Pentagon budget planners set for tough decisions

No matter how high-stakes budget talks between the White House and Congress end, experts say one thing is certain -- the Pentagon will suffer major cuts. The only question is what will get the ax.

The military had already been bracing for lean years even without the showdown over the US deficit, which threatens deep across the board cuts in defense spending if an agreement is not reached by January 2.

Even if US defense budgets keep pace with the rate of inflation, as the Pentagon hopes, it is still looking at a $487 billion shortfall in funding over the next decade.

"We have done our part with regards to deficit reduction. And I sure don't intend to put anything additional on the table," Defense Secretary Leon Panetta said earlier this month during a trip to Australia.

Loren Thompson of the Lexington Institute, which has ties to defense contractors, foresees a steady decline in defense spending no matter what happens in the budget talks.

"Whether we get budget sequestration or some alternative in the new year, it's pretty clear that military spending will continue drifting downward as our divided political system grapples with deficit reduction," he said.

"The question is which part of the Pentagon budget will get whacked the most."

Gordon Adams, a professor of international relations at American University and a former White House budget official on national security during the Clinton administration, agrees.

"Think tanks and research groups that are focused on defense planning for the long run are all saying that they expect defense to go down further than what is currently projected in the Panetta budget," Adams said.

Those projections range on average from $300 billion to $500 billion in cuts over 10 years, in addition to the $487 billion shortfall already taken into account in Panetta's plans.

The Pentagon's massive budget, which has doubled since the September 11 attacks of 2001, is already starting to lose steam.

President Barack Obama's budget proposal for fiscal year 2013 calls for $614 billion for defense spending, $89 billion of it for the war in Afghanistan alone.

With the war winding down, the military is preparing for a round of budget cuts similar to those seen after the Korean and Vietnam Wars.

At the end of the Cold War, the US army's budget fell by 36 percent in constant dollar terms (taking inflation into account) between 1985 and 1998, said Adams.

In a tough environment pitting the army, navy, air force and marines against each other in a battle for funding, it remains to be seen how each branch of the military will find the money for needed restructuring.

The Center for Strategic and Budgetary Assessments asked several teams of experts how they would apportion $500 billion in budget cuts over the next decade, while maintaining the "crown jewels" -- special operations forces, cyberspace options and next-generation long-range strike capabilities.

In the center's report on the budget exercise published Tuesday, all of the teams counted on a drop in orders of the F-35 Joint Strike Fighter, as well as cuts in the army's Brigade Combat Teams (BCTs), naval ships and training programs.

"Traditionally the deepest cuts happen to procurement," Adams said.

"So the first thing that will be cut is the projected spending on weapon systems, hardware programs, support systems and all that... It's the easiest way to capture some budget," he explained.

"The second area that will be cut is personnel, the size of the military."

The army and the marines are expected to lose a combined total of 100,000 personnel. Adams says he expects the military to shed 300,000 active duty positions simply through the non-renewal of contracts.

The Pentagon's 700,000 civilian employees will not be immune to the budget knife, Adams predicted. In the 1990s, 400,000 civil servant jobs were cut, bringing the total from one million to 600,000, the professor noted.

The areas that are the most difficult to change because of their political sensitivity are the closure of US bases, and the salaries and benefits of military personnel, Adams said.

"Your average military family of four pays 520 dollars a year for its health insurance under Tricare, while the average private sector family of four pays 5,000 dollars," he said.

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