By David Alexander, Phil Stewart and Missy Ryan
WASHINGTON (Reuters) - Military spending is not the cause of the $1.4 trillion U.S. budget deficit, and even a "disastrous" 10 percent cut would only reduce the budget shortfall by some $50 billion -- about 4 percent, Defense Secretary Robert Gates says.
Gates, in his final interview as Pentagon chief before stepping down on Friday, offered a robust defense of his effort to trim military spending since 2009 and said his successor was "on board" with his measured approach for finding new cuts.
President Barack Obama has called on the Defense Department to come up with $400 billion in reductions over 12 years as he struggles to reduce the country's $1.4 trillion deficit and $14 trillion debt.
Gates saw the writing on the wall two years ago and began an efficiency drive -- an effort that resulted in cuts expected to produce $154 billion in savings over five years due to reduced overhead and better business practices.
"I saw this train coming and knew we were going to have to get better and more disciplined if we were going to ... defend ourselves at all," he said. "We had to be seen as out in front in trying to do smart things to make this place more efficient and more cost-effective."
Gates said critics who accuse him of cutting too many programs or not defending Pentagon budgets are "completely oblivious to the political reality in this city and particularly on Capitol Hill among both Republicans and Democrats."
Members of both parties -- even Republicans traditionally strong on defense -- have demonstrated an increased willingness to draw the line on military spending after a decade of war and rising costs that have nearly doubled the Pentagon's base budget.
But Gates said he did not believe the Pentagon had lost the budget debate in Congress, where lawmakers are working to trim Obama's request for nearly $690 billion in military spending for the 2012 fiscal year beginning October 1.
NEXT ROUND OF CUTS
The administration's budget request includes a $553 billion Pentagon base budget, $118 billion for the wars in Afghanistan and Iraq and $18 billion for maintenance of the nuclear stockpile by the Department of Energy.
If the base Pentagon budget were cut by 10 percent -- "which would be disastrous" for the military -- that would only be $50 billion of a $1.4 trillion deficit, Gates said. "We are not the problem."
Lawmakers in the House of Representatives are close to cutting the president's request by some $9 billion, while the Senate is considering at least $6 billion in reductions. But the sides are still far from a final defense spending bill that Obama can sign into law.
Fulfilling the president's request for an additional $400 billion in cuts will fall to Gates' successor -- outgoing CIA director Leon Panetta.
The defense secretary, who departs for his home in Washington after farewell ceremonies on Thursday, has rejected the idea of across-the-board cuts to the military, saying it would leave the United States with a "hollow" force structure with too few people to perform all the required tasks.
Instead he has said defense cuts of the magnitude sought by Obama will require a slimming of the force, strategic tradeoffs and a willingness to accept greater risk to national security.
Gates said one strategic assumption on the line is that the United States must have a military capable of fighting two major regional wars simultaneously -- a core principle since the Second World War.
"That is clearly one of the issues that we're looking at," he said, "and what difference it makes in terms of force structure if you assume that you're not going to fight those wars simultaneously but sequentially."
To decide how to proceed, Gates has announced a review that will present the president and other policy-makers with options for cutting the military and its missions along with an analysis of the risks they entail.
Gates said Panetta, who would be the first Democrat to serve as defense secretary in about 15 years, had indicated in conversations that he was "on board with the approach."
But at the end of the day, he added, defense secretaries serve the president.
"If the president says go do this, you have two choices," Gates said. "It's a binary decision."
(Editing by Jackie Frank)