Pentagon budget set to shrink next year

The Pentagon budget will shrink slightly next year for the first time since 1998, the Obama administration said Thurs­day, in an attempt to chip away at the federal deficit while reorienting the armed forces toward Asia.

Under the proposal, the administration will reduce the size of the Army and Marine Corps, trim the number of fighter aircraft and ships, and seek congressional approval for another round of military base closures.

The administration will instead spend more on unmanned vehicles and Special Operations forces that can be deployed quickly and will not require large, expensive bases. The military will also largely preserve its manpower and weapons systems geared toward the Middle East.

The Pentagon said it would ask Congress for $525 billion in 2013, which represents a 1 percent decrease from the current year. While the difference may sound small, it represents a new era of austerity for the Defense Department that would have been unthinkable just a few years ago, when the military was still accustomed to huge annual raises after the attacks of Sept. 11, 2001.

Pentagon leaders characterized the cuts in solemn tones. Defense Secretary Leon E. Panetta called them a “difficult undertaking.” Army Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, added: “Make no mistake, the trade-offs were tough. The choices were complex.”

The changes are part of a broader effort by the Pentagon to decrease its projected spending by $487 billion over the next decade in accordance with a deficit-reduction deal President Obama reached with Congress in August.

Those cuts could soon swell substantially. If Obama and Congress cannot agree on another package of spending reductions or tax increases by next January, the Pentagon could be forced to slash an extra $600 billion over 10 years. “It basically takes a chain saw to the budget,” said Adm. James A. Winnefeld Jr., vice chairman of the Joint Chiefs of Staff.

Many analysts say that the chances of that happening are small, and that Obama and Congress are likely to work out a compromise ahead of time. But even if they do, many believe the Pentagon is in for more pain as lawmakers search for a long-term solution to the nation’s fiscal troubles.

“In terms of the overall federal budget, these changes are a rounding error,” Thomas Donnelly, a defense analyst at the American Enterprise Institute, said of Obama’s Pentagon budget for next year.

Donnelly said the Pentagon’s fiscal future will depend on the outcome of the presidential election in November.

“Either it will get worse for the Department of Defense if Obama gets reelected or Newt Gingrich gets elected, or it will get better for the Pentagon if Mitt Romney gets elected.”

Aside from the cuts to the Army, which will eventually reduce the number of active-duty soldiers to 490,000 from 547,000, most of the reductions revealed Thursday had been previously announced or involved less costly items. Panetta noted that the Army and the Marine Corps will still be slightly larger than they were in 2001, before the invasion of Afghanistan and the subsequent war in Iraq.

Among the few weapons systems getting the ax are a defense weather satellite, a version of the Global Hawk surveillance drone and a radar with a mouthful of a name: the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System.

Of the total $259 billion in cuts to projected spending over the next five years, almost one quarter — $60 billion — will come from what the Pentagon obliquely called “efficiencies.” Defense officials said they would save more on “streamlined staff,” better use of “information technology” and “inventory management” but weren’t more specific.

Several big-ticket items that had been under scrutiny survived.

The Pentagon said it will preserve all versions of its next generation F-35 Lightning II fighter jet, also known as the Joint Strike Fighter, although some planned purchases will be delayed. The Air Force will also eliminate six of its 60 tactical air squadrons. Each has from 18 to 24 fighter aircraft, mostly older F-15s or F-16s.

The Navy got to keep all 11 of its aircraft carriers, although it will have to retire seven aging cruisers earlier than expected. It will also cut back production of two Littoral Combat Ships and eight Joint High Speed Vessels.

Panetta signaled that the Pentagon is willing to tackle a couple of politically sensitive topics: closing military bases and limiting compensation for troops and veterans.

He said the Obama administration will ask Congress to establish a new Base Closure and Realignment Commission, which would enforce another round of military base closures nationwide. Congress approved the last round of base closures in 2005. Most lawmakers, however, hate the idea of shuttering bases in their districts.

“Make no mistake, the savings we are proposing will impact all 50 states, and many districts across America,” Panetta said. “This will be a test — a test — of whether reducing the deficit is about talk or action.”

He also said he will ask Congress to approve a separate commission to authorize reductions in retirement benefits, which have accounted for an increasingly steep share of the defense budget. Moreover, he said the Pentagon would limit pay raises for active-duty troops — another idea that is unlikely to win much favor from lawmakers, who consistently award pay hikes larger than those sought by defense officials.

Panetta emphasized that any changes to retirement benefits would affect only future recruits, not those currently in the armed forces. He also said the less-generous pay raises would not take effect until 2015.

Also declining will be a separate budget dedicated to the cost of fighting the wars in Iraq, Afghanistan and certain other overseas operations. Obama is asking Congress for $88 billion for the Afghan war next year, down from $115 billion in the current fiscal year, which included the costs of winding down the war in Iraq.

Although the defense budget will decline next year, to $525 billion from this year’s $531 billion, under Obama’s current projections it will inch upward in constant dollars between 1 percent and 2 percent annually thereafter.

Some analysts, however, said those projections are far too optimistic and that the Pentagon will be squeezed further.

Gordon Adams, a professor of international relations at American University, predicted that if lawmakers are to stabilize federal finances, they will have to agree on about $4 trillion in spending cuts and revenue increases over the next decade.

“Defense budgets will come down deeper than the secretary thinks,” said Adams, a former White House official for national security budgets who worked for Panetta in the Clinton administration. “To find those cuts, everything, including defense, will still be on the table.”