The New York Times - November 6, 2011, By THOM SHANKER and ELISABETH BUMILLER
WASHINGTON — Under orders to cut the Pentagon budget by more than $450 billion over the next decade, Defense Secretary Leon E. Panetta is considering reductions in spending categories once thought sacrosanct, especially in medical and retirement benefits, as well as further shrinking the number of troops and reducing new weapons purchases.
Secretary of Defense Leon E. Panetta,
in his office at the Pentagon on Friday,
spoke about reducing the military's budget.
Mr. Panetta, a former White House budget chief, acknowledged in an interview that he faced deep political pressures as he weighed cuts to Pentagon spending, which has doubled to $700 billion a year since the terrorist attacks of Sept. 11, 2001. He said that meeting deficit-reduction targets might require another round of base closings, which could be highly contentious as members of Congress routinely fight to protect military deployments and jobs in their communities.
Among other steps, Mr. Panetta said, Pentagon strategists were looking at additional cuts in the nuclear arsenal, with an eye toward determining how many warheads the military needed to deter attacks.
Mr. Panetta also held out the possibility of cutting the number of American troops based in Europe, with the United States compensating for any withdrawal by helping NATO allies improve their militaries. That effort would free up money so the United States could maintain or increase its forces in Asia, a high priority for the Obama administration, and sustain a presence in the Persian Gulf after the withdrawal from Iraq this year, he said.
In a 40-minute interview on Friday, Mr. Panetta offered the most detailed description to date of his plans to cut and reshape the military to fit a smaller budget — while still protecting national security interests and taking care of military personnel and their families.
It was clear in the interview that the defense secretary was addressing a variety of audiences: enlisted personnel, officers and veterans, as well as members of Congress who approve Pentagon spending and an American public exhausted by a decade of war and now worried about the nation’s financial health.
Mr. Panetta spoke less than three weeks before a special bipartisan committee is supposed to produce a far-reaching deficit-reduction plan.
If the committee deadlocks and fails to find $1.2 trillion in deficit reductions, then automatic cuts go into effect and the Pentagon could face an estimated $500 billion in additional reductions over the next decade.
Mr. Panetta has called those additional cuts potentially ruinous. In that view, he has allies in Congress, especially Republicans on the House and Senate Armed Services Committees, who are preparing legislation that would undo the automatic across-the-board cuts for military programs, or exchange them for cuts in other areas of the federal budget. The defense secretary’s stated views could well put more pressure on the committee to come up with a deal.
Apart from the prospect of the automatic cuts, some Republicans have already criticized the administration’s planned reductions as dangerously severe. Some Tea Party members and liberals, by contrast, have argued that the administration’s reductions are too modest.
The administration’s more than $450 billion in cuts would reduce the military budget by roughly 7 or 8 percent over the next 10 years, even beyond the spending reductions that would come from the withdrawals from Iraq and Afghanistan, according to government budget projections.
Although Pentagon spending stands at about $700 billion this year, the Defense Department’s base operating budget is about $530 billion, with the rest allocated by Congress for the wars in Iraq and Afghanistan. Pentagon officials predict that total Defense Department spending will drop to $522.5 billion by 2017.
Mr. Panetta outlined a series of guiding principles for where to invest and where to cut. He pledged to maintain and even increase spending in areas that have redefined the American way of war in recent years. They include cyberoffense and defense, unmanned aircraft, known as drones, and Special Operations forces — like those who killed Osama bin Laden and who also train foreign militaries to battle insurgencies so the United States does not have to.
“We’re going from three cops to two cops in a pretty rough neighborhood,” Mr. Panetta said in his office, where a portion of one wall is devoted to mementos from the raid that killed Bin Laden, which he directed in his former role as director of the Central Intelligence Agency.
“We’re going to be developing a smaller, lighter, more agile, flexible joint force that has to conduct a full range of military activities that are necessary to defend our national interests,” he said. “So even though they’re going to be smaller and lighter, we’ve got to make sure they always maintain a technological edge.”
Trimming Pentagon spending by eliminating waste and increasing productivity remains a goal, he said — but he acknowledged that that would not be enough.
“There will be some huge political challenges,” he said. “When you reduce defense spending, there’s likely to be base closures, possible reduction in air wings.”
Mr. Panetta cited North Korea and Iran as persistent threats, and said that the military had to maintain “the ability to deter and defeat them.” Still, he did not envision maintaining a ground force large enough to conduct a long, bloody war and then stability operations in North Korea or Iran, as the United States did in Afghanistan and Iraq.
Under current plans, the Army is to drop to 520,000 troops, from 570,000, and the Marine Corps to 186,600, from 202,000, beginning in 2015, and Mr. Panetta said cuts could go below those levels. “There is a likelihood that there may be some additional reductions below that, but not very much at this point,” he said.
Mr. Panetta said he had met regularly at the White House with President Obama about the reductions to Pentagon spending. He described the president as closely involved and said Mr. Obama had met recently with the four armed services chiefs to discuss budget and strategy issues.
In what he described as the most sensitive of the potential cuts facing an all-volunteer force, Mr. Panetta said the Pentagon was considering raising fees for the military’s health insurance program, Tricare. Today, military retirees and families, who are guaranteed Tricare for life, pay only $460 a year in fees — far below what they would pay if they worked for a private employer — although a modest increase for new enrollees began last month.
The White House and Pentagon have made clear that Tricare fee increases would be phased in over a few years and would affect current retirees and troops serving today when they retire. Health care costs for the Pentagon, the nation’s largest employer, total $50 billion a year, or about a tenth of its base budget. Ten years ago, health care cost the Pentagon $19 billion, equal to about $25 billion in today’s dollars.
Mr. Panetta provided no details of potential reductions in military retirement pay for those who enlist in the future, but said he would consider supporting the creation of a binding commission to review such pay. He also indicated that he might support a change that would increase retirement spending, by offering some retirement pay to those who had served less than 20 years. Currently only those who have served at least 20 years receive retirement pay, which is 50 percent of their final annual base pay, for life.
“Are there ways, looking at the retirement piece, where those who serve 10 or 12 years might be able to take that retirement with them?” Mr. Panetta said.
In potential reductions to major weapons systems, Mr. Panetta said he was considering cutting the purchases of the F-35 Joint Strike Fighter, a radar-evading jet for the Air Force, Navy and Marines that is projected to cost nearly $400 billion for more than 2,400 planes over the next two decades. He suggested he might slow or cut back production, although the final decision may be to protect that jet program and identify cuts in other weapons purchases.
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