Panetta sees half of defense cuts from weapons

WASHINGTON Wed Nov 2, 2011 6:55am IST

U.S. Defense Secretary Leon Panetta speaks during a joint news conference with South Korean Defense Minister Kim Kwan-jin in Seoul October 28, 2011. REUTERS/Jung Yeon-je/Pool

U.S. Defense Secretary Leon Panetta speaks during a joint news conference with South Korean Defense Minister Kim Kwan-jin in Seoul October 28, 2011.

Credit: Reuters/Jung Yeon-je/Pool

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WASHINGTON (Reuters) - Defense Secretary Leon Panetta expects about half of the $450 billion-plus in defence cuts slated for the next 10 years to come from weapons programs, a senior lawmaker said on Tuesday.

Panetta told lawmakers he remained concerned about the prospect of having to cut defence spending by up to $600 billion more if a special congressional committee does not reach agreement on $1.2 trillion in deficit reductions, said House Armed Services Committee Chairman Howard McKeon.

McKeon, speaking after a classified briefing by Panetta and other officials, said Panetta and General Martin Dempsey, chairman of the Joint Chiefs of Staff, had reiterated their warning that cutting the U.S. defence budget up to $1 trillion would have a "devastating effect" on the military.

Panetta did not provide details on where the $450 billion or more in cuts already agreed to by the White House would come from, and had not yet finalized those decisions, McKeon said.

But he said the secretary told lawmakers he had issued general guidelines to Pentagon budget officials on how to reach the total. "He wants to take 50 percent of the cuts out of modernization," McKeon told reporters, referring to programs for new weapons and upgrades to existing ones.

The remaining funds would come from efficiencies and cuts to troop numbers and personnel costs like healthcare, McKeon reported.

Panetta told reporters last week that the Obama administration would unveil a five-year budget to Congress in February that will include about $250 billion to $260 billion in cuts.

President Barack Obama and the U.S. Congress agreed to a deal in August that requires as much as $450 billion in cuts to security-related spending over 10 years, compared with previous Pentagon projections.

Big U.S. defence contractors like Lockheed Martin Corp, Boeing Co and Northrop Grumman Corp are anxiously awaiting details of the Pentagon's plans to gauge the impact on big weapons programs.

Senator Carl Levin, the Michigan Democrat who heads the Senate Armed Services Committee, told reporters after an earlier briefing by Panetta that he worried about the future of Lockheed's F-35 Joint Strike Fighter program.

Asked if he was concerned that international partners on the multinational fighter program could scrap plans to buy F-35 fighter jets due to rising costs, Levin said: "I'm concerned about us walking out on the program, unless we can control the budget costs. So the answer is yes," he said.

Senator John McCain, the top Republican on the panel, said he was reviewing news that the Pentagon's chief tester had recommended a delay of up to 10 months in planned training on the F-35 for Air Force pilots until more flight testing could be completed.

"We're analyzing it now, but it's not surprising. It's the history of the program," he told reporters.

He said he did not have enough information to judge if the issue would affect funding for the program in the coming year.

The F-35 program remains under tough scrutiny since it is the largest U.S. weapons program and has already seen costs rise sharply over the past 10 years -- making it a prime target for future cuts as defense officials brace for up to $1 trillion in defence spending cuts over the next decade.

Officials estimate it will cost $382 billion to develop and build 2,447 of the radar-evading fighter jets for the U.S. military, but Pentagon officials have said they intend cut that projected cost sharply through tough cost-cutting measures.

(Reporting by Andrea Shalal-Esa and Susan Cornwell; Editing by Gary Hill)

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