a new round of Base Realignment and Closure proceedings, a politically unpopular request that was rejected by lawmakers last year and has already produced hearings this year, even before the decision was announced.

Base closures disrupt local economies and cost a huge amount up front, only saving money over the long run. The Pentagon is believed to have more than 20 percent surplus of infrastructure based on estimates from the last round of base closures that started in 2005.

The 2014 budget also renews a request to Congress for increased fees for pharmacy co-pays and health-care enrollment for retired military personnel. The Pentagon also proposed a 1 percent pay increase for military employees, lower than the 1.8 percent increase in the Employment Cost Index ordinarily used to determine pay increases.

Congress has been resistant in the past to increasing healthcare fees for military retirees and has often approved pay increases above those recommended by the department, a factor analysts say has led to military pay rising at an unsustainable pace over the past decade.

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